Tag Archives: economy

Azerbaijan drops currency tax

FEB. 23 2016 (The Conway Bulletin) – The Azerbaijani parliament formally dropped a plan to impose a 20% tax on all deals in foreign currencies. It voted to drop the bill, which had passed earlier in the year, after President Ilham Aliyev refused to sign it. The motive for the bill had been to protect Azerbaijan’s manat currency which has lost around half its value but critics said it was unfair and unworkable. Low oil prices have hit Azerbaijan hard. It is reliant on oil to earn export revenue.

ENDS

(News report from Issue No. 269, published on Feb. 26 2016)

Kazakhstan cuts funding to sport

FEB. 25 2016 (The Conway Bulletin) – Samruk-Kazyna, Kazakhstan’s sovereign wealth fund, said it will cut funding to the Astana Presidential Sports Club, an umbrella organisation that sponsors everything from cycling to football to boxing. The club was officially set up in 2013 to promote Kazakhstan and Astana under the country’s yellow and blue colours. It received large sums of money. Successes included winning cycling’s Tour de France and FC Astana playing in the Champion’s League, football’s most high profile competition. Kazakhstan has been looking for ways to cut costs as the economic downturn bites.

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(News report from Issue No. 269, published on Feb. 26 2016)

Kazakhstan slips towards recession

FEB. 23 2016, ALMATY/DUSHANBE (The Conway Bulletin) — Kazakhstan verged on acknowledging that its economy may actually shrink this year and a Tajik Central Bank official said it was in talks with the IMF for an emergency loan, more signals that a sharp regional economic crisis was deepening further.

Normally bullish about its own GDP growth predictions, the reconfigured Kazakh government GDP growth estimate of 0.5% is an important sign of the severity of the economic downturn linked to low oil prices. Kazakhstan had earlier predicted GDP growth in 2016 at 2.1%.

“If the cost of a barrel of oil is $40, GDP growth will be 2.1%, but we’ve taken the conservative approach and have assumed that the price of oil will costs $30 per barrel and that GDP growth will hit 0.5%,” journalists quoted Yerbolat Dosayev, the economy minister as saying. Oil is currently around $35/barrel.

Importantly, this new GDP growth estimate is far closer to that of international economist who have said that Kazakhstan’s economy could shrink in 2016. The last time that Kazakhstan’s economy dipped into a recession was in 2008.

Low oil prices and a recession in Russia which has wiped out essential remittance and business investment flows have hit Central Asia hard. The scale and speed of the downturn appears to have wrong-footed leaders, including Kazakh president Nursultan Nazarbayev and his advisers.

They have slashed government budgets and also sold off chunks of state-owned companies, but they haven’t been able to prevent the tenge from losing 50% of its value and inflation rising. Officials are now worried about anti-government protests.

On the southern fringe of Central Asia, Tajikistan, the world’s most remittance-reliant economy, has also been reeling from the impact of the downturn. It has called in the IMF to try to organise an emergency loan.

Jamoliddin Nuraliev, deputy head of Tajikistan’s Central Bank, told the FT that talks with the IMF had begun.

“It’s crisis time,” he said.

Tajikistan has depleted its currency reserves in its Central Bank trying to defend the value of it somoni currency. At the same time, data has shown that the flow of remittances from Russia have dropped by around half.

ENDS

(News report from Issue No. 269, published on Feb. 26 2016)

Azerbaijan cancels $16.5b petrochemical project

FEB. 19 2016 (The Conway Bulletin) — Azerbaijan’s state-owned energy company SOCAR said it had halted a multi-billion dollar project to develop the OGPC petrochemical complex at Sangachal, 40km south of Baku, because of sustained low oil prices, dealing a major blow to the country’s economic outlook.

SOCAR’s vice president Tofig Gahramanov said the company had stopped construction on the complex that was once valued at $16.5b and feted as the project that would transform Azerbaijan into the region’s biggest producer of refined products.

“We can say that active work on the OGPC project has been temporarily frozen,” Mr Gahramanov told Reuters in an interview.

Last month, in Kazakhstan, South Korea’s LG Chem cancelled a $4.2b project to build a petrochemical plant on the Caspian Sea coast.

Initially, the OGPC project near Baku, included an oil refinery which was later dropped, bringing the cost of construction down to $7b.

Japan’s Mitsui signed a preliminary memorandum to take part in the project last year. Last year, the Britain-based unit of US’ Fluor Group was selected as the lead contractor on the project. Fluor UK declined to comment when contacted by The Conway Bulletin.

