DEC. 1 2015 (The Conway Bulletin) – Toronto-listed Lydian International said it had secured the $325m finance needed to exploit a major gold deposit in Armenia. The deposit at Amulsar could transform Armenia’s economy.
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(News report from Issue No. 259, published on Dec. 4 2015)
DEC. 3 2015 (The Conway Bulletin) – The World Bank predicted that Kazakhstan’s economy would grow at its slowest rate since the mid-1990s, four days after President Nursultan Nazarbayev tried to shrug off the worsening economic outlook by telling listeners during a state-of-the- nation speech that they have never had it so good.
Throughout the year economists at the World Bank have been down- grading growth rates in Kazakhstan but a new lower GDP growth estimate of 0.9% this year, smaller than growth rates in the 2008/9 global financial crisis, still came as a shock.
And worse was to follow. The World Bank said GDP growth would measure only 1.1% in 2016.
“The uncertain external outlook will dampen private investment, while the pass-through effect of the tenge depreciation will reduce house- hold consumption and public consumption will remain modest due to the ongoing fiscal adjustment.” the World Bank said in its report.
From 2017, the economic outlook would improve mainly thanks to the giant Kashagan oil field coming on- stream. But the warning signs are there.
If the World Bank’s outlook comes through, it’ll be the first time for over 20 years that growth in Kazakhstan has been so low for two consecutive years.
Three days earlier Mr Nazarbayev had tried to rally his countrymen in a televised state-of-the-nation speech that was filled with talk about toughing out the economic malaise.
He blamed factors outside his control for the economic downturn and then told his audience that they have never lived in such a prosperous period.
“Never before have our people lived as well as they do now,” he said. “We have achieved a lot.”
And Mr Nazarbayev needs to put a brave face on things. Inflation has jumped to around 10% and the value of the tenge currency has halved in the past 18 months.
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(News report from Issue No. 259, published on Dec. 4 2015)
NOV. 28 2015 (The Conway Bulletin) – Georgia’s parliament approved an increase of 96m lari ($40m) in next year’s budget to improve healthcare. The extra cash will be used by the ministry of health to bring in its universal healthcare programme. Introducing universal healthcare is a key policy of the ruling Georgian Dream coalition.
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(News report from Issue No. 259, published on Dec. 4 2015)
NOV. 23 2015 (The Conway Bulletin) – In a move designed to help oil exporters, the Kazakh government said it would cut export duty on a tonne of oil to $40 from $60. Some exporters in Kazakhstan have simply stopped production until either oil prices improved or taxes were cut.
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(News report from Issue No. 258, published on Nov. 27 2015)
NOV. 25 2015 (The Conway Bulletin) – Azerbaijan’s president Ilham Aliyev appeared to be preparing his country for a prolonged economic slump when he ordered the government to triple the amount of debt that it could take on.
He also told the Central Bank that it had to increase the amount of capital that it holds to 500m manat ($478m) up from 10m manat.
Both orders appear to be designed to preempt a sustained economic slowdown. The increase in the amount of debt that the Azerbaijani government can accrue to 4.5b manat and the rise in the Central Bank’s working capital should soften the impact of oil prices staying low.
Like the rest of the region Azerbaijan is trying to cope with a collapse in oil prices.
The price of a barrel of oil has more than halved in the past year. For Azerbaijan, whose economy is reliant on oil sales, the impact has been heavy. It has cut its budget and dropped various infrastructure projects to save cash.
Last week a fire at an internet data centre knocked Azerbaijan off the World Wide Web, highlighting just how fragile and investment-needy some of Azerbaijan’s infrastructure it.
In June, the IMF said Azerbaijan’s economy would grow by only 1.8% this year, a sharp fall from the rapid growth of a few years ago. It also said there would be sluggish growth until 2020. Mr Aliyev’s orders appear to confirm this view.
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(News report from Issue No. 258, published on Nov. 27 2015)
NOV. 23 2015 (The Conway Bulletin) – Incompetent local administrations have delayed the Kazakh government’s centrepiece $9b Nurly Zhol infrastructure investment policy, Yerbolat Dossayev, Kazakhstan’s minister of economy, said. Nurly Zhol, which means bright path, was announced last year and was supposed to transform the Kazakh economy. It has failed to have an impact.
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(News report from Issue No. 258, published on Nov. 27 2015)
NOV. 20 2015 (The Conway Bulletin) – The IMF applauded Kazakhstan’s plans to sell off chunks of up to 50% in 43 high profile state-owned companies.
In a report, the IMF also said that ditching the tenge’s peg to the US dollar in August will push up inflation in the short term.
“The decision to float the exchange rate in August, followed by the introduction of a new policy interest rate (base rate) as the new monetary policy anchor in September, set in motion the process of modernizing the monetary policy framework,” the IMF said in its report.
Under pressure from depressed oil prices and a fall in the value of the rouble, the Kazakh Central Bank dropped its peg to the US dollar in August. The tenge plunged in value.
Strapped for cash, the Kazakh government said earlier this month that it wanted to sell off chunks of its biggest companies to private investors. The plan received a qualified endorsement from the IMF.
“We welcome these initiatives and the authorities’ objective of implementing the privatisation program competitively and in a way that ensures genuine private ownership and control,” it said.
The issue for investors is which stock market the government lists the shares on.
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(News report from Issue No. 258, published on Nov. 27 2015)
NOV. 26 2015 (The Conway Bulletin) – Tajikistan debt-to-GDP ratio will rise to 30% by the end of the year from 22.5% at the start of the year, media quoted various analysts as saying. Tajikistan’s growing debt ratio highlights the impact of the economic downturn on the economies of Central Asia and the South Caucasus. Tajikistan’s remittances from Russia have fallen 40% this year.
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(News report from Issue No. 258, published on Nov. 27 2015)
NOV. 20 2015 (The Conway Bulletin) – A report by the UN’s International Labour Office (ILO) said the use of child labour to pick cotton in Uzbekistan has reduced although it hasn’t been totally eradicated.
The ILO’s findings are important because Uzbekistan has come under growing criticism for its use of children, medical staff and teachers for picking cotton. Cotton is one of Uzbekistan’s biggest exports, although many Western companies have stopped buying Uzbek cotton.
“The use of children in the cotton harvest has become rare and sporadic,” the ILO said in its report. “Authorities have taken a range of measures to reduce the incidence of child labour and make it socially unacceptable.”
It said that a campaign to stop teachers and medics being used to pick cotton has been less successful.
Activists rank Uzbekistan as one of the worst countries in the world for upholding human rights.
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(News report from Issue No. 258, published on Nov. 27 2015)
NOV. 24 2015 (The Conway Bulletin) — The share of foreign currency-denominated deposits in Kazakhstan increased from 55.5% in January 2015 to 65.9% at the end of October, according to Central Bank chief Daniyar Akishev.
The devaluation of the tenge vis-à- vis the US dollar motivated people to keep their savings in US dollars to preserve the value.
One ofMr Akishev’s main tasks is to restore confidence in the tenge, after the currency lost 40% of its value over the summer. The 65.9% mark will beMr Akishev’s starting point, the ratio when he took office after his predecessor Kairat Kelimbetov was sacked on Nov. 2. New regulations restricting mortgage loans in foreign currencies might help reduce dollarisation, but a new wave of non-performing loans will soon hit the banking sector. A painful reminder of the 2008/9 financial crisis.
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(News report from Issue No. 258, published on Nov. 27 2015)
