Tag Archives: economy

Georgia welcomes the EBRD for its AGM

MAY 13 2015 (The Conway Bulletin) – The European Bank for Reconstruction and Development (EBRD) holds its 24th annual meeting and business forum in Tbilisi May 14-15, placing Georgia firmly at the centre of the region’s attention.

Georgia is the first country in the Caucasus to host the annual EBRD meeting. Uzbekistan hosted the event in 2003. The Bank is a major player in Georgia, and has invested a total of $3b over the last 22 years.

This meeting is strategically important for Georgia to demonstrate its economic development, especially now, when the country is mired in a currency crisis. The lari has lost around 32% of its value since November.

Deputy minister of finance Davit Lezhava said the meeting was a perfect opportunity to spread information about Georgia to the outside world.

“I hope that the meeting will result in more investment, greater integration with the democratic world and in more political support,” Mr Lezhava told the Bulletin.

Over $7.2m was spent in preparing the EBRD annual meeting by the private sponsors and the government, media reported.

Mr Lezhava said that he didn’t know how much came from the state’s budget.

“But whatever the governmentcontribution was, it is not a waste of money because we will have great benefits from this event,” he said.

ENDS

(News report from Issue No. 231, published on May 13 2015)

Kazakh Central Bank sets up $700m fund for bad mortgages

MAY 13 2015 (The Conway Bulletin) – The Kazakh Central Bank has created a $700m fund to help people pay their mortgages, a move designed to ease Kazakhstan’s mountain of bad consumer debt.

Banks in Kazakhstan have one of the highest ratios of non-performing loans in the world, a legacy of the 2008/9financial crisis. Now, with a new financial crisis linked to the drop in global energy prices and a sharp fall in the performance of the Russian economy, also hitting Kazakhstan’s mortgage holders, policy makers have been looking for ways to ease the burden.

Low-income households are the principal target of the measure, according to official sources. Families at risk will be able to access new credit at advantageous rates, in order to pay off their outstanding bill.

Around 20,000 loans obtained between 2004 and 2009 should be affected by this measure. The largest contribution will go to Kazkommertsbank, which will receive $205m and refinance the debt of 12,500 borrowers.

The rationale is simple. Policymakers have argued that people taking out mortgages between 2004-9 were relatively uneducated in the practise and may have been mis-sold a product or taken out debt that they could not finance.

Most mortgages during this period were also taken out in US dollars. The

Kazakh tenge has dropped markedly against the US dollar since then, making the loans harder to service.

Some analysts, though, have questioned the spirit of the measure.

Quoted on Forbes.kz, financial analyst Murat Temirkhanov said: “The word ‘refinancing’ has little to do with this measure. It should be described as a restructuring, i.e. an exchange of bad loans for cheap money from the state.”

Still, the new measure has the potential to revive the financial market in Kazakhstan.

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(News report from Issue No. 231, published on May 13 2015)

Uzbek President says wants to sell stakes in state companies

MAY 8 2015 (The Conway Bulletin) – In what could be a potential game-changer for Uzbekistan, President Islam Karimov has ordered the government to sell stakes in 68 large companies to strategic foreign investors.

Media quoted a presidential decree which said that stakes in companies such
as Navoiazot, a cement maker, and Turonbank would be up for sale.

“It is time to carry out a full-scale critical analysis of the availability and effectiveness of the presence of state shares in the economy, in other words, ‘the state’s presence in the economy’, and on this basis, to define our actions for a significant increase in the private sector’s presence in the economy,” media quoted Mr Karimov as saying.

It’s unclear from the decree and the media coverage who this apparent relaxation of state controls over Uzbek industry and commerce is actually aimed at.

Western business has generally had a strained relationship with Uzbekistan. There have been a number of instances where Western companies — generally metals companies — have accused Uzbekistan of grabbing their assets.

Instead, Uzbekistan may be thinking of Chinese companies, which have been making in-roads over the past few years, or even businesses from South Korea and India.

Uzbekistan’s economy, like other countries in the region has been struggling to cope with a downturn in global energy prices and a sharp fall in the performance of the Russian economy. Remittances from Russia have dropped considerably.

ENDS

(News report from Issue No. 231, published on May 13 2015)

Imports drop in Kazakhstan

MAY 13 2015 (The Conway Bulletin) – Kazakhstan imported goods worth 6.3% less in March 2015 compared to March 2014, media reported quoting the Central Bank, further evidence, if it was needed, of the economic stagnation that has hit the region. Exports were down 19.5%.

