Tag Archives: economy

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)

Georgia’s CAA to improve domestic aviation

OCT. 6 2015 (The Conway Bulletin) – Georgia’s Civil Aviation Authority (GCAA) presented a plan to develop four airstrips, a move that it hopes will help boost domestic air travel. The GCAA said it was looking for partners to develop the sites which is said would thrive off Georgia’s growing economy and status as a tourist destination.

ENDS

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

Currency: Kazakh tenge, Kyrgyz som

OCT. 2-8 2015 (The Conway Bulletin) — The Kazakh tenge lost 1.5% of its value over the past week, ending at 274/$1.

Much of this perceived strength appears to lie with the Central Bank’s little secret — intervention. Despite promising never to intervene in the currency again, the Kazakh Central Bank has spent another $367.5m this week propping up its currency.

Over the border in Kyrgyzstan, the som crept briefly over 69/$1 on Oct. 6, before settling back to 68.9 in a week that saw little of the violent fluctuations of previous episodes. The Kyrgyz Central Bank also intervened in the market, selling $10.2m.

No doubt the successful and peace- ful parliamentary elections would have played well to the steady currency markets. European vote monitors were certainly impressed and that is good for Kyrgyzstan’s image.

The Georgian lari was also stable last week at 2.40. Positive economic data and a substantial stability in foreign reserves reassured lari holders.

The Tajik somoni continued its gradual devaluation against the dollar. By marginally weakening every week, the somoni has lost 2.5% of its value against the dollar over the past month.

ENDS

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

Remittances to Kyrgyzstan drop

OCT. 8 2015 (The Conway Bulletin) – The Kyrgyz Central Bank said remittances from Russia fell by 27% in US dollar terms during the first eight months of this year compared to the same period last year. Cash flows from Russia increased by 18% in rouble terms, but a fall in the value of Russia’s currency against the US dollar meant that the real value fell.

ENDS

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

Tajik coal production rises

OCT. 6 2015 (The Conway Bulletin) – Coal production in Tajikistan grew by 27% in the first nine months of 2015 to 760,000 tonnes, compared to the same period last year, the government said. This is important both for export revenues and also in the run-up to winter when hydro-power slows and energy demand rises.

ENDS

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

Foreign currency deposits rise in Kazakhstan

OCT. 6 2015 (The Conway Bulletin) – The proportion of savings in Kazakhstan held in foreign currency measured 78% in August, according to the ranking.kz website, a sharp increase from a year earlier. Foreign currency deposits in August 2014 measured 60% of the total. Kazakh savers have gradually lost faith in their currency.

ENDS

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

Georgian inflation creeps up

OCT. 2 2015 (The Conway Bulletin) – Annualised inflation in Georgia in September measured 5.2%, the Georgia statistics service said, a small drop from August. The main driver of inflation has been a rise in the price of electricity, alcohol and cigarettes. Last month the Central Bank increased interest rates to try to beat rising inflation.

ENDS

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

Markets: Inflation and growth in Kazakhstan, Kyrgyzstan and Azerbaijan

OCT. 7 2015 (The Conway Bulletin) — Analysts in Kazakhstan have revised their inflation expectations down to 7.1% this year after official data showed that the consumer price index grew by only 1% in September.

Halyk Finance researchers said the numbers are much more encouraging than what they forecasted. This should keep inflation within the Central Bank target of 6-8%. Central Bank chairman Kairat Kelimbetov said he doesn’t rule out the possibility of a further increase in interest rates, after a new rate was set at the end of last week.

The Eurasian Development Bank (EDB) said in a report that Kyrgyzstan’s economy is poised to grow by 1.8% this year. This came after PM Temir Sariyev disclosed more optimistic numbers, pointing out that in Jan.- Sept. 2015, the country’s economy grew by 6%. The EDB said it expects a marginal slowdown in economic activity in Q4 2015.

The IMF has dramatically increased its forecast for Azerbaijan’s growth in 2015, from a meagre 0.6% in April to 4% in its latest report.

The international lender also revised inflation expectations downwards from 7.9% to 5% for 2015, more good news.

ENDS

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

Kazakh Central Bank receives more pressure

OCT. 6 2015 (The Conway Bulletin) – Piling more pressure on the Kazakh Central Bank, Vijay Mahadevan, CEO of steel maker ArcelorMittal Temirtau, said its decision to cut the tenge free from its US dollar peg in August was a good one but that it needed to devalue further. Mr Mahadevan said the tenge was overpriced against the rouble.

ENDS

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

Inflation in Kazakhstan begins to accelerate

OCT. 7 2015, ALMATY (The Conway Bulletin) — The Consumer price Index (CPI) in Kazakhstan grew by 1% in September, official data showed, matching analysts’ predictions of accelerating inflation after a devaluation of the tenge in August.

Analysts had forecasted higher price inflation for September after the Central Bank cut its peg to the US dollar on Aug. 20, triggering a sharp fall in its value.

Halyk Finance, part of one of Kazakhstan’s largest banks, said that a drop in government spending, tighter economic policies and wage cuts had acted as a brake on inflation but it still measured 4.8%.

It said that there were inflationary pressures in the Kazakh economy but that the weaker tenge was not going to have as big an impact as analysts had thought at first.

“We do not expect weaker tenge to have a considerable effect on food price growth. We revised our year- end inflationary expectations downward to 7.1% y-o-y,” analysts Askar Akhmedov and Nurfatima Jandarova wrote in the Halyk Finance report.

These sentiments will come as a relief to the Kazakh Central Bank which has been under fire this year for its handling of the economy. Last week it raised its key interest rate to 16% from 12% to help strengthen the tenge and also dampen inflation.

One of the main inflationary pressures comes from a sharp rise in the price of petrol after the Kazakh government abandoned controls on it last month.

The official data showed that petrol prices rose 14% last month.

ENDS

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