Tag Archives: inflation

Falling Kazakh tenge hits charities

OCT. 1 2015, ALMATY (The Conway Bulletin) — The collapse in the value of the Kazakh tenge over the past 18 months has not only hurt businesses and consumers in Kazakhstan. Charities that collect cash in tenge but accrue costs in US dollars and other foreign currencies are also having to cut services — often life-saving ones.

In an interview with The Conway Bulletin, Ilyas Kubriyanov, head of the UnityKZ charity, said that the cost of sending ill children abroad for treatment had spiralled.

“We are having problems, of course, as foreign hospitals invoice in dollars but we collect 90% of our donations in tenge,” he said. “Consequently, the cost of treatments is increasing.”

UnityKZ helps pay for children who have cancer or other serious illnesses to travel abroad for treatment. Mr Kubriyanov, who set up the charity in 2009, said that there are currently 10 children waiting for treatment.

“Because of the currency situation, the money we collect loses its impact,” he said. “Everything has become much more expensive.”

The Kazakh Central Bank released the tenge from its US dollar peg in August, triggering a sharp devaluation. It is trading at around 272/$1 compared to 188/$1 on Aug. 19.

It also devalued its currency in February 2014. The tenge is now worth nearly half its Feb. 2014 value.

A sharp drop in oil prices and a recession in Russia has battered economies in Central Asia and the South Caucasus. Statistics show unemployment and inflation rising but the impact is felt across Kazakh society.

“Recently, we asked parents of sick children to think about another type of treatment to have or another country to aim for,” Mr Kubriyanov said. “One child was transferred to China recently, but they also have some difficulties with their currency there.”

ENDS

(News report from Issue No. 250, published on Oct. 2 2015)

Trade turnover drops in Armenia

SEPT. 22 2015 (The Conway Bulletin) – Trade turnover in Armenia dropped by over 5% in the first eight months of the year compared to the same period in 2014, media reported quoting the country’s statistics office. Media also reported that consumer prices had risen by 4.8%. Both indicators show the pressure that the Armenian economy is under.

ENDS

(News report from Issue No. 249, published on Sept. 25 2015)

Georgia raises interest rates to dampen inflation

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

(News report from Issue No. 249, published on Sept. 25 2015)

Georgian PM and CBank meet despite row

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

(News report from Issue No. 249, published on Sept. 25 2015)

Kazakhstan to subsidise industries

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

(News report from Issue No. 248, published on Sept. 18 2015)

Kyrgyz som slips to new low

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

(News report from Issue No. 248, published on Sept. 18 2015)

Kyrgyzstan should diversify assets

SEPT. 15 2015 (The Conway Bulletin) – Kyrgyz should diversify their assets, including cash, to protect themselves from the sharp swings in the value of currencies and commodities, Raushan Seitkazimova, head of the Central Bank’s monetary control unit, told media. The value of the Kyrgyz som has been fluctuating wildly, over the past few months.

ENDS

(News report from Issue No. 248, published on Sept. 18 2015)

Inflation rises in Georgia

SEPT. 16 2015 (The Conway Bulletin) – Producer prices have risen by nearly 10% in the past year in Georgia, the country’s statistics office said. The main driver of the inflation was a sharp increase in prices of electricity, water and gas, rises all linked to the fall in the value of the Georgian lari.

ENDS

(News report from Issue No. 248, published on Sept. 18 2015)

Utility prices to rise in Uzbekistan

SEPT. 14 2015 (The Conway Bulletin) – The Uzbek government said it would increase all utility prices from Oct 1, a decision prompted by the regional economic malaise.

The state water supply company said drinking water rates would increase by 8% and hot water by 5% in Tashkent; electricity prices will increase by 8%; gas prices by 7.3%.

The announcements will pile extra pressure onto ordinary people who are already dealing with price inflation for food and petrol as well as a drop in their own spending power because of a major fall in remittances.

Data from the Russian Central Bank showed that cash sent back by Uzbek workers had halved in the first half of the year compared to the same period in 2014.

Inflation has been creeping up across Uzbekistan. Earlier this month, the government said that it was going to increase public sector salaries by 10%.

Unofficial reports from Uzbekistan have said that this injection of cash into the economy has also inflated food prices by 30%.

Higher tariffs will pose especially serious challenges to the Uzbek population given the approaching winter coupled with plummeting money remittances from abroad, the increasing staples and services prices as well as anticipated shortages of fuel, gas and electricity.

ENDS

(News report from Issue No. 248, published on Sept. 18 2015)

Markets: Inflation rallies in Armenia, Azerbaijan and Tajikistan

SEPT. 18 2015 (The Conway Bulletin) — On inflation, the data looks worse in Armenia, Azerbaijan and Tajikistan, compared to other economies which have managed to keep prices flat. In the period between Jan.-Aug. 2015, prices in Armenia grew by 4.8%, in Tajikistan by 3.2%, in Azerbaijan by 3.8%, according to their statistics committees.

Despite the steady growth in consumer prices, the region’s economies are containing inflation. For a comparison, inflation in Russia reached 15% in August.

ENDS

(News report from Issue No. 248, published on Sept. 18 2015)