MAY 31 2017 (The Bulletin) — Armenia’s Central Bank raised its inflation target for 2017 to 2.5% from 0.6%, a leading indicator that it feels the worst of an economic downturn has passed. Armenia has been struggling to deal with deflation over the past couple of years. Recent data showed the economy starting to grow. The government targets 3.2% growth.
ENDS
Copyright ©Central Asia & South Caucasus Bulletin — all rights reserved
(News report from Issue No. 331, published on June 5 2017)
MAY 30 2017 (The Bulletin) — A rise in remittances and exports has boosted Georgia’s economic growth, official data showed. It showed that Georgia’s GDP was 4.2% bigger in the first four months of this year compared to the same period in 2016. In the first four months of 2016, GDP grew by 2.8%. Remittance inflows and exports have increased.
ENDS
Copyright ©Central Asia & South Caucasus Bulletin — all rights reserved
(News report from Issue No. 331, published on June 5 2017)
MAY 30 2017 (The Bulletin) — Five more Azerbaijani banks are currently failing to meet their capitalisation requirements, Rufat Aslani, head of the Financial Markets Supervisory Authority told media, suggesting more weakness in the sector.
In May, Azerbaijan’s biggest bank, the International Bank of Azerbaijan, which is 80% owned by the government and has a market share of around 60%, said that it needed to restructure its debt to stave off bankruptcy.
Now, after a series of small banks merged or went bankrupt in 2016, it has emerged that five mid-sized banks are still under the special supervision of Azerbaijan’s Financial Market Supervisory Authority.
“Today, under our supervision, there are five banks, capitalisation programs of which should be completed by mid-2017,” media quoted Mr Aslani as saying at a banking conference in Baku.
Mr Aslani did not name the banks but the Business New Europe magazine named three of them as Unibank, AtaBank and DemirBank — all mid-sized banks. None of the banks responded to requests for comment. The EBRD owns a 25% stake in DemirBank and Dutch development finance company FMO owns a 10% stake.
The Central Bank has imposed increased capitalisation rules to strengthen the sector. A recession in Russia and a collapse in oil prices since 2014 have halved the value of the Azerbaijani manat and heavily dented the banking sector.
Analysts had warned that Azerbaijani banks have been too relaxed about lending.
The currency devaluation and poor economic conditions have triggered a surge in bad debt which Moody’s, the rating agency, said stood at 30% of the banking sector’s loan portfolio.
ENDS
Copyright ©Central Asia & South Caucasus Bulletin — all rights reserved
(News report from Issue No. 331, published on June 5 2017)
DUSHANBE, MAY 30 2017 (The Bulletin) — The IMF completed a mission to Tajikistan saying there had been progress over essential economic reform but more was needed before it could officially agree to a formal lending programme.
Tajikistan’s economy, and especially its banking sector, has been under increased pressure this year and it has asked for international help. The IMF has said that it will lend to Tajikistan but only if it implement various reforms first.
“The authorities indicated they wish to resume discussions on a possible IMF-supported program,” the IMF said in a statement.
“Concrete steps in key reform areas will need to be taken, building on the efforts already made by the Tajikistan authorities, to resume program negotiations.”
The IMF also said that Tajikistan needs to reform its creaking banking sector and create more jobs for its youthful population.
ENDS
Copyright ©Central Asia & South Caucasus Bulletin — all rights reserved
(News report from Issue No. 331, published on June 5 2017)
JUNE 5 2017 (The Bulletin) — In a week of little movement, it fell to the Kazakh tenge to, quite literally, fall – but only slightly. It fell 1.1% to trade at a shade above 314/$1, its lowest since mid-May.
The move was, probably, triggered by a downward shift in Brent oil prices. The price of Brent dropped to just above $50/barrel. This is still within the generally accepted trade corridor and the impact on oil-sensitive currencies around the world was limit. The surprise was that the Azerbaijani manat, already smashed by the near- collapse of its biggest bank, didn’t shift downwards.
Elsewhere, the Uzbek soum continued its slow and controlled depreciation, down 0.6%, and the Kyrgyz som fell 1.1% to 68.1/$1 – its lowest since the end of April.
ENDS
Copyright ©Central Asia & South Caucasus Bulletin — all rights reserved
(News report from Issue No. 331, published on June 5 2017)
MAY 24 2017 (The Conway Bulletin) — In an interview with the FT, Berik Beisengaliyev, managing director for asset optimisation at Kazakhstan’s sovereign wealth fund Samruk- Kazyna said that IPOs of both Air Astana and nuclear agency Kazatomprom could be shelved if market conditions were not right. Kazakhstan has been planning to list both companies in Astana and London in Q3 2018. It has been talking about listing a series of companies for several years but has consistently delayed this. The Kazakh government, through Samruk Kazyna, is 100% shareholder in Kazatomprom. It owns 51% of Air Astana, with BAE Systems owning the remaining 49%. These IPOs are an important test of Kazakhstan’s attractiveness to foreign investors.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 330, published on May 28 2017)
TRAIN 702TS/Kazakhstan, MAY 28 2017 (The Conway Bulletin) — The Kazakh oil executive, Serik, was clear enough. The economic problems in the system were hitting and hurting everybody and, importantly, it was much worse than the authorities were letting on.