The economic downturn has hit Azerbaijan hard. The manat currency has lost around 50% of its value and, with oil prices still low, the project was simply too costly for the state budget.

And the impact of SOCAR’s decision to freeze, or scrap, plans to build the petrochemical complex will be felt far and wide.

This was one of the biggest projects in the region and dozens of Western companies will have been lined up to work on it.

ENDS

(News report from Issue No. 269, published on Feb. 26 2016)

Tajikistan raises interest rate

FEB. 19 2016 (The Conway Bulletin) – Tajikistan’s Central Bank raised its key interest rate by 1 percentage point to 9%, its first rise since December 2014. It said it needed to try to protect the value of its somoni currency which has lost around half its value over the past year. A recession in Russia has hit Tajikistan hard, as its economy relies on remittances sent back by workers living in Russia.

ENDS

(News report from Issue No. 269, published on Feb. 26 2016)

Azerbaijani economy to shrink

FEB. 23 2016 (The Conway Bulletin) – The Economist Intelligence Unit (EIU) said that it was likely Azerbaijan’s economy would contract in the first quarter of 2016. This would be the first time since the last quarter of 2011 that Azerbaijan’s economy has contracted. For an economy to be considered to be in recession, GDP needs to shrink for two consecutive quarters. The main factor in Azerbaijan’s poor economic outlook is the consistent low oil prices.

ENDS

(News report from Issue No. 269, published on Feb. 26 2016)

Electricity price to rise in Armenia

FEB. 25 2016 (The Conway Bulletin) – Armenia’s Public Services Regulatory Commission (PSRC) approved a 1.5b dram ($3m) investment in its Soviet-era nuclear power plant Metsamor. Also at the press conference, the PSRC chairman, Shiraz Kirakosyan, said the controversial issue of raising electricity prices would be revisited in April. Last year proposed electricity price rises triggered street protests.

ENDS

(News report from Issue No. 269, published on Feb. 26 2016)

Kyrgyz businesses say the odds are stacked against them in the EEU

BISHKEK, FEB. 25 2016 (The Conway Bulletin) — Kyrgyz farmers and exporters of agricultural products have said that the Eurasian Economic Union (EEU), a group centred around the Kremlin that was supposed to boost its members’ economies, has undermined their businesses by exposing them to unfair competition.

The insight collected by The Conway Bulletin’s correspondent in Bishkek, undermines claims by President Almazbek Atambayev that joining the EEU in August was a positive move for Kyrgyzstan.

Sergey Ponomarev, head of the business lobby group AMTSS and a former PM adviser, said that cheaper Belarusian goods had hit Kyrgyzstan’s key export market in neighbouring Kazakhstan.

“In Belarus, prices for animal feed are largely subsidised by the state, which makes their products cheaper on the Kazakh market,” he said. Mr Ponomarev said that the Belarus government subsidises its farmers’ animal feed, something the Kyrgyz government doesn’t do.

Data released by Kyrgyzstan’s state statistics committee last month showed that in 2015 exports of clothes fell by 50%, fruit and vegetables exports fell by a third and tobacco exports by 28%.

This has partly to do with the worsening economic conditions in the region but also because of the more competitive export markets created by the EEU.

Tilek Toktogaziyev, the owner of a greenhouse in Bishkek. which sells various fruit, vegetables and berries, said: “Local farmers cannot trade their vegetables, and some of them have stopped farming altogether.”

Previously, business owners have complained of extra red tape after joining the EEU but they hadn’t complained of excessive competition.

One business owner, though, was more positive. Dastan Omuraliev, the manager of Organic, a company producing fruit juices, said: “With entering the Eurasian Economic Union, it became easier to pass our goods through the Kazakh border.”

ENDS

(News report from Issue No. 269, published on Feb. 26 2016)

Uzbek companies fail salaries

FEB. 19 2016 (The Conway Bulletin) – Companies in Uzbekistan are failing to pay staff their full salaries, eurasianet.org reported quoting figures from a state agency that showed fines totalling $500m being handed out for failing to pay salaries on time. This could be, eurasianet.org reported, a sign that worsening economic conditions are hitting Uzbekistan.

ENDS

(News report from Issue No. 269, published on Feb. 26 2016)

Kazakh companies struggle with bills

FEB. 12 2016 (The Conway Bulletin) – Kazakh companies are struggling to pay for the electricity they are using because of a general downturn in the economy, the deputy minister of energy Bakhytzhan Dzhaksaliyev told media. His views are another indication of the problems that Kazakh companies are facing as they try to counter the worsening economic conditions.

ENDS

(News report from Issue No. 268, published on Feb. 19 2016)