JAN. 21 2016 (The Conway Bulletin) – Kazakhstan’s Central Bank increased interest rates on tenge held bank deposits by four percentage points to 14% in an attempt to defend the value of its currency. The Central Bank has maintained different interest rates on tenge and US dollar deposits for several years. US dollar deposits now earn interest of 2%, down from 3%.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 264, published on Jan. 22 2016)
JAN. 20 2016, DUSHANBE (The Conway Bulletin) — Hundreds of migrant workers are returning to Tajikistan everyday from Russia where an economic recession has destroyed once solid jobs.
At the international airport, flights from Russia were packed full of swathy, downcast young men dejectedly carrying their belongings in bags.
They told the same story.
They had moved to Moscow, or St Petersburg, or Yekaterinburg, or a host of other Russian cities, in search of work. The usual seasonal jobs, working in factories, on construction sites, cleaning roads. These jobs had seemed safe but a recession in Russia, triggered by a collapse in oil prices and sanctions imposed by the West, have wiped these out.
According to the Russian Federal Migration Service, there are now only 863,000 Tajik workers in Russia, down by nearly 30% from the 1.2m employed this time last year.
Idibek, a 24-year-old man, was standing outside the airport’s terminal building waiting for a friend to pick him up. He had just left his job in a St Petersburg chocolate factory.
“The money I earn is enough only for my living expenses in Russia,” he said.
“I used to make 30,000 roubles, which was around $800, and that was enough for me and my family in Tajikistan. Nowadays, the money I earn is a little bit more than $300.”
He didn’t know whether he would find any work now that he had returned to Tajikistan.
Russia’s economy is so important to Central Asia and the South Caucasus that its woes have hit its near-abroad like a tsunami and wreaked havoc.
Most currencies in the region have fallen by a third or half. Economic forecasts are down and Central Banks and governments are scrambling to rework budgets.
Tajikistan, with its reliance on remittances, is one of the countries hardest hit by the economic downturn in Russia. Its Central Bank has said remittances have dropped by around 40%, a heavy burden for the rest of the economy to shoulder.
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(News report from Issue No. 264, published on Jan. 22 2016)
JAN. 22 2016 (The Conway Bulletin) – When it comes to worker remittances from abroad, Tajikistan is the most heavily reliant country in the world.
Transfers from migrant workers, mostly residing in Russia, made up 42% of the country’s GDP in 2014.
But the economic downturn in Russia, which sent the rouble to its historical lowest against the dollar this week, and tougher border controls and regulations have made the life of many Tajiks impossible in Russian cities. Their return en masse to Tajikistan will undoubtedly put pressure on the local job market, which isn’t flourishing either, and also strain the Tajik somoni.
This week, Georgia also published remittances data, highlighting a 39% fall in transfers from Russia.
Together with shrinking trade turnover data, low remittances volumes are a barometer of the worsening economic environment across the entire former Soviet Union. They also underscore Russia’s role as the engine-room of economies in the former Soviet Union.
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(Editorial from Issue No. 264, published on Jan. 22 2016)
JAN. 21 2016 (The Conway Bulletin) – Inflation in Kazakhstan in 2015 measured 13.6%, nearly double the rate of 2014, media reported quoting the state statistics agency. The final tally confirms that prices increased rapidly after a tenge devaluation in August. The tenge has lost around 55% of its value since Feb. 2014.
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(News report from Issue No. 264, published on Jan. 22 2016)
JAN. 20 2016, BISHKEK (The Conway Bulletin) — Kyrgyzstan started the hunt for a new investor for its $2b Kambar-Ata-1 hydropower project, which was supposed to transform the country into a major electricity exporter, after MPs officially voted to cancel a deal with Russia.
At the end of last month, Kyrgyz President Almazbek Atambayev said that Russia simply didn’t have enough money to finance the project any more. MPs said that they had little choice but to cancel the deal with Russia so that a search for a new investor could begin in earnest.
Dastan Bekeshev, considered a liberal progressive MP, told a Conway Bulletin correspondent that it would be hard to find a new investor at the moment.
“Kyrgyzstan will seek investors, but I am sceptical to this idea because this is an issue of geopolitics and not simply investment from foreign countries,” he said.
The cancellation of the Kambar- Ata-1 project, signed between Kyrgyzstan and Russia in 2008, is a major blow to Kyrgyzstan and one of the biggest casualties of the deepening economic malaise. And, as Mr Bekeshev said, in the current economic climate, it may be difficult for Kyrgyzstan to attract another investor.
China, the most obvious substi- tute, is trying to deal with its own economic slowdown.
Russia’s withdrawal from the Kambar-Ata-1 hydropower project also shows that Russian influence in Central Asia is waning as its economic power dips.
On the streets of Bishkek, opinion was divided on the impact of Russia’s withdrawal from the project.
Aliaskar, 23, said that Russia had promised and failed to build many infrastructure projects in Kyrgyzstan.
“They said they would build gas pipelines and improve infrastructure under the Eurasian economic union, but all these things would be implemented in 50 years from now,” he said.
But Alisher, 24, said the scuppered hydropower project deal wouldn’t damage relations between Kyrgyzstan and Russia. “There are other spheres in the Kyrgyz economy where Russia has positively contributed like importing Russian gas, forgiving debt, providing security in the region and other pillars,” he said.
