NOV. 17 2015 (The Conway Bulletin) – Despite pledging to maintain oil and gas production this year, both have fallen in Azerbaijan. Oil production, vital for the economy, fell 2% to 35m tonnes in the first 10 months of the year, a government source told Reuters, and the national statistics office said gas production dropped 2.7% in same period.
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(News report from Issue No. 257, published on Nov. 20 2015)
NOV. 18 2015 (The Conway Bulletin) – Official media in Uzbekistan reported that President Islam Karimov has signed a resolution to begin a $16.6 investment programme running in 2016 and 2017. The main focus of the programme is to upgrade and modernise the country’s technology and energy sectors. Projects include part of a gas pipeline to China and the construction of both a petro-chemical plant and a thermal power station.
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(News report from Issue No. 257, published on Nov. 20 2015)
NOV. 16 2015 (The Conway Bulletin) – Georgia’s producer price index (PPI) rose by 8.3% in the year to the end of October, the national statistics agency said, indicating that inflation is built into Georgia’s economy. The biggest pressure on prices over this period was from a 10% jump in electricity prices.
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(News report from Issue No. 257, published on Nov. 20 2015)
NOV. 20 2015 (The Conway Bulletin) – Uzbekistan’s government will allocate 275b sums over the next 13 months or so to act as a safety-net for its four biggest banks to survive the region’s worsening economic depression.
The announcement of a credit line to state-owned Agrobank, the National Bank for Foreign Economic Activity, Microcredit Bank and Qishloq Qurilish Bank – is a another indicator that Uzbek policy makers have begun to recognise and react to the region’s worsening economic outlook. Last week, the Central Bank indicated that it was trying to gradually reduce the official value of its sum currency, in line with devaluations across Central Asia.
The banks’ safety-net, worth around $101m at the official exchange rate but unofficially worth around $45m at the Black Market rate, has been earmarked to support the banks’ liquidity, media reported. This effectively means it is a government slush fund created to bail out the banks.
The cash has been parcelled up, with 100b sums allocated to Agrobank, 75b sums to the National Bank for Foreign Economic Activity and 50b sums each for Microcredit Bank and Qishloq Qurilish Bank.
Earlier this month, the Fitch ratings agency said that Uzbek banks were generally stable.
“As internal capital generation at the state banks is moderate and lags growth, state banks are getting regular capital contributions from the government in order to comply with regulatory capital requirements,” Fitch said in its report on Nov. 11.
“Liquidity is comfortable due to solid buffers as well as potential state support.”
It also said that non-performing loans, considered those over 90 days late, were relatively low with 3% at Agrobank and 14% at Microcredit Bank.
Like the rest of the region, though, Uzbekistan has been struggling to cope with the sharp downturn in Central Asia’s economic health. This month the Uzbek government even started talking about selling off stakes in state-owned companies to increase capital and boost their knowledge- base.
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(News report from Issue No. 257, published on Nov. 20 2015)
NOV. 15 2015 (The Conway Bulletin) – A Turkmen opposition website reported that the Turkmen authorities have placed restrictions on foreign currency withdrawals. The website, chronotm.org, is well-regard. It said the Black Market rate for the Turkmen manat has dropped to between 4.20 and 4.50/$1 compared to $3.60/$1 a few days ago.
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(News report from Issue No. 257, published on Nov. 20 2015)
NOV. 20 2015 (The Conway Bulletin) — The Kazakh tenge was steady this week, trading at around 307.2/$1, off an all-time low against the US dollar of 311/$1 earlier in November.
There is still much speculation by analysts on just how monetary policy in Central Asia’s biggest economy is going to change under new Central Bank chief Daniyar Akishev. He said that inflation was too high and appeared to make this his priority.
With this in mind, expect another interest rate rise at the Central Bank’s policy meeting next month — if the policy wonks don’t cancel it again. There are, though, two urgent problems, it seems to me, with the Kazakh monetary policy. People don’t know what it is or whether it works.
The new key interest rate — overnight repo rates — was only introduced in September. It was raised in October to 16% from 12% and then ignored in November when the Central Bank cancelled its policy meeting at the last moment. Does this interest rate have any credibility? Does the market even care about it? It doesn’t appear to have had any effect so far.