“It took me a year to find a job. It shouldn’t take that long” he said. “I know people who are selling their property because they just can’t find work. They are selling and getting out, moving to Singapore or elsewhere.”
Through the window the Kazakh steppe rushed past. At this time of year, the clumps of long grass were only just beginning to turn an arid brown.
Serik took another sip of his beer. The bar on the train was full of men drinking beer, cheerfully, killing time before they could return to their berths and sleep. It’s a 13-hour journey from Astana to Almaty on the Spanish-built Talgo train.
Serik was heading to Almaty to meet up with old university class- mates from his time at the Kazakh State University. In an ordinary year, he said that he would fly to Almaty but this year he was looking to save money.
“The jobs have disappeared and inflation is eating people’s salaries. Not many people are happy at all,” he said. He popped another peanut into his mouth and took a long sip of his beer.
A collapse in oil prices from 2014 and a recession in Russia, Central Asia’s economic driver, forced Kazakhstan’s economy into a downward trajectory.
It is recovering now, but slowly. The tenge has halved in value, companies have laid off staff and prices are rising, faster than salaries.
Serik’s frustrations at the Kazakh economy, and his warning that things were worse than the government was prepared to let on, were repeated across Kazakhstan. In Astana, an engineer working on the government’s tech projects complained that his salary had been kept the same for years. As a subcontractor the engineer was not covered by government wage rises of around 20%, even though the cost of living had risen between 20% and 40%.
“It’s all about saving now,” he said. “As for foreign summer holidays, forget it.”
The rate of inflation given by the engineer was confirmed by several other people. It was far higher than the official inflation rate of 8%, down from 18% in the middle of 2016.
Later, in Almaty a Russian real estate dealer said that the market had pretty much flatlined. Very little was being sold or bought as prices were too unstable.
Last year, too, buyers had started to insist that he accept tenge for property deals, adding another level of instability.
“Things will get better,” he said. “But, right now, it doesn’t feel good at all.”
And there is more evidence of this on the streets of Almaty, the country’s commercial hub.
Like cavities fouling a row of perfect white teeth, empty shops displaying ‘to let’ signs scarred Almaty’s main shopping streets.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 330, published on May 28 2017)
MAY 28 2017 (The Conway Bulletin) — Uzbekistan’s Central Bank chief, Fayzulla Mullajanov, died on May 24. He was 67-years-old and was perhaps the world’s longest serving Central Bank chief, officially holding the position since independence from the Soviet Union in 1991.
According to media reports, Mullajanov had been suffering from a kidney disease for sometime. In 2013 Ferghana News even reported that Mullajanov had fallen into a coma. This was denied but it is doubtful that Mullajanov has exerted much influence over Uzbekistan’s monetary policy in the last few years — either because he hasn’t been well enough or he simply hasn’t been empowered.
Appointed by Islam Karimov to head the Central Bank, Mullajanov was your archetypal Soviet-style official, prepared to put on a brave face and carry through decisions made by others.
He didn’t make monetary policy but he was expected to sell it.
This was clear from a US embassy report from May 2009 published, later, by Wikileaks.
In the cable, the US ambassador to Uzbekistan at the time, Richard Norland, recounted a series of meetings he had with senior Uzbek officials during a trip to Tashkent by deputy assistant US trade representative Claudio Lilienfeld. Mullajanov featured in the dispatch but only towards the bottom.
“After listening to a half hour recitation of Uzbekistan’s economic success and successes in the banking sector, Lilienfeld remarked that a major disincentive for US businesses to invest in Uzbekistan is the difficulty with capital convertibility,” Norland wrote.
“Expressing surprise that convertibility could be an issue, Mullajanov responded that conversion is done by the commercial banks. He assured us that he would personally look into any convertibility problems if they are brought to his attention in writing.”
Nothing more was said of Mullajanov in the memo, but Norland’s exasperation towards the Uzbek Central Banker was tangible. Mullajanov had been rolled out to sell Uzbekistan as a serious economy to the visiting US delegation. The reality was, as everybody knew, Karimov called the shots.
Uzbekistan’s monetary policy is dominated by its currency and this is set by central government. Mullajanov, who had only ever worked at the Uzbek Central Bank, was the face of this policy but not the architect.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 330, published on May 28 2017)
MAY 28 2017 (The Conway Bulletin) — Most currencies in the Central Asia and South Caucasus region have had a reasonable start to the year, gaining as oil prices have been sustained and the Russian economy has stabilised.
The Tajik somoni, though, has not been one of these currencies. Instead, it has continued to slide and is now trading at around 8.82/$1, down 12% from the start of the year.
This is 85% down from the start of 2013.
Analysts have said that confidence in the somoni is low as the Central Bank looks to bail out various banks which have found themselves in trouble. Tajikistan’s banking sector has been teetering on the verge of collapse for some time, only staving off being wiped out by government bail outs.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 330, published on May 28 2017)
MAY 22 2017 (The Conway Bulletin) — In a new report, the World Bank said that it predicted economic growth in Kazakhstan of between 2% and 3% over the next three years. It said that GDP numbers showed improvements, despite the economic downturn, because of planned investments in the oil and gas sectors. The Kashagan and Tengizchevroil projects have both attracted major investments over the last few years which are coming through into Kazakh GDP growth now.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 330, published on May 28 2017)