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(News report from Issue No. 264, published on Jan. 22 2016)
JAN. 19 2016 (The Conway Bulletin) – Azerbaijan imposed some of the most stringent currency controls in the region to try and halt the slide in its manat currency and to stop a feared wave of capital outflows as the economic storm that has hit the region strengthens.
The most draconian measure was an immediate 20% tax on purchases of property, securities and other investments in foreign currencies.
“People should know that the central bank, other government agencies are in a position to prevent the manat from falling sharply,” Azerbaijan’s Central Bank chief, Elman Rustamov, said in televised comments clearly aimed at shoring up public support. Last week sporadic clashes broke out in regional towns between angry protesters and police.
The Azerbaijani manat has lost 50% of its value in six months and people have lost confidence in the country’s financial system.
Mr Rustamov also said that the Central Bank held enough currency reserves to support the manat, despite a series of reports which suggested that it was running out of money after trying to defend its value unsuccessfully throughout 2015, and that several smaller banks would soon have to merge.
Other measures unveiled by Mr Rustamov to try to boost public support in the manat included allowing people to pay back loans of up to $5,000 at the manat/$ exchange rate prior to the last devaluation on Dec. 21 and cancelling tax on manat bank deposits and dividends.
Azerbaijan has been one of the hardest hit by the economic slowdown that has hit the region. Its economy is dependent on oil which has sunk in price to around $28/barrel from around $115/barrel in July 2014.
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(News report from Issue No. 264, published on Jan. 22 2016)
JAN. 16/17 2016, ALMATY/Kazakhstan (The Conway Bulletin) – Countries in the South Caucasus and Central Asia applauded the end of western sanctions against Iran, a move they hope will turn their southern neighbour into a strong trade and diplomatic partner.
But, as well as adding a hopefully vibrant economy on their southern fringe, the reemergence of Iran also presents a major potential downside.
Low commodity and oil prices have been a major contributor to an economic downturn that has shaken the region. Adding Iran’s large oil reserve to the market will further pressure prices which are already hovering around 12-year-lows of $28/barrel, down from $115/barrel in the summer of 2014.
Most countries in the region issued a statement applauding Iran’s return to the international fold.
The Kazakh foreign ministry said: “It is a critically important step in creating a safer world.”
It also said that Iran had signed its first post-sanctions international agreement with Kazakhstan’s Air Astana to open an Almaty-Tehran flight in 2016.
In the South Caucasus, Armenia and Georgia are trying to negotiate gas supply deals with Iran, and Azerbaijan may be able to persuade Tehran to fill part of its TANAP gas pipeline running via Turkey to Europe.
Elham Hassanzadeh, Research Fellow at the Oxford Institute for Energy Studies, said Iran could become an important trade and diplomatic partner for Central Asia and the South Caucasus.
“It will certainly be an easier partner to trade with [than previously],” she told The Conway Bulletin in an interview.
“The cost of doing business with Iran will be significantly lower than that of during the sanctions era while less economic and political restrictions on a given country in the region could be translated into less antagonism and conflict and more collaboration and constructive dialogue.”
She said, though, that energy would be at the forefront of relations. “A good number of Azeri and Turkmen companies are planning to invest in Iran’s oil and gas sector,” Ms Hassanzadeh said.
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(News report from Issue No. 264, published on Jan. 22 2016)
JAN. 15 2016 (The Conway Bulletin) – Total remittances to Georgia fell by 25% in 2015 to $1.08b, mainly because of a sharp slowdown in the Russian economy, the Central Bank said. Remittances from Russia fell by 39% to $433m and from Greece (Georgia’s second largest remittance originator) by 42.5% to $118m. A slowdown in Russia’s economy has rippled out across the former Soviet Union.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 264, published on Jan. 22 2016)
JAN. 15 2016 (The Conway Bulletin) – China has lifted administrative barriers that had restricted Kazakhstan’s grain exports to its neighbour, Kazakh first deputy PM Bakytzhan Sagintayev told media. He said that the lifting of the various barriers would make it far easier for Kazakhstan to sell grain to China. Grain has become, over the past decade, an important export commodity for Kazakhstan.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 264, published on Jan. 22 2016)
ALMATY, JAN. 18 2016, (The Conway Bulletin) — Kazakhstan’s national airline Air Astana reported a 21% drop in revenues in 2015, a sign that the economic downturn is hurting state- owned companies.
Air Astana was not explicit about exactly what triggered the sharp drop in revenue. In a press release, Air Astana CEO Peter Foster said: “A sharp fall in revenue was more than compensated for by significant cost savings, including, though not limited to, jet fuel savings.”
Revenue in 2015 dropped to $738m. Net profit rose to $47.4m from $19.5m.
An Air Astana spokesperson told The Bulletin that more explanation on why revenues had fallen so sharply would be given in a full year report to be published over the next few weeks.
The suspicion is that the depreciation of the tenge has hit Air Astana hard. Its income is mainly in tenge and its costs in US dollars or euros. The tenge has lost 50% of its value over the past five months.
Air Astana is supposed to lease 7 aircraft from Netherlands-based AerCap, a deal priced in euros. The fall in the tenge makes the deal expensive.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 264, published on Jan. 22 2016)