And Mr Akishev appeared to acknowledge as much when he said that a fall in oil price would send the tenge tumbling further. Oil prices, outside the Kazakh Central Bank’s control, are the driver of tenge value and not its key interest rate.
In neighbouring Kyrgyzstan, the som currency did continue to set new records against the US dollar. It hit an all-time low on Friday of 72.5/$1 versus 71.9/$1 at the start of the week. On Oct 1, the som had been valued at 68.8/$1, meaning that it has lost over 5% of its value in the past seven weeks.
As the Bulletin reports in the main section of the newspaper, information coming out of Turkmenistan is that its manat currency has devalued and that the government has placed restrictions on the amount of cash people can withdraw from the banks. Earlier this month, The Bulletin also reported on the devaluation of the Uzbek soum.
Even staunchly controlled currencies are feeling the pressure, it seems.
And over in the South Caucasus, it is a similar story. Since its sharp 33% devaluation in February, the Azeri manat has been kept steady but analysts have increased chat of a need to devalue again.
Both the Armenian dram and the Georgian lari were steady through the week.
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(News report from Issue No. 257, published on Nov. 20 2015)
NOV. 18 2015 (The Conway Bulletin) — Canadian miner Centerra Gold said production and revenue at Kumtor, Kyrgyzstan’s largest gold mine, increased in the third quarter, countering continued low gold prices and giving the Kyrgyz economy a welcome boost.
Production grew to 3.2 tonnes of gold, up 9% from 2.9 tonnes in Q3 2014. This compared against relatively depressed gold prices meaning that Centerra’s revenues grew by 3%. Gold prices have fallen since the start of November by 6% to a six-year low of $34.37/gram.
In a statement on its website, Ian Atkinson, Centerra’s CEO, said: “Financially, the Company is in good shape with cash, cash equivalents and short-term investments of $537m or
$461m, net of debt, at September 30, 2015.”
Importantly for Kyrgyzstan, Centerra’s tax contributions also rose. In the first nine months of 2015, Centerra paid $98.7m, a 20% increase compared to 2014.
Centerra is the largest taxpayer in Kyrgyzstan. Output at the Kumtor gold mine makes up 10% of GDP.
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(News report from Issue No. 257, published on Nov. 20 2015)
NOV. 17 2015 (The Conway Bulletin) – Seemingly trying to defy logic, the Kazakh government said it wanted to double tax on petrol but that the price rise would not add to inflationary pressure in the economy.
The day after economy minister Yerbolat Dossayev said that he wanted to increase tax on petrol, the new head of the Kazakh Central Bank Daniyer Akishev also said inflation this year in Kazakhstan was likely to be above even the upper 8% estimate.
The tenge has almost halved in value since the Central Bank ditched its US dollar peg in August, forcing prices up across economy.
Shortly after the tenge lost its US dollar peg, the government also ditched it price control over petrol, allowing prices to increase to match the tenge devaluation.
And now Mr Dossayev has said that he wants tax on a tonne of petrol to rise to 10,500 tenge ($16.70) from 5,000 tenge ($34.10) which would equal, roughly, to an increase of around 5% for consumers.
Petrol prices have already risen around 25% this year and any further increase will be unpopular.
As for inflation in general, Mr Akishev, made Central Bank chief at the start of the month, said targeting inflation was now his highest priority.
“Our task now is to ensure stable inflation and get back to the range of 6-8% in 2016,” he said.
The problem for Kazakhstan is that with oil prices continuing to be suppressed, pressure builds on the tenge to fall further which means that inflationary pressure also builds.
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(News report from Issue No. 257, published on Nov. 20 2015)
NOV. 18 2015 (The Conway Bulletin) — Kazakhstan’s sovereign wealth fund Samruk Kazyna said that it would sell stakes in two of its power related companies, its nuclear agency Kazatomprom and its power holding company Samruk-Energo, within a year, part of a wide-scale IPO of state- owned companies.
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(News report from Issue No. 257, published on Nov. 20 2015)
NOV. 18 2015 (The Conway Bulletin) – Kazakhstan’s economy grew by only 1% in the first 10 months of the year, economy minister Yerbolat Dosayev told a government meeting, far below even the more pessimistic estimates of a year ago. Mr Dosayev said industry had contracted by 2.2%.
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(News report from Issue No. 257, published on Nov. 20 2015)
