Tag Archives: economy

SP to exclude Kashagan from Kazakhstan’s economic forecasts

ALMATY, OCT. 20 2015 (The Conway Bulletin) — Ratings agency Standard & Poor’s said it would exclude Kashagan, Kazakhstan’s biggest oil field, from its Kazakh economic forecasts because its start-up date was unclear.

The news is a setback for NCOC, the consortium developing the Caspian sea field, which includes Eni, Shell, ExxonMobil, Total, CNPC, Inpex and Kazakhstan’s state-owned company Kazmunaigas.

Karen Vartapetov, S&P’s associate director, explained.

“The project has been repeatedly delayed. We are no longer taking this oilfield into account in the rating procedures,” she said.

Operations at Kashagan begun, briefly, in September 2013, eight years behind schedule. Two weeks later a leaky pipe was discovered and operations were stopped.

The delay has been costly for NCOC, adding an estimated $4b to the current $50b cost of the project.

The Kazakh government and NCOC say commercial production at

Kashagan will resume in the second half of 2016. S&P has forecast a start date no earlier than 2018.

Rich with oil and gas reserves, Kashagan was poised to become the gem of Kazakhstan’s resource-based economy. But technical problems and low oil prices have meant this glittering prize has been delayed.

Over the past few years, international oil companies have quit the project. Now S&P’s decision not to include it in Kazakh econ forecasts further undermines its status .

ENDS

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

Kyrgyz electricity prices rise

OCT. 21 2015 (The Conway Bulletin) – Nurbek Elbayev, director of the Kyrgyz energy regulatory agency, said electricity tariffs will rise sharply over the next two years. The regulator will impose a 21% increase in August 2016 and a 29% rise in 2017. Electricity prices have risen across the region, triggering civil unrest.

ENDS

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

Turkmen President presents 2016 budget

OCT. 16 2015 (The Conway Bulletin) – Turkmen President Kurbanguly Berdymukhamedov confirmed that the government will increase by 10% all salaries for state employees from next year.

In an official announcement in the state’s Neutral Turkmenistan newspaper, Mr Berdymukhamedov presented his budget for 2016.

“The State budget was drafted with consideration of the Decree on the President of Turkmenistan on a 10% increase in wages, pensions, state benefits and scholarships on January 1, 2016,” Neutral Turkmenistan reported.

Turkmenistan devalued its manat currency by 20% on Jan. 1 this year, hitting people’s real wages. Earlier this year Mr Berdymukhamedov said that he would go some way towards compensating people by raising government salaries but there had previously been no official confirmation of how or when this would happen.

And in a budget clearly designed to ward off a drop in economic growth linked to low energy prices, Mr Berdymukhamedov said he would fund the salary rise by selling off some state assets.

“The revenues of the State budget are to be replenished through the privatisation of state-run objects and enterprises and dwelling houses from the state housing stock and the distribution of the bonds of the state fund,” Neutral Turkmenistan said.

ENDS

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

Currency: Kazakh tenge, Georgian lari

OCT. 23 2015 (The Conway Bulletin) — Despite all the reassuring declarations coming from Astana and the Central Bank in Almaty, volatility will be a constant for the Kazakh currency over the next months. There is just no getting away from it.

On Wednesday, Kairat Kelimbetov, Kazakhstan’s Central Bank chief, said 277.5 tenge/ $1 is an acceptable rate as long as oil prices float around $50 per barrel. Already on Friday, Brent prices fell to $48 and the tenge followed to 278.2. Over the past fortnight it has lost 1.5% against the US dollar.

Other currencies fared better this week, maintaining their value. The Georgian lari was steady at 2.39/$1 and even the Kyrgyz som had a calm week below 69/$1.

Rumours of devaluation are more worrisome in Uzbekistan, where the sum is officially stable at around 2,663/$1, but the website dollaruz.com said informal rates on the Black Market are hitting over 5,700 sum/$1.

ENDS

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

Armenia’s foreign trade slows

OCT. 20 2015 (The Conway Bulletin) – Armenia’s foreign trade turnover dropped 20% in the first eight months of the year, its national statistics office said. The data is more evidence of the economic slowdown that has hit the South Caucasus over the past year.

ENDS

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

Economic crisis worse than 2008/9, says Kazakh President

OCT. 19 2015, ASTANA (The Conway Bulletin) — In a rare candid assessment of the economic storm battering Central Asia and the South Caucasus, Kazakh President Nursultan Nazarbayev said the outlook for Kazakhstan’s economy was now worse than it had been during the 2007-9 Global Financial Crisis.

Mr Nazarbayev’s comments, made during a meeting with Kazakh PM Karim Massimov and published on the Presidential website, were the most candid so far by one of the region’s leaders.

