JAN. 19 2016 (The Conway Bulletin) — Ratings agency Fitch downgraded Kazkommertsbank’s long-term credit to CCC from B- because of a fall in the value of the tenge. Fitch said: “The downgrade reflects a significant increase in the volume of problem (mostly foreign currency-denominated) exposures, primarily as a result of the tenge’s devaluation.”
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(News report from Issue No. 264, published on Jan. 22 2016)
JAN. 21 2016 (The Conway Bulletin) – The organisers of Azerbaijan’s first Formula 1 race, scheduled for June, denied that the current economic downturn has hit their plans to stage the event. They were responding to media reports that they were going to have to downgrade their plans after a 50% fall in the value of their manat currency over the past year.
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(News report from Issue No. 264, published on Jan. 22 2016)
JAN. 20 2016 (The Conway Bulletin) – Around 100 women covered in grey sheets marched in protest to Kazkommertsbank and Bank Center Credit to complain about how they treat mortgage holders, their second protest this month. The protesters said that they have struggled to pay their debts since the the tenge lost 50% of its value during a devaluation in August. The authorities in Kazakhstan fear economic problems will trigger social discontent.
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(News report from Issue No. 264, published on Jan. 22 2016)
JAN. 21 2016 (The Conway Bulletin) – Although not an energy producing country, Georgia is also suffering heavily from the continued low oil prices, PM Giorgi Kvirikashvili said during a speech at the Davos Economic Forum. He said that as an oil trading nation, investment linked to energy has dried up over the past year. Mr Kvirikashvili again said that the government was looking into a 0% tax scheme on reinvested profits.
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(News report from Issue No. 264, published on Jan. 22 2016)
JAN. 19 2016 (The Conway Bulletin) – Policemen in the city of Ferghana told the Uzbek language service of Radio Free Europe/Radio Liberty that they are not receiving their full salaries. The information stream from Uzbekistan is weak but evidence has been growing that prices are rising and shortages of good growing. The Uzbek government has not commented.
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(News report from Issue No. 264, published on Jan. 22 2016)
JAN. 14 2016 (The Conway Bulletin) – Kyrgyzstan’s economy grew at 3.5% in 2015 compared to 4% in 2014, the state statistics committee said. The statistics committee said that the main reason for the slowdown was an 8% drop in production at the Kumtor mine. Production slowed at Kumtor, which is owned by Toronto-listed Centerra Gold, when it enlarged the mine.
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(News report from Issue No. 263, published on Jan. 15 2016)
JAN. 12 2016, ALMATY (The Conway Bulletin) — Data from the Kazakh Central Bank showed that Foreign Direct Investment (FDI) into the country has collapsed to its lowest level for a decade.
In the first nine months of 2015, FDI into Kazakhstan measured $2.1b. Total FDI in 2014 was $8.3 and in 2010 was 10.4b.
The new data is yet more evidence of the sharp slowdown in the Kazakh economy, as well as the impact of the 50% fall in the value of the tenge.
Economists have forecast a slowdown in economic growth in Kazakhstan, expected to last into 2017 and 2018, linked to low oil prices and a recession in Russia.
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(News report from Issue No. 263, published on Jan. 15 2016)
JAN. 15 2016 (The Conway Bulletin) — In Azerbaijan, people took to the streets to protest against inflation and unemployment. The manat grew slightly to 1.58/$1, but what angers people most is the increase in prices, especially for imported goods.
In Kazakhstan, the tenge depreciated further to 366/$1, a 6% drop on the previous week. Many worry now that there could be no end to the downward spiral.
In Tajikistan, the somoni lost an additional 2% this week, trading at 7.38/$1. The currency slide in the country doesn’t seem to slow.
In Kyrgyzstan the Central Bank has kept the som stable at 75.9/$1 by intervening several times in the currency market. The Georgian Central Bank also protected the lari with a few interventions. In Azerbaijan and Turkmenistan, the governments imposed further restrictions on the trade of foreign currencies, by limiting licenses to banks, airports and, in Azerbaijan’s case, hotels.
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(News report from Issue No. 263, published on Jan. 15 2016)
JAN. 15 2016 (The Conway Bulletin) — Non-performing loans (NPLs) are a good barometer of a country’s economic health. A low proportion of NPLs means bank customers are in a stable financial position and able to pay back the capital they borrowed.
During economic crises and downturns, the proportion of NPLs is among the first factors, together with inflation in weaker economies, to surge, denting the banking sector’s ability to finance growth.
In Kazakhstan, NPLs shot up to 31-33% of overall lending in 2010/12, an upward trend that the government tried to address in 2013 and 2014, managing to bring the proportion back to around 10%. The positive development was, in fact, a statistical shortcut, as in Q2 2015 the government excluded BTA Bank and its toxic loan portfolio from the accounting.
The sudden depreciation of the tenge, linked to the Central Bank’s decision to abandon the peg to the US dollar in August, will put an increasing pressure on the quality of bank assets.
Now analysts expect figures to worsen.
In the first nine months of 2015, lending slowed significantly and the impact of the rapid fall of the tenge may well impact Q4.
What’s worrying analysts is the share of foreign currency loans, which has increased in the past months. With the depreciation of the tenge against the US dollar this means that they will be more expensive to service.
In Armenia, non-performing loans increased in November, from 1.6% to 1.8% of the total, but there is a worry that the drought in migrant workers remittances from abroad and the drop in demand for banking services may increase the figure further.
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(News report from Issue No. 263, published on Jan. 15 2016)
JAN. 13 2016 (The Conway Bulletin) – Armenia’s foreign trade dropped by 20% in the year to the end of November, the state’s statistics agency said. In particular, the data showed that imports into Armenia had dropped by 26% to just under $3b, showing the impact of the current economic downturn.
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(News report from Issue No. 263, published on Jan. 15 2016)
