Tag Archives: economy

Teachers in Kazakhstan to receive 50% pay rise

SEPT. 8 2015, ALMATY (The Conway Bulletin) — Kazakhstan’s government said that it would increase salaries for teachers by 20-50% depending on their qualifications, another indication that the devaluation of the tenge is spurring inflation.

Announcing the pay rise at a school in Astana, deputy PM Berdybek Saparbayev said that it showed the government cared about its workers. “We have very good news for our teachers,” media quoted him as saying. “Salaries will be increased from 20 to 50% starting from 2016.”

The Kazakh Central Bank has devalued the tenge twice since February 2014.

It is now worth around 40% less than it was before the first devaluation and economists have been warning that inflation will shoot up.

Companies have already been raising salaries and it was only a matter of time before the government put up pay for its thousands of employees.

Other key workers, such as doctors and nurses, have also been promised large tenge pay rises.

The problem for the Kazakh government is that with oil prices low and production declining, it may struggle to pay or all the rises.

ENDS

(News report from Issue No. 247, published on Sept. 11 2015)

Currency: Kyrgyz som, Kazakh tenge

SEPT. 11 2015 (The Conway Bulletin) — The Kazakh tenge and the Kyrgyz som dropped to record lows this week, as economies in Central Asia and the South Caucasus continued to show structural weaknesses.

By the end of Friday, the tenge traded at around 264/$1, down from 240/$1 at the start of the week. That’s a drop of 10%. The Kyrgyz som fared slightly better but still dropped through the 67/$1 barrier. A week earlier it had traded at around 65.5/$1.

Over the border in Tajikistan, the somoni held its own. This may have had something to do with a massive cash injection from China. It agreed to buy 3b yuan ($470m) worth of somoni in a so called currency swap deal. This is a thinly disguised mechanism to prop up the ailing somoni which has lost 17% of its value this year.

In the South Caucasus the currencies were broadly stable, although the Georgian lari lost some ground, falling to around 2.40/$1 compared with a price of around 2.36/$1 a week earlier.

ENDS

(News report from Issue No. 247, published on Sept. 11 2015)

Business comment: FDI in Kyrgyzstan

SEPT. 9/10 2015 (The Conway Bulletin) — Between January and July this year, Canada increased its flow of Foreign Direct Investment into Kyrgystan by 90 times.

For Canada, read Centerra Gold, the Toronto-listed company that is part-owned by the Kyrgyz government. It owns the Kumtor gold mine in the east of the country, Kyrgyzstan’s main economic driver.

And it seems that this investment and the subsequent 49% increase in gold exports has helped Kyrgyzstan to post GDP data in Jan. – Aug. 2015 that shows growth of 7% from the same period last year. If capital flows are encouraging, however, foreign trade has shrunk significantly. The volume of import-export fell by 15% in the first 7 months of 2015.

In 2015, the fall of the som currency has led to lower purchasing power for Kyrgyzstan, and the government recently announced that Kyrgyzstan will inevitably face inflation for the next few months.

But as long as foreign investors retain their confidence in Kyrgyzstan, the country will be able to defend itself from the growing regional economic crisis.

ENDS

(News report from Issue No. 247, published on Sept. 11 2015)

Azerbaijani C.Bank spent $1.2b in August defending manat

SEPT. 4 2015 (The Conway Bulletin) – Azerbaijan’s Central Bank spent nearly $1.2b defending the value of it manat currency in August despite devaluing it by a third earlier in the year.

With oil prices, the key driver of Azerbaijan’s economy, stubbornly hovering around 7-year lows, the data will add more pressure onto the currency and suggests that another devaluation may be possible. Across the Caspian Sea, oil-exporter Kazakhstan effectively devalued its currency for a second time last month after trying to defend it for over a year.

Reuters quoted a high-placed source at the Azerbaijani Central Bank as saying: “August 2015 was difficult from a financial point of view. The economies of large countries of the world declined and the price of oil also fell on world markets, which influenced the state of the manat.”

The Central Bank data showed that its reserves had fallen to $7.31b by the end of August from $8.5b at the end of July.

The South Caucasus and Central Asia region is trying to cope with a sharp decline in its economy. Suppressed oil prices and a recession in Russia have dragged down growth. Azerbaijan with its dependency on oil has suffered more than most.

The latest data means that the Azerbaijani Central Bank has spent 42% of its total reserves this year.

ENDS

(News report from Issue No. 247, published on Sept. 11 2015)

Azerbaijani oil exports to Russia rise

SEPT. 4 2015 (The Conway Bulletin) – SOCAR, the Azerbaijani state oil and gas company, said in the first 8 months of 2015 it shipped 930,671 tonnes of oil to Russia, up from 677,785 tonnes during the same period in 2014. Azerbaijan- Russia relations have improved over the past year as Azerbaijan’s relations with the West have faltered.

ENDS

(News report from Issue No. 247, published on Sept. 11 2015)

Turkmenistan to boost import duties

SEPT. 5 2015 (The Conway Bulletin) – Turkmen president Kurbanguly Berdymukhamedov has approved a bill that will increase customs duties on sausages, fruit, vegetable, softs drinks and fruit juice and come into force on Oct. 1. Mr Berdymukhamedov has said he wants a policy of import substitution.

