Tag Archives: economy

Business comment: IMF’s reforming zeal

OCT. 23 2015 (The Conway Bulletin) — The South Caucasus and Central Asia might be looking at a long term economic crisis, the IMF said, sending a chill down the spines of the region’s investors.

After the shock of the 2008/9 financial crisis, countries across the region picked up pace and restored the steady growth pattern they had witnessed in the early 2000s.

But the current crisis, which Kazakhstan’s President Nursultan Nazarbayev called worse than the 2008/9 financial crunch, could linger on for longer than expected because of its ripple effects on the Russian economy, the IMF said.

Lower oil prices have affected hydrocarbon exporters from the region – big and small, private and state. Several exploration and production projects have become unprofitable and revenues have lost value. The IMF forecast a break- even price of around $60/barrel or higher for both Azerbaijan and Kazakhstan. If oil prices are lower, debt will grow and reserves will shrink.

Tajikistan, Kyrgyzstan and Armenia, had been forecasted to be better off due to lower oil prices, but the fall in the rouble has reduced the value of their remittances and pressured currencies.

And the IMF had a message. Reform is the only option, it said.

“The long-lasting nature of the shocks means that deeper and more durable policy changes will be needed,” Juha Kähkönen, deputy director of the IMF in Almaty said.

ENDS

(News report from Issue No. 254, published on Oct. 30 2015)

Kazakhstan hoards gold

OCT. 26 2015 (The Conway Bulletin) – In September, Kazakhstan increased its gold reserves by 1.5% to around 213 tonnes. Kazakhstan has increased its gold holdings in each of the past 36 months. Gold prices hit a 5-year low in July but have recovered.

ENDS

(News report from Issue No. 254, published on Oct. 30 2015)

Kyrgyzstan keeps interest rates stable

OCT. 27 2015 (The Conway Bulletin) – The Kyrgyz Central Bank said after its monthly monetary policy meeting that it was keeping interest rates stable at 10% after pressure on the som currency eased in October. Last month, it raised rates by 2% to halt a slide in the value of the som. It lost 16% of its value in June-Sept.

ENDS

(News report from Issue No. 254, published on Oct. 30 2015)

Georgia plans to boost foreign investment

OCT. 29 2015 (The Conway Bulletin) – Georgian PM Irakli Garibashvili chaired the first session of Georgia’s Investors’ Council, a body that aims to bring local businesses and major international financial institutions together. Mr Garibashvili set up the Council in May. Foreign investment plays a significant role in Georgia’s economy. The government wants to stimulate the economy by giving potential investors a boost.

ENDS

(News report from Issue No. 254, published on Oct. 30 2015)

Azerbaijan’s Sofaz revenues drop

OCT. 26 2015 (The Conway Bulletin) -The value of Azerbaijan’s sovereign wealth fund Sofaz dropped by 6.4% to $34.7b between Jan 1 and Oct 1, it said, a decrease that highlights the impact of the fall in oil prices and collapse in the value of its manat currency. Sofaz earns revenues from oil and gas contracts.

ENDS

(News report from Issue No. 254, published on Oct. 30 2015)

Georgia Healthcare Group sets price range for London IPO

OCT. 25 2015, TBILISI (The Conway Bulletin) — Georgia Healthcare Group set a price range for shares at its IPO in London later this year of between 215p and 315p, an IPO that will give investors a rare chance to buy into the South Caucasus region.

This share price range gives Georgia Healthcare Group, the largest healthcare provider in Georgia, a value of between £257m – £347m ($400m – $535m).

Georgia Healthcare Group wants to raise $100m in the IPO to give two hospitals it owns in Tbilisi a makeover.

With economic conditions across the region slowing, various planned IPOs for companies from Central Asia and the South Caucasus have been cancelled or postponed.

Georgia Healthcare Group owns 42 hospitals in Georgia, giving it a 27% share of the hospital beds in the country. It used to be part of Bank of Georgia.

ENDS

(News report from Issue No. 254, published on Oct. 30 2015)

Industrial investment slows in Kazakhstan

OCT. 16 2015, ALMATY (The Conway Bulletin) — In an effort to cut spending, Kazakhstan appears to have reduced industrial investments by 23% in the first nine months of the year, the ranking.kz website reported, an indication of the worsening economic turmoil hitting the country.

In Jan.-Sept. 2015, the government invested 220.7b tenge ($797m) in fixed industrial assets, compared to 285b in the same period last year. The sharpest decline was to public utilities.

Last November, Kazakhstan’s President Nursultan Nazarbayev unveiled the Nurly Zhol (bright path), a $24b state programme designed to support industrial and infrastructure projects in the country.

The economic decline, triggered by the fall in oil prices and sanctions on Russia, has hit this ambitious target. Kazakhstan’s officials are beginning to talk more seriously about a prolonged economic decline.

ENDS

(News report from Issue No. 253, published on Oct. 23 2015)

Markets: Trade turnover among Eurasian Economic Union members falls

OCT. 15 2015 (The Conway Bulletin) — The Eurasian Economic Commission published the latest statistics on trade turnover among EEU countries. It made for interesting, if also distressing, reading.

Trade among Russia, Kazakhstan, Belarus, Armenia and Kyrgyzstan was down by a quarter in Jan.-Aug. 2015, compared to the same period last year.

By volume, Russia was the country that suffered the largest fall, amounting to over $4b. In terms of percentage, however, all other countries except for Kyrgyzstan fared worse — Kyrgyzstan acceded as a full member only in August, so its numbers could be misleading.

Curiously, Armenia increased trade turnover with non-EEU countries such as Uzbekistan and Turkmenistan by over 40%.

In the two periods analysed by the Commission, oil prices were significantly different. And this can be clearly seen in Kazakhstan’s statistics, which show a sharp fall in exports to Italy, China and Russia, its main trade partners by volume. In particular, the value of Kazakhstan’s exports were reduced by the double whammy of lower oil prices and the decrease in the value of the tenge after the government abandoned its peg to the US dollar.

It is undeniable that the rouble crisis and the fall in oil prices have affected the Eurasian region. And the EEU has been unabel to contain the spill-over effects on its members.

OCT. 23 2015 (The Conway Bulletin) —

ENDS

(News report from Issue No. 253, published on Oct. 23 2015)

Kyrgyzstan’s housing market slows

OCT. 20 2015, BISHKEK (The Conway Bulletin) — Kyrgyzstan’s real estate market has slowed, media reported quoting a land registry report, more evidence that the overall Kyrgyz economy is stalling.

Analysts from the department of land registry said that the number of house sales this year had dropped by around 42% and the market for apartments was down by 34%.

The official position was the housing market had cooled off because prices were simply too high but a construction company in Bishkek said that the real reason activity in the housing market had fallen was the drop in the value of the Kyrgyz som against the US dollar.

“Sanctions on Russian economy definitely affect the purchasing power of our citizens because the US dollar is the currency for real estate transactions,” a construction company manager who wanted to remain anonymous told the Bulletin.

Roughly in line with other currencies in the region, the som has lost around 33% of its value over the past 12 months and is now trading at around 69/$1.

ENDS

(News report from Issue No. 253, published on Oct. 23 2015)

Azerbaijan’s GDP growth falls

OCT. 20 2015 (The Conway Bulletin) – Azerbaijan’s government said its economy would grow by only 1.8% next year compared to 4.4% this year because of low oil prices and a drop in production. Parliament also approved a national budget for 2016 of 14.6b manat ($13.9b), down by 10.4% from last year.

ENDS

(News report from Issue No. 253, published on Oct. 23 2015)