And any comparison with the dark days of 2007-9, when the economies of Kazakhstan and its neighbours reversed nearly a decade of sharp growth, will hit a nerve.

“Our people must know the current situation, profits at businesses are dropping, income is falling and there is the possibility of job losses,” he said.

“This is a real crisis — more powerful than in 2007-2009.”

In 2006, according to World Bank data, Kazakhstan had been powering along and enjoying GDP growth of over 10%.

This dipped to 9% in 2007 before falling in 2008 to around 3% and in 2009 to just over 1%.

Consumers and mortgage holders defaulted on debt repayments in 2008-9 and Kazakhstan’s government had to buy up bankrupt banks. Although the Kazakh economy has recovered, the experience left deep financial and psychological scars.

And the crash this time has been just as sudden as the 2007-9 Global Financial Crisis.

In 2007-9, sub-prime mortgages in the US started the rout. This time, a sudden fall in oil and commodity prices and a loss of confidence in Emerging Markets, including in China, have been the triggers.

Currencies across Central Asia and the South Caucasus have fallen by around 40%, inflation is rising and trade volumes falling.

Kazakhstan has built up cash reserves from oil and gas sales but Mr Nazarbayev said that, although social programmes would be supported, businesses would not be bailed out.

“Companies should not expect the State to give them the means to survive. This will not happen,” he said.

Other leaders across Central Asia and the South Caucasus may not have been as forthright as Mr Nazarbayev on the economic outlook but they are facing the same stormy conditions.

ENDS

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

Kazakh labour figures down

OCT. 19 2015 (The Conway Bulletin) – Over 11,000 people lost their jobs in Kazakhstan in the first nine months of the year, the ministry of social development said. The ministry monitors only a sample of private businesses, so the total numbers could be larger, according to Radio Free Europe. A chart produced by the Economist Intelligence Unit showed that the overall size of the Kazakh labour force is shrinking.

ENDS

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

S&P drops Kazakh Kashagan

OCT. 20 2015 (The Conway Bulletin) – International ratings agency Standard & Poor’s said it will stop including the Kashagan oil field in its economic forecasts for Kazakhstan because of continuous delays in production.

ENDS

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

Azerbaijan considers 2nd devaluation

OCT. 13 2015 (The Conway Bulletin) – Azerbaijan is considering following Kazakhstan and allowing its manat currency to float free, the head of the Central Bank Elman Rustamov said to media, effectively warning of a another devaluation. Azerbaijan devalued its currency by 33% in February but has still had to spend billions defending its value since then.

ENDS

(News report from Issue No. 253, published on Oct.16 2015)

Kazakhstan’s bail-out for savers to cost $420m

OCT. 7 2015, ALMATY (The Conway Bulletin) — A Kazakh government bail-out for hundreds of thousands of savers who hold tenge denominated deposits hit by a currency devaluation in August could cost the state around $420m, according to the Bulletin’s calculations.

The bail-out adds to the lengthening bill that the Kazakh state is having to foot to weather a worsening economic storm that has hit the Central Asia and South Caucasus region.

It has spent billions of dollars propping up its currency and also said that it will give handouts and tax breaks to key industries heavily effected by the economic downturn such as car-makers and smaller oil producers.

And in an effort to shore up support immediately after the devaluation on Aug. 20, President Nursultan Nazarbayev said savers would be compensated for losses incurred when the Central Bank ditched the tenge’s peg to the US dollar and allowed it to drop heavily.

Now, at a press conference in Almaty, Alexander Trentyev, director of the consumer protection department at the Central Bank, for the first time hinted at the bill that the government was facing.

“The compensation will cover the period August 18 2015 to September 30 2016. Over 1.7m accounts totalling around 250b tenge are eligible for the government aid,” media quoted him as saying.

The tenge is currently trading at around 275/$1, a drop of around 46% from its value of 188/$1 just before the devaluation on Aug. 20. This means that the 250b tenge in bank deposits will convert to 365b tenge and cost the government $420m in compensation. Of course, though, as analysts have said, the tenge could well drop further in value before Sept. 30.

But there is a flip-side for savers. Their accounts will be frozen for 13 months until Sept. 30 2016.

This measure appears to have been adopted to prevent customers from rushing to withdraw their savings and turning them into US dollars after they received compensation.

It will also keep a high level of tenge in the currency markets, a policy the Central Bank has said that it favours.

What the authorities are desperate to avoid during this period of economic turbulence is civil unrest. The bail-out of savers appears designed to ward this off.

ENDS

(News report from Issue No. 251, published on Oct. 9 2015)