ENDS

(News report from Issue No. 247, published on Sept. 11 2015)

Russia cuts gas price for Armenia

SEPT. 11 2015, YEREVAN (The Conway Bulletin) — Russian gas monopoly Gazprom agreed to cut the price of gas it sells to Armenia by 12%, giving the Armenian government much needed economic breathing space.

The economic turmoil blowing through the former Soviet region has hit Armenia hard. Its dram currency has lost around 20% of its value and its economy is stalling.

Inflation is also rising and protesters have become increasingly agitated about utility price increases. Earlier this year, thousands of people demonstrated against proposed electricity price rises, eventually forcing the government into a climb-down.

Now Gazprom, which owns 100% of Armenia’s gas network, appears to have taken pity on Armenia.

Shushan Sardaryan, a spokeswoman for Gazprom Armenia, said that the new price was set at $165, down from $189, for 1,000 cubic metres of gas.

“The current price of natural gas was based on an exchange rate of $1 equalling 416 Armenian drams,” she told reporters. “But the exchange rate significantly differs from this level and the fluctuations damaged the company.”

The dram is now hovering at around 480 against the US dollar.

Ms Sardaryan also made the point that although Russia had reduced the cost of its gas to Armenia, this price reduction would not be passed on to consumers.

Instead, the saving would be made by the government. Armenia has also floated the idea of pricing its gas in roubles, rather than US dollars, a move which would, in theory, protect it from price rises linked to the devaluation of its dram currency.

ENDS

(News report from Issue No. 247, published on Sept. 11 2015)

Turkmen elders discuss cuts

SEPT. 10 2015 (The Conway Bulletin) – Members of Turkmenistan’s Council of Elders, an advisory body chaired by President Kurbanguly Berdymukhamedov, have urged the government to charge people for using gas and water, media reported.

Free gas and water for people has been a cornerstone of society in Turkmenistan. Charging for it would be a major policy switch and may indicate that the economic turmoil that has has hit the region in the past year has had a heavy impact on Turkmenistan.

“Our people have, for many years, enjoyed unprecedented and unparalleled benefits, such as free water and gas. Given that today the standard of living has increased significantly, I believe it is time to abolish these benefits and introduce a fee,” official media quoted Gozel

Saparmyradova, a physics teacher and a member of the council, as saying.

She was backed up by Khudainazar Atageldiyev, described as a caterer.

“The new amendments to the Constitution will contribute to the development of the non-public sector of the economy,” he said.

Mr Berdymukhamedov was present at the meeting and had earlier delivered a speech in which he had showcased entrepreneurship in Turkmenistan. He didn’t mention the perilous state of the country’s economics nor charging for utilities.

But Mr Berdymukhamedov has previously used the Council of Elders to leak out policy changes and he may be considering charging for gas and water.

What impact this has on the population remains to be seen.

ENDS

(News report from Issue No. 247, published on Sept. 11 2015)

Markets: Central Bank reserves in Kazakhstan, Kyrgyzstan and Azerbaijan

SEPT. 9 2015 (The Conway Bulletin) — Perhaps the most important feature of news and data from the region’s money markets this week was details about the various Central Banks’ gold and currency reserves.

Kazakhstan’s Central Bank said it had increased its reserves in August to $29.1b. Kazakhstan has amassed reserves over the past 3 months after spending around $400m in April to contain the effects of the regional financial crisis.

In Kyrgyzstan, the Central Bank’s reserves hit $2b, according to the Central Bank, back up to the levels of August 2014.

In Baku it was another story. The Central Bank has been spending ferociously since it devalued its manat currency by a third in February. According to the state-linked Trend news agency, the Azerbaijani Central Bank spent 14% of its foreign currency reserves in August. In the last year, Azerbaijan has spent half its foreign currency reserves trying to defend the manat.

ENDS

(News report from Issue No. 247, published on Sept. 11 2015)

Fitch warns Azerbaijani banks they are increasingly vulnerable

SEPT. 9 2015 (The Conway Bulletin) — The Fitch ratings agency warned investors of the precarious state of Azerbaijan’s banking sector.

Authorities in Azerbaijan have put a brave face on the country’s shaky economic conditions but the Fitch report cut through the bluster.

“We believe capital positions at some banks are likely to come under significant pressure over the medium term from increasing credit losses,” Fitch said. “Capital cushions are only moderate in most cases, and internal capital generation is limited.”

Azerbaijan depends on oil and gas for over 90% of its exports, meaning that it haPs been particularly exposed to the collapse in oil and gas prices. GDP growth is slated at the relatively low 1.5%.

In February, the Central Bank devalued the manat currency by a third denting its credibility. Despite the devaluation, fresh data has shown that the Central Bank has still spent billions defending its new value.

Non-performing loans are likely to grow from their current level of 10%, a consequence that Fitch sees inevitable, especially given the growing amount of loans and deposits denominated in foreign currency.

“We expect zero loan growth for the banking sector in 2015,” Fitch said. “Asset quality, already somewhat strained, with impaired loans averaging 10% at end-1H15 at Fitch-rated banks, is likely to deteriorate further.”

ENDS

(News report from Issue No. 247, published on Sept. 11 2015)