JAN. 8 2016 (The Conway Bulletin) – Revenues earned by the Kazakh national railway company were down by 12.6% in the 11 months to the end of November compared to the same period in 2014, the ranking.kz website reported. The website said that passenger numbers had dropped off, another sign of the tight grip that the current economic downturn has taken of Kazakhstan.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 263, published on Jan. 15 2016)
DEC. 21 2015 (The Conway Bulletin) – Azerbaijan’s Central Bank cut the manat from its US dollar peg just before Christmas, immediately triggering a 50% fall in its value.
This was, in effect, the second currency devaluation by Azerbaijan in 2015. The manat started 2016 trading at 1.56 /$1, 50% lower than it had been a year earlier.
Speaking a couple of days after the un-pegging of the manat, Azerbaijani president Ilham Aliyev said officials had had no choice but to effectively devalue the manat.
“The main reason for the change in the manat’s rate was a decline in oil price by three times. It means that the change was inevitable,” Reuters quoted him as saying.
This is a major climb down from an earlier position held by Mr Aliyev and the Central Bank. At the start of 2015 he told media that a devaluation was definitely not on the cards only to order a 33% cut in the value of the manat in Feb. 2015.
Since then , in the past 10 months, the Azerbaijani Central Bank has spent billions of dollars trying to defend the value of the manat despite analysts warning that a devaluation was needed. When Kazakhstan ditched its own peg to the US dollar in August, triggering a 40% drop in the value of the tenge, this second devaluation of the manat became an inevitability.
Azerbaijan has been particularly exposed to the drop in oil and gas prices — down to 11-year-lows. Oil and gas sales make up around 95% of its export revenue and 75% of total government revenues. To counter the sharp fall in prices, down by around 75% since July 2014, the Azerbaijani government has slashed spending on infrastructure and social projects.
Fitch, the ratings agency, said the devaluation was needed but that it would hurt the banking sector.
“The sharp exchange rate adjustment eases the oil shock’s fiscal impact by boosting the local-currency value of oil revenues and a floating currency should help stabilise reserves,” it said. “The devaluation will hurt the banking sector, which has large amounts of foreign- currency denominated loans.”
The government has imposed currency controls over foreign exchange transactions. It said that people wanting to exchange over $500 worth of manat now needed to present a formal ID.
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(News report from Issue No. 262, published on Jan. 8 2016)
JAN. 1 2016 (The Conway Bulletin) – Media in Kazakhstan reported that utility companies had increased water and electricity prices by up to 15%, more evidence of latent inflation in the Kazakh economy linked to a sharp drop in the value of the tenge. Analysts have said frustration is growing among ordinary people about price rises. Electricity price rises in particular are a sensitive issue across the S.Caucasus/C.Asia region.
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(News report from Issue No. 262, published on Jan. 8 2016)
DEC. 30 2015 (The Conway Bulletin) – China pays considerably less for the gas it bought from Turkmenistan between Jan. and Nov. 2015, compared to the same period in 2014, Chinese media reporting quoting official stats. China increased supplies from Turkmenistan by 13.8% during this period but still only paid $22.3b, 15% less than the total bill during the same period in 2014. Turkmenistan is largely reliant on China for its revenues although it is developing a gas route to India.
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(News report from Issue No. 262, published on Jan. 8 2016)
JAN. 6 2016, ALMATY (The Conway Bulletin) — Bread prices are beginning to rise in Kazakhstan after the government cut flour subsidies, people working in the bread-making sector told The Bulletin.
The Kazakh government ended its subsidies for flour on Jan. 1, a move it flagged up in November as part of an overhaul of government spending designed to counter an economic slowdown. It has defended dropping subsidies as fair because it means that
the money saved can be re-focused on benefits for poorer sections of society. Asylzhan Mamytbekov, minister for agriculture, has said that flour subsidies were costing the government 9b tenge a year ($26m).
But the impact of the subsidy cut on bread-makers is already being felt.
In Almaty, Yerbol Beisembayev was going about his business buying bread from factories and re-selling loaves to shops. He said that a couple of factories had already closed because the cut in flour subsidies had made them unprofitable.
“Now everything will depend on who will get the best price for the flour,” he said. “The government has allowed bread (prices) to free float, just like the tenge.”
In August, the Central Bank ditched the tenge’s peg to the US dollar. This sent the value of the tenge crashing by around 40%.
It appears that, for now, bread producers are preferring to soak up the extra cost of the flour rather than pass it on to consumers. Most shops selling bread in Almaty said there had been a small price rise of 5 tenge a loaf — roughly 8%. This below the doubling of prices that analysts had predicted once flour subsidies were cut.
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(News report from Issue No. 262, published on Jan. 8 2016)
JAN 5 2016 (The Conway Bulletin) – Annualised inflation in Kazakhstan hit 13.6% for the 12-months to the end of December, its highest rate for six years, the National Statistics Committee said. Inflation shot up in October after the tenge depreciated. In September, annualised inflation in Kazakhstan measured just 4.4%.
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(News report from Issue No. 262, published on Jan. 8 2016)
JAN. 5 2016 (The Conway Bulletin) – Georgia exported 39% less wine in 2015 than it did in 2014 because of a worsening recession in Russia and a protected civil war in Ukraine. In a press release, Georgia’s National Wine Agency said that wine exports to China had increased by 22% to 2.7m bottles but that sales to Russia had fallen by 51% to 18.3m bottles and to Ukraine by 56% to 3.4m bottles.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 262, published on Jan. 8 2016)
JAN 6 2016 (The Conway Bulletin) – The proportion of cash in banks in Kazakhstan held in foreign currencies rose to 77.5% in November from 76.4% a month earlier, media reported quoting the Central Bank, highlighting people’s lack of confidence in the national currency. It has been a long-held Central Bank policy to try to persuade people to keep their savings in tenge. The tenge, though, lost around half its value in 2015.
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(News report from Issue No. 262, published on Jan. 8 2016)
JAN. 6 2016 (The Conway Bulletin) – The Kyrgyz Central Bank sold $9.1m to prop up its ailing currency, media reported, its first intervention in 2016. Like the other countries of Central Asia, Kyrgyzstan has sold millions of dollars of its reserves to support its som. In December, media reported that it had intervened 17 times to prop it up.
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(News report from Issue No. 262, published on Jan. 8 2016)
DEC. 22 2015 (The Conway Bulletin) – Armenia’s Central Bank cut its key interest rate by one percentage point to 8.75%, its lowest level for 11 months, because of a slowdown in inflation. It said that annualised inflation for the 12-months to the end of November measured 0.6% compared to 1.3% a year earlier. Slow global economic growth and low commodity prices have stalled prices in Armenia.
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Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 262, published on Jan. 8 2016)
