SEPT. 21 2015 (The Conway Bulletin) – Gold production in Azerbaijan increased by 30% between Jan.- Aug. this year to 1.5 tonnes, media reported quoting government data. Gold is not a major contributor to Azerbaijan’s earnings, which is dominated by oil and gas, but it is growing in importance.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 249, published on Sept. 25 2015)
SEPT. 21 2015, BISHKEK (The Conway Bulletin) — When the US military quit its airbase outside Bishkek in July 2014, ambitious officials dreamt of turning Manas airport in a Central Asian transport hub that would connect Europe and South-East Asia.
A year on and this dream is still very much that. There have been no major investments.
In an interview with the Bulletin at his office in central Bishkek, Nursultan Belekov, the 24-year-old deputy head of Manas Airport’s investment department, explained his frustration.
“We have worked hard to attract Russian, Turkish and Chinese partners, but no one has contributed yet,” he said.
Earlier this year Rosneft rowed back on an earlier promise to invest in the airport, perhaps making Manas a victim of a sharp economic downturn hitting the region.
Mr Belekov, who is standing for parliament in October’s election, had a different spin on Rosneft’s pull out from Manas.
“They offered to invest $1b dollars, but we were needed to refuse because Manas airport is a strategic object for Kyrgyzstan’s independence, and a 51% stake cannot go to a foreign company,” he said. Manas needs around $1.2b investment.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 249, published on Sept. 25 2015)
SEPT. 25 2015 (The Conway Bulletin) – The Georgian Central Bank is one of the more open central banks in the region. It holds scheduled meeting and posts reasonably detailed explanations on its monetary policy decisions.
In short it can give people interested in Central Asia and the South Caucasus something of an insider’s view of things. This makes its statement on Sept. 23 that accompanied an interest rate rise all the more important.
And the Georgian Central Bank was blunt in its assessment of the problems facing the wider region.
“Real GDP growth in the second quarter was consistent with the forecasts,” it said. “The factor hindering growth is the external sector, which, given the dire economic situation in the region negatively affects export of goods and services.”
Of course the Georgian Central Bank was talking about poor GDP growth in Georgia but the more important word in this statement for the wider region was “dire”. The Georgian Central Bank had said what other government economists from Tajikistan to Kazakhstan to Azerbaijan and Armenia have been thinking but shying away from saying. The prospects for their economies, with inflation rising and the values of their currencies falling, is dire.
Of course there are differences between the various regional economies – Kazakhstan and Azerbaijan are heavily dependent on oil and gas sales, for example, while Georgia isn’t – but many of the pressures are shared ones and if one Central Bank, in this case the Georgian one, starts describing the situation as “dire” it is important to listen.
By James Kilner, Editor, The Conway Bulletin
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 249, published on Sept. 25 2015)
SEPT. 18 2015 (The Conway Bulletin) – Agricultural projects outnumbered any other sector for applications to a $1b Russian-Kyrgyz development fund for small and medium enterprises in Kyrgyzstan. The data highlights Kyrgyzstan’s predominantly agricultural economy.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 249, published on Sept. 25 2015)
SEPT. 23 2015, TBILISI (The Conway Bulletin) — Georgia’s Central Bank raised its key interest rate for the fifth time this year to dampen accelerating inflation.
At 7%, Georgia’s interest rate is at its highest level since December 2011. At the start of this year, Georgia’s key interest rate measured 4%.
“The monetary policy decision is based on the macroeconomic forecast, which indicates a sharp increase in the inflation expectations given the Lari depreciation against the US dollar, which raises the future risks as a result of a one-time deviation from the inflation target,” The Georgian Central Bank said in a statement.
Georgia’s lari currency has lost 37% of its value over the past year, much like other currencies in the region, and the Central Bank said that this had been a key driver for inflation which now measured around 5.4%, moving towards the top of its 5-6% target range.
It also said that the economic situation in the region was “dire” and that demand would stay weak.
“Domestic demand is also weak, as a result of both the decline in remittances and the increase in the service burden of foreign currency denominated loans,” the Bank said.
On the streets of Tbilisi, though, the economic pain was evident.
“I get my salary in lari, but I pay my mortgage in dollar. Instead of 800 we now have to pay 1200 Lari. How are we supposed to buy food?” said university administrator Anita, 37.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 249, published on Sept. 25 2015)
SEPT. 22 2015, TBILISI (The Conway Bulletin) — Pushing their personal differences aside, Georgia’s Central Bank chief Giorgi Kadagidze and the PM Irakli Garibashvili held a rare head-to-head meeting to discuss the increasingly poor state of the Georgian economy.
