Tag Archives: government

Business comment: Wealth fund critics come out

JAN. 22 2016 (The Conway Bulletin) — At the end of December, Berik Otemurat, a senior official at Kazakhstan’s Central Bank, picked up the phone and called several newspapers to speak out against the way the sovereign wealth fund was being managed.

He was promptly sacked after his quotes started populating articles. He had said that Kazakhstan’s sovereign wealth fund to be doomed.

Mr Otemurat’s argument was that the sovereign wealth fund was risk averse and that it was pilfering away its cash on low yield investments making low returns.

Low oil prices and the economic slump would combine, he said, to wipe away the fund’s reserves in 6 to 7 years.

Timur Kulibayev, President Nursultan Nazarbayev’s son-in-law and powerful businessman, spoke out against Kazakh money managers to but he’s not in any real danger of losing his job.

He has criticised for months the behaviour of the Central Bank and, effectively, said their management of the economic crisis has been poor.

Mr Kulibayev repeated his criticism last week. His bottom line was: “The government cannot continue spending its reserves to prop up the tenge or the reserves will be extinguished in three years.”

Of course, Mr Kulibayev, the second-richest man in Kazakhstan, is in a much stronger position than Mr Otemurat, so his words will not make him a pariah of the elite. This parallel goes to show that there are only few people who can speak out against Kazakhstan’s economic policy and face no consequences.

The managers of the sovereign wealth fund have said they will change their policy this year. Let’s see if they can stop the drain.

ENDS

(News report from Issue No. 264, published on Jan. 22 2016)

Protesters and police clash again in regional Azerbaijanji town

JAN. 18 2016 (The Conway Bulletin) – Police and protesters angry about worsening economic conditions in Azerbaijan clashed briefly in the town of Quba, north of Baku, three days after demonstrations sprung up in several regional towns.

Media reports from Quba said that police fired tear gas and rubber bullets to control the demonstration. Protesters are angry at a sharp rise in prices after a devaluation of the manat at the end of last month.

Similarly to the earlier protests, police moved in after the end of the stand-off and detained dozens of demonstrators.

There have been no other demonstrations since.

These were the most serious civil disturbances this year in Central Asia and the South Caucasus linked to the economic slowdown and have worried the Azerbaijani government.

ENDS

(News report from Issue No. 264, published on Jan. 22 2016)

Kazakh leader’s nephew gets KNB post

JAN. 20 2016 (The Conway Bulletin) – Samat Abish Nazarbayev, the 37- year-old nephew of president Nursultan Nazarbayev, was appointed deputy head of the KNB, Kazakhstan’s intelligence service, the eurasinet.org website reported. Samat Abish Nazarbayev is the son of Bolat Nazarbayev, President Nazarbayev’s brother. By appointing him to a senior position in the KNB, Pres. Nazarbayev is strengthens his control over it.

ENDS

(News report from Issue No. 264, published on Jan. 22 2016)

Azerbaijan imposes capital barriers

JAN. 19 2016 (The Conway Bulletin) – Azerbaijan imposed some of the most stringent currency controls in the region to try and halt the slide in its manat currency and to stop a feared wave of capital outflows as the economic storm that has hit the region strengthens.

The most draconian measure was an immediate 20% tax on purchases of property, securities and other investments in foreign currencies.

“People should know that the central bank, other government agencies are in a position to prevent the manat from falling sharply,” Azerbaijan’s Central Bank chief, Elman Rustamov, said in televised comments clearly aimed at shoring up public support. Last week sporadic clashes broke out in regional towns between angry protesters and police.

The Azerbaijani manat has lost 50% of its value in six months and people have lost confidence in the country’s financial system.

Mr Rustamov also said that the Central Bank held enough currency reserves to support the manat, despite a series of reports which suggested that it was running out of money after trying to defend its value unsuccessfully throughout 2015, and that several smaller banks would soon have to merge.

Other measures unveiled by Mr Rustamov to try to boost public support in the manat included allowing people to pay back loans of up to $5,000 at the manat/$ exchange rate prior to the last devaluation on Dec. 21 and cancelling tax on manat bank deposits and dividends.

