Tag Archives: Kyrgyzstan

Kyrgyzstan bans dollar mortgage

FEB. 10 2016 (The Conway Bulletin) – Kyrgyzstan’s Central Bank said that it had banned commercial banks from handing out US dollar mortgages to customers. The ban is designed to stop the economy from accruing more bad debt. Like its neighbours the Kyrgyz som has been under increased pressure to devalue. Over the past couple of months, the Central Bank has intervened heavily in the currency markets to protect its value but analysts have said that this policy is unsustainable and a devaluation is inevitable.

ENDS

(News report from Issue No. 267, published on Feb. 12 2016)

Kyrgyzstan imposes fines for USD

FEB. 3 2016 (The Conway Bulletin) – Kyrgyzstan’s anti-monopoly said it would start to impose fines against shops, companies and people selling products in US dollars rather than the local som currency. The new rules appear designed to boost the use and the strength of the Kyrgyz som. The som has lost around a third of its value.

ENDS

(News report from Issue No. 266, published on Feb. 5 2016)

Kyrgyzstan looks to cash in on expropriation of MegaCom

BISHKEK, FEB. 2 2016 (The Conway Bulletin) — Kyrgyzstan’s government said that it wanted to sell Alfa Telecom, which owns the mobile brand MegaCom, for around 19b som ($253m), cashing on its most lucrative asset grab from a revolution in 2010.

The sale of Alfa Telecom will mark the end of a battle for control over one of Kyrgyzstan’s most valuable companies.

Alfa Telecom had been controlled, directly and indirectly, by the son of former Kyrgyz president Kurmanbek Bakiyev. He was forced to flee the country in 2010 and one of the first moves by the new government was to start nationalising Alfa Telecom by taking control of a 49% stake in the company. It completed this process in 2014 when a court in Bishkek handed it the final 51% stake in the company from Alexey Yeliseyev, regarded as a frontman for the Bakiyev family.

Presenting plans to sell off, Alfa Telecom, Kyrgyz PM Temir Sariyev said: “We are presenting the auction to the international market, where competition is very high. The company is appealing for foreign investors and it needs a technological upgrade.”

Local audit firm All Star and the Kazakh branch of Ernst & Young assessed the total price of Alfa Telecom shares at $306m.

But with markets, especially Emerging Markets, subdued it will be a tough time to sell a telecoms company.

Last December, the government said companies from Russia, China, Turkey and Azerbaijan have expressed interest in buying Alfa Telecom.

A successful sale would be a boon for the Kyrgyz government which is struggling to fight off the impact of a worsening economic downturn.

ENDS

(News report from Issue No. 266, published on Feb. 5 2016)

Stand Energy files claims against Kyrgyzstan

FEB. 2 2016 (The Conway Bulletin) — Canadian mining company Stans Energy said it filed a claim for damages in the UN arbitration court against the Kyrgyz government. The company says Kyrgyzstan wrongfully terminated its licences to operate the Kutessay II and Kalesay mines in 2012. Stans claims to have invested $128m in the gold mines and will also seek a $91m compensation for interests. The UN court will deliberate in mid-March.

ENDS

(News report from Issue No. 266, published on Feb. 5 2016)

Kyrgyz gov to sue Centerra

FEB. 3 2016 (The Conway Bulletin) — Kyrgyz PM Temir Sariyev said the government is considering suing Centerra Gold over its plans to issue a fresh batch of shares. According to Mr Sariyev, state owned company Kyrgyzaltyn, which owns a 32.7% stake in Centerra, has signed a contract with a law firm to prepare a case. In 2015, Centerra decided to issue new shares. The Kyrgyz government has complained this would dilute its share.

ENDS

(News report from Issue No. 266, published on Feb. 5 2016)

Kyrgyz business blames EEU for poor outlook

FEB. 5 2016, BISHKEK (The Conway Bulletin) — Frustrated Kyrgyz businessmen and company owners are blaming a worsening economy on joining the Russia-led Eurasian Economic Union (EEU) last year.

The criticism of the EEU, whether it is accurate or not, is a major problem for Kyrgyzstan’s leadership which dragged the country into the trade bloc despite deep-rooted unease from ordinary Kyrgyz. Also in the EEU are Russia, Kazakhstan, Belarus and Armenia.

In Bishkek, Azamat, who was selling cars, said Kyrgyzstan had aligned itself with the wrong countries.