A collapse in global energy prices and a sharp fall in the performance of Russia have pressured regional economies this year but a breakdown in relations between the Central Bank and the PM’s office has also been a feature of the year in Georgia.
The Central Bank’s press office declined to confirm if this was the first time Mr Garibashvili, the PM, had visited Mr Kadagidze in 2015 but analysts said it was a rare occasion.
“It was significant, as they discussed the currency,” said Tamar Jugheli, research director at the Policy and Management Consulting Research Center. She said a management change in one of the main departments at the Central Bank had improved relations. Mr Garibashvili has criticised Mr Kadagidze over monetary policy. He also stripped the Central Bank of its power to oversee commercial banks.
Like many issues in Georgia, politics is at the heart. Mr Kadagidze was appointed by the previous government of former president Mikheil Saakashvili, irritating the current government.
Still with Georgia’s currency dropping to an all-time low and with inflation rising fast, Mr Kadagidze and Mr Garibashvili had to act. After the meeting the Bank bought $40m worth of lari and then, the following day, it increased interest rates.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 249, published on Sept. 25 2015)
SEPT. 18 2015 (The Conway Bulletin) — Have the Kazakh tenge and the Kyrgyz som reached rock bottom yet? This week, the tenge in Kazakhstan suffered another strong fall (-4.4%). The cost of $1 even rose above the psychological rate of 300 tenge on Sept. 16, only to settle back down to around 270 by the end of the week.
The Kyrgyz som also hit a historical high of 70/$1 on Wednesday.
And this despite repeated interventions from both Central Banks, which bought hundreds of millions of dollars in the currency market to support the tenge and som.
At the end of last week, the announcement that Dariga Nazarbayeva, the eldest daughter of Kazakh president Nursultan Nazarbayev, had been appointed as deputy PM sparked a late round of trade in the dollar market, weakening the tenge. Was this the market saying that they were worried about her promotion? Some analysts said that President Nazarbayev may be grooming her to take over the top job.
The som is struggling because the Russian economy isn’t recovering and the upcoming parliamentary elections in Kyrgyzstan are upset- ting the market.
In Georgia, the lari lost 2.4%, probably linked to general Emerging Markets weakness.
The Fed hasn’t ruled out the possibility of increasing rates by the end of the year. Such a decision would divert US dollars back to the US economy, away from Emerging Markets. The faltering economies in Central Asia and the South Caucasus need to prepare themselves for the worst.
Tightly-managed currencies in Azerbaijan, Tajikistan, Turkmenistan and Uzbekistan remained vir- tually unchanged this week. To maintain the exchange rates constant, central bankers in these countries had to heavily intervene in the currency markets.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 248, published on Sept. 18 2015)
SEPT. 15 2015 (The Conway Bulletin) – The Kazakh government said it would subsidise industrial companies that needed to increase salaries to match rising inflation and the falling value of the tenge. The Kazakh government has struggled to manage the economy during difficult economic times.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 248, published on Sept. 18 2015)
SEPT. 14 2015 (The Conway Bulletin) – Russia has doubled cheese imports from Armenia this year, media quoted the head of Russia’s statistics agency, Konstantin Laikam, as saying. Shops in Moscow and elsewhere in Russia have had to diversify their supplier base for cheese and other products to beat EU sanctions.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 248, published on Sept. 18 2015)
SEPT. 16 2015, BISHKEK (The Conway Bulletin) — Kyrgyzstan’s som dropped to its lowest level against the US dollar since independence, forcing the Central Bank to step in to brake its fall.
At exchange kiosks in Bishkek, the som traded at 72/$1 before recovering to around 69/$1 after the Central Bank’s intervention. Still, the fall in the som, now down 13% in the past month, has pushed up inflation and worried people.
“Food is getting more expensive, it definitely reflects on the family budget,” a 52-year-old man who declined to be named said as he left a supermarket in central Bishkek.
When the Kyrgyz government pushed the country into the Russia- led Eurasian Economic Union last month it said food prices would fall.
Emil Umetaliev, a Bishkek-based analyst, said this promise has been shown to be empty. “How can they be cheaper if in Russia they are getting more expensive because of an internal crisis?” he said.
To stop the slide, the Central Bank bought $18m worth of som but a source at the Bank told the Bulletin officials were anxious.
“The Bank made intervention but it did not particularly affect such a fast growth of dollar,” she said.
ENDS
Copyright ©The Conway Bulletin — all rights reserved
(News report from Issue No. 248, published on Sept. 18 2015)