Azerbaijan has been one of the hardest hit by the economic slowdown that has hit the region. Its economy is dependent on oil which has sunk in price to around $28/barrel from around $115/barrel in July 2014.

ENDS

(News report from Issue No. 264, published on Jan. 22 2016)

Kazakh leader calls for early election

JAN. 20 2016 (The Conway Bulletin) – Kazakh president Nursultan Nazarbayev called a parliamentary election for March 20, more than a year ahead of schedule. Officially MPs asked him to bring the election forward from 2017 because they said that they had fulfilled their mandate. Unofficially, the Kazakh political elite appear to be increasingly worried about civil disobedience linked to worsening economic conditions.

ENDS

(News report from Issue No. 264, published on Jan. 22 2016)

Uzbekistan searches for assets

JAN. 20 2016 (The Conway Bulletin) – Uzbekistan is trying to recover up to $1m of assets frozen in bank accounts in Europe belonging to Gulnara Karimova, the eldest daughter of Uzbek president Islam Karimov, media reported. Ms Karimova has been under house arrest in Tashkent for nearly two years. She was once considered a potential successor to her father. Swiss authorities are investigating her for money laundering.

ENDS

(News report from Issue No. 264, published on Jan. 22 2016)

Georgian President approves redistricting

JAN. 8 2016 (The Conway Bulletin) – Georgian president Giorgi Margvelashvili signed into law a redistricting of constitutional boundaries, part of a move in Georgia to do away with so-called majoritarian seats in parliament. Of Georgia’s 150-seat parliament, 103 are made up of majoritarian, although the size of these seats varies from 9,000 to 150,000 people. The redistricting is the first step in a process designed to even out this imbalance.

ENDS

(News report from Issue No. 263, published on Jan. 15 2016)

Kabyldin leaves KazTransOil

JAN. 12 2016 (The Conway Bulletin) — Kairgeldy Kabyldin, former CEO of KazTransOil, quit as a director of the company, completing his exit from the Kazakh oil transport company. Earlier in December 2015, Mr Kabyldin quit as CEO of KazTransOil, which is owned by Kazakhstan’s Kazmunaigas. After Mr Kabyldin’s resignation, the board named Nurtas Shmanov as the company’s new CEO. He had been a director of KazTransOil since January 2011. Mr Kabyldin, 63, has worked almost his entire career in Kazakhstan’s oil and gas industry. Analysts expect him to be re-appointed to another role shortly.

ENDS

(News report from Issue No. 263, published on Jan. 15 2016)

Fund chief leaves in Kazakhstan

JAN. 13 2016 (The Conway Bulletin) – Berik Otemurat left the Kazakh National Investment Corporation, the unit within the Central Bank that invests money from the Oil Fund, after he gave a series of interviews to major Western publications criticising its strategy. It’s unclear if Mr Otemurat was sacked or he resigned. Eszhan Birtanov, former head of the Kazakhstan Stock Exchange, was named as the new head of the National Investment Corporation.

ENDS

(News report from Issue No. 263, published on Jan. 15 2016)

Editorial: Kazakhstan’s parliament

JAN. 15 2016 (The Conway Bulletin) – It doesn’t happen often that a parliament asks the president to order its dissolution and call for elections. But in Kazakhstan, MPs feel they have fulfilled their obligations and, with one voice apparently, asked for an early vote.

The economic downturn could potentially lead to the formation of organised opposition in Kazakhstan and the calling of snap presidential elections last year and, in a similar fashion, this year would prevent dissent.

Although it was the MPs calling for it, the decision to call for early elections came from the top. The elite wants to consolidate its power within the various political institutions in light of a prospective transition.

President Nurtsultan Nazarbayev has indicated that he is likely to hand over to a successor at the end of his current term as president in 2020. If the transition goes as planned, the successor will be chosen from the political elite that is currently in charge of the major institutional positions.

The name of the new speaker of the Majilis and the percentage of seats that go to the ruling Nur Otan party are the two main things to monitor.

ENDS

(Editorial from Issue No. 263, published on Jan. 15 2016)