ENDS

(News report from Issue No. 231, published on May 13 2015)

Kyrgyz FDI drops by 37% in first four months of year

MAY 12 2015 (The Conway Bulletin) – The National Statistics Committee of Kyrgyzstan said foreign direct investment (FDI) fell by 37% in the first four months of 2015, figures which highlight the current difficult economic climate.

This marks the second year of decreasing FDI in Kyrgyzstan after a jump in 2013. Most of the loss this year can be attributed to the construction sector, impacted by economic sanctions and crisis in Russia, and to the mining sector, due to the Kumtor gold mine stalemate.

Alex Nice, Central Asia analyst at the Economist Intelligence Unit, said: “Economic and political uncertainty may have depressed foreign investment and of course relatively weak gold prices may also depress new investment in Kumtor, the biggest source of FDI.”

With the fall in remittances from migrant workers abroad and low GDP growth for the next couple of years, Kyrgyzstan needs to improve its business climate in order to attract more, rather than less foreign investors interest.

But as the head of the Association for Foreign Investment, Kairat Itibayev, told media, infrastructure in Kyrgyzstan needs improving.

“Businessmen from Turkey, for example, lament that there is a lack of storage space, unstable electricity, and unusable roads,” he said.

ENDS

(News report from Issue No. 231, published on May 13 2015)

Uzbekistan keeps interest rates stable

APRIL 29 2015 (The Conway Bulletin) – Uzbekistan’s Central Bank said it would keep its key interest rate at 9% because the economy was set to hit its inflation target. In January the Central Bank raised its interest rate by 1%. Uzbekistan’s main currency exchange exists on the black market but the statement gives insight into the Central Bank.

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(News report from Issue No. 230, published on May 6 2015)

Azerbaijan’s Oil Fund drops

MAY 1 2015 (The Conway Bulletin) – Azerbaijan’s State Oil Fund said its assets had dropped by 5% in the first three months of the year compared to the same period in 2014. Azerbaijan’s government is trying to push its way through a regional economic downturn and has said it will dip into its reserves to support various projects.

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(News report from Issue No. 230, published on May 6 2015)

Tajikistan sacks Central Bank chief

MAY 1 2015 (The Conway Bulletin) – Tajik president Emomali Rakhmon sacked the head of Tajikistan’s Central Bank Abdujabbor Shirinov, media reported, an apparent reaction to the continued slide of the somoni currency.

This year the somoni has nose-dived by around 20% against the US dollar as it struggled to cope with a fall in the value of the Russian rouble and a dip in Russia’s economy which has hit remittances.

Mr Shirinov, a previous Tajik ambassador to the United States and head of the Central Bank since 2012 has taken increasingly desperate measures to defend the currency. Last month he ordered exchange kiosks to be banned but instead of giving the government more control over its currency, it just forced money changers into the black market.

The Dushanbe-based ASIA-Plus reported that Jamshed Nourmahmadzoda had been appointed Tajikistan’s new Central Bank chief. Mr Nourmahmadzoda was previously head of Amonatbonk.

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(News report from Issue No. 230, published on May 6 2015)

Kazakhstan aims help for mortgages

APRIL 30 2015 (The Conway Bulletin) – Apparently worried about people defaulting on mortgage payments, the Kazakh Central Bank has set up a 130b tenge ($700m) fund. Kazakh media said the Central Bank will loan cash to commercial banks who will then help people who took out mortgages, possibly in dollars, between 2004 and 2009.

ENDS

(News report from Issue No. 230, published on May 6 2015)

Devaluation stokes salary rises in Turkmenistan

MAY 4 2015 (The Conway Bulletin) – Salaries have risen by nearly 10% since the beginning of the year in Turkmenistan, official media reported quoting the Turkmen finance ministry.

This piece of data is important for two main reasons. Firstly, it is a rare piece of data from Turkmenistan’s government on prices and inflation. Secondly, it shows the probable impact of the devaluation by 30% of Turkmenistan’s manta currency on Jan. 1.

Turkmenistan, like other countries in the region, has been struggling to cope with the fall in global energy prices and the downturn in Russia’s economy that has slashed around 50% off the value of its rouble currency.

Both issues have pressured Central Asian economies and Turkmen President Kurbanguly Berdymukhamedobv ordered the Central Bank to cut the value of the manat for the first time in seven years.

Typically, currency devaluations in Central Asia have triggered inflation and, although not officially confirmed, this appears to be the case in Turkmenistan.

The Turkmen finance ministry said salaries had risen by 9.5% in the first three months of the year. It didn’t give any more information.

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(News report from Issue No. 230, published on May 6 2015)