“While we are in the Customs Union we will have nothing to develop,” he said.

The Customs Union is the old name for the EEU, which analysts have said was dreamt up by the Kremlin to extend its political control.

Western sanctions and a collapse in oil prices have tipped Russia’s economy into a recession. It has cancelled overseas projects, including a hydropower plant in Kyrgyzstan, and remittance flows from Kyrgyz workers in Moscow have fallen by around 40%. Inflation is rising in Kyrgyzstan and economic growth rates are being cut – a familiar story across the region.

Emil Umetaliev, a former Kyrgyz economy minister who now owns a travel company, told The Conway Bulletin that the EEU has been a major hindrance to small and medium sized companies, rather than the help that had been promised.

“The Eurasian economic union tends to organise countries’ interdependence on resources,” he said. “It does not encourage small and medium enterprises to develop and does not have a friendly investment climate.”

ENDS

(News report from Issue No. 266, published on Feb. 5 2016)

Kyrgyz CBank should cut spending, says IMF

FEB. 4 2016 (The Conway Bulletin) – Kyrgyzstan’s Central Bank needs to slow its interventions in the currency market in order to avoid depleting its reserves, the IMF said at the end of a mission to Bishkek. The IMF had been on a fact-finding mission ahead of a meeting in April when Kyrgyzstan hopes to extend its borrowing. Its Central Bank has been buying som heavily to support its value.

ENDS

(News report from Issue No. 266, published on Feb. 5 2016)

Chaarat finds gold in Kyrgyzstan

FEB. 3 2016 (The Conway Bulletin) — British Virgin Island-registered Chaarat Gold completed a feasibility study for a gold mine it is exploring in north-west Kyrgyzstan. The mine is Chaarat’s only asset. Dekel Golan, Chaarat’s CEO, said in an interview that the study revealed low production costs (around $650/troy ounce, including the government tax), which means the company will go ahead with the project.

ENDS

(News report from Issue No. 266, published on Feb. 5 2016)

Critics say the Kyrgyz-Russian Fund is failing

BISHKEK, JAN. 26 2016 (The Conway Bulletin) — Businesses, company owners and lobby groups in Kyrgyzstan have criticised the Kyrgyz- Russian Investment Fund, launched with great fanfare in 2014 ahead of Kyrgyzstan’s entry into the Kremlin- led Eurasian Economic Union, as ineffective.

The criticism will sting as it comes after Russia withdrew support for a $2b hydropower project in Kyrgyzstan. It also underlines the Kremlin’s waning influence in Central Asia.

“The Kyrgyz-Russian Investment Fund does not have enough resources to keep the economy stable, as it cannot substitute a drop in remittances which used to come from Kyrgyz labour migrants in Russia and

revenues from re-exporting Chinese goods through Kyrgyzstan,” Uluk Kydyrbayev, head of the National Alliance of Business Associations lobby group, told The Bulletin.

An anti-crisis plan presented by the government on Jan. 26, which placed the Fund at its core, triggered an outpouring of frustration by businesses.

The Kyrgyz-Russian Investment Fund measures around $500m and was supposed to act as source of cheap credit for Kygyz businesses. At least some of this cash, though, has been used to bail-out mortgage holders who have seen their debts spiral with the devaluation of the som against the US dollar.

Like the rest of the region Kyrgyzstan is trying to navigate its way through a worsening economic crisis. One of the consequences is a fall in remittances from Russia.

Tilek Toktogaziyev, head of an organic food company, said that the Kyrgyz-Russian Fund had been a failure and had favoured big business over small business.

“The credits are only given to big companies who have break-even activities in past three years and have been present in the market for a long time,” he said.

He said the lowest credit the Fund gives is $3m. To win this loan, the company owner also has to make a contribution of 20%.

ENDS

(News report from Issue No. 265, published on Jan. 29 2016)

EU sends 15m euro to Kyrgyzstan

JAN. 26 2016 (The Conway Bulletin) – The European Union said it had released the second tranche of a 30m euro loan and grant to Kyrgyzstan designed to support and promote stability and democracy. Of the final 15m euro payment, 5m euro was a grant and 10m euro was a loan. The EU said the payment was “to support the restoration of a sustainable external financial situation for the Kyrgyz Republic.”

ENDS

(News report from Issue No. 265, published on Jan. 29 2016)