JAN. 13 2016 (The Conway Bulletin) – Kazakhstan’s foreign and gold reserves fell to $27.2b at the end of December, their lowest level since August 2014, data from the Central Bank showed. Like other countries across the region, Kazakhstan has been propping up its tenge currency by selling its reserves. The tenge has halved in value over the past year.
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(News report from Issue No. 263, published on Jan. 15 2016)
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.
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(Editorial from Issue No. 263, published on Jan. 15 2016)
JAN. 8 2016 (The Conway Bulletin) – Revenues earned by the Kazakh national railway company were down by 12.6% in the 11 months to the end of November compared to the same period in 2014, the ranking.kz website reported. The website said that passenger numbers had dropped off, another sign of the tight grip that the current economic downturn has taken of Kazakhstan.
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(News report from Issue No. 263, published on Jan. 15 2016)
DEC. 24 2015 (The Conway Bulletin) – The Kazakh government has scrapped plans to build a new nuclear power station, despite years of speculation over its location, size and financing, media reported quoting energy minister Vladimir Shkolnik. Mr Shkolnik said the country was producing enough power from other sources, although the government’s shrinking budget probably played a role in the decision.
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(News report from Issue No. 262, published on Jan. 8 2016)
JAN. 1 2016 (The Conway Bulletin) – Media in Kazakhstan reported that utility companies had increased water and electricity prices by up to 15%, more evidence of latent inflation in the Kazakh economy linked to a sharp drop in the value of the tenge. Analysts have said frustration is growing among ordinary people about price rises. Electricity price rises in particular are a sensitive issue across the S.Caucasus/C.Asia region.
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(News report from Issue No. 262, published on Jan. 8 2016)
ALMATY, JAN. 8 2016 (The Conway Bulletin) — Kazakhstan and Azerbaijan will diversify the investment portfolios of their Sovereign Wealth Funds in 2016 away from low yield bonds and currency holdings to high- risk equity and property investments.
Slow global economic growth has forced Sovereign Wealth Funds to ditch conservative investment strategies in search of higher yields and Kazakhstan and Azerbaijan are following a trend.
Bloomberg News quoted Berik Otemurat, director at the Kazakh Central Bank’s National Investment Corporation, as saying: “We’re sitting on a huge pile of cash and not making real returns. It’s especially urgent to address this, given the gloomy outlook for oil prices and reduced inflows into the National Fund.”
Azerbaijani officials have said that they want to increase the cap on real estate investment in its investment portfolio to 10% from 5%for 2016, as well as raising the cap for equity investment to 15% from 10%. SOFAZ, Azerbaijan’s oil fund, has been buying up high-profile property for the past couple of years and it started 2016 by buying a 19th century palazzo in Milan for 97m euro.
“In 2016, SOFAZ will be implementing investment policy, which makes it possible to get the maximum yield at low risk of capital loss,” SOFAZ said of its of strategy.
But Indra Overland, research professor at the Norwegian Institute of International Affairs, said Sovereign Wealth Funds follow market trends, rather than set them, which generates a risk that will buy at the top, rather than the bottom, of the market.
“This change is probably driven by a combination of desperation over low oil price, dissatisfaction with historically low returns on bonds and worries about the stability of financial markets, especially related to China,” Mr Overland said.
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(News report from Issue No. 262, published on Jan. 8 2016)
JAN. 6 2016, ALMATY (The Conway Bulletin) — Bread prices are beginning to rise in Kazakhstan after the government cut flour subsidies, people working in the bread-making sector told The Bulletin.
The Kazakh government ended its subsidies for flour on Jan. 1, a move it flagged up in November as part of an overhaul of government spending designed to counter an economic slowdown. It has defended dropping subsidies as fair because it means that
the money saved can be re-focused on benefits for poorer sections of society. Asylzhan Mamytbekov, minister for agriculture, has said that flour subsidies were costing the government 9b tenge a year ($26m).
But the impact of the subsidy cut on bread-makers is already being felt.
In Almaty, Yerbol Beisembayev was going about his business buying bread from factories and re-selling loaves to shops. He said that a couple of factories had already closed because the cut in flour subsidies had made them unprofitable.
“Now everything will depend on who will get the best price for the flour,” he said. “The government has allowed bread (prices) to free float, just like the tenge.”
In August, the Central Bank ditched the tenge’s peg to the US dollar. This sent the value of the tenge crashing by around 40%.
It appears that, for now, bread producers are preferring to soak up the extra cost of the flour rather than pass it on to consumers. Most shops selling bread in Almaty said there had been a small price rise of 5 tenge a loaf — roughly 8%. This below the doubling of prices that analysts had predicted once flour subsidies were cut.
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(News report from Issue No. 262, published on Jan. 8 2016)
JAN 5 2016 (The Conway Bulletin) – Annualised inflation in Kazakhstan hit 13.6% for the 12-months to the end of December, its highest rate for six years, the National Statistics Committee said. Inflation shot up in October after the tenge depreciated. In September, annualised inflation in Kazakhstan measured just 4.4%.
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(News report from Issue No. 262, published on Jan. 8 2016)
DEC. 30 2016 (The Conway Bulletin) — The Kazakh government said it has allowed local telecom operators to provide 4G services to their customers . State-owned Kazakhtelecom’s subsidiary Altel had been the only company that could use the 4G network. Other companies may now offer 4G data services, giving a much-needed competitive boost to Kazakhstan’s telecoms sector.
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(News report from Issue No. 262, published on Jan. 8 2016)
JAN 6 2016 (The Conway Bulletin) – The proportion of cash in banks in Kazakhstan held in foreign currencies rose to 77.5% in November from 76.4% a month earlier, media reported quoting the Central Bank, highlighting people’s lack of confidence in the national currency. It has been a long-held Central Bank policy to try to persuade people to keep their savings in tenge. The tenge, though, lost around half its value in 2015.
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(News report from Issue No. 262, published on Jan. 8 2016)
