DEC. 10 2015 (The Conway Bulletin) – Remittances to Kyrgyzstan were 30% lower in the first 10 months of the year compared to the same period in 2014, said the head of the Central Bank, Tolkunbek Abdygulov. This shortfall, triggered by a recession in Russia and a fall in the value of the som, has blown a $400m hole in the national budget.
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(News report from Issue No. 260, published on Dec. 11 2015)
DEC. 4 2015 (The Conway Bulletin) -The IMF gave Kyrgyzstan a $13m grant after a generally positive review of its economic progress since a credit arrangement was agreed earlier this year.
Kyrgyzstan’s government, under pressure from a regional economic downturn, will welcome both the grant and the positive IMF review.
“The Kyrgyz authorities have managed successfully to keep the program largely on track despite that the economy continues to face adverse external and domestic shocks,” the IMF said in a statement.
In May, the IMF approved a so called-Extended Credit Facility for Kyrgyzstan. This, in short, meant that Kyrgyzstan would receive $92.4m over the next three years if it stuck to a tight fiscal regime that reigned in public spending, improved tax collection and targeted inflation through its various monetary policy levers.
The deal also meant a twice- annual report by the IMF on Kyrgyzstan’s progress. These reports would form the basis of whether the next tranche of the IMF’s phased grant could be released to Kyrgyzstan.
And this latest report means that the next $13m can be handed over.
“Monetary policy will remain on a tightening bias to contain inflation pressures,” the IMF said in its report.
“The Central Bank will also continue to pursue a flexible exchange rate policy to safeguard foreign exchange reserves and preserve competitiveness, with interventions limited to smoothing short-term fluctuations.”
Kyrgyzstan’s Central Bank has been spending heavily to maintain the strength of its currency.
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(News report from Issue No. 260, published on Dec. 11 2015)
DEC.11 2015 (The Conway Bulletin) – Foreign Direct Investments (FDI) are picking up again in the South Caucasus and Central Asia. After a difficult year hooked around the fall in the rouble and the drop in oil prices, investors have appeared to regain confidence in the economies of Central Asia and the South Caucasus. Or at least they have decided to just get on with it and deal with the economic downturn.
At least this is what the numbers show.
In Armenia FDI, measured by Central Banks as inflow minus outflow, reached $260m in the first 9 months of the year, a 17% increase compared to the same period last year.
In Georgia, although down 17% compared to the first three quarters of 2014, FDI grew progressively throughout the year, to reach just above $1b at the end of September.
Kyrgyzstan, which saw a surge of FDI in the first half of the year, might be on track to keep the trend going due to renewed confidence in the country’s extractive sector.
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(News report from Issue No. 260, published on Dec. 11 2015)
DEC. 10 2015 (The Conway Bulletin) – Uzbekistan once again formally complained to the OSCE, Europe’s security and democracy watchdog, about plans by Kyrgyzstan and Tajikistan to build new dams on the upstream river system
The complaint is a reminder of Uzbekistan’s opposition to hydro- power development in Central Asia’s upstream water system.
The Tajik and Kyrgyz governments see building new dams and hydro- power systems as essential for their countries’ development, and specific to meeting new power demands from Pakistan who they will serve through the CASA-1000 project. Uzbekistan sees the hydro- power systems as a threat to its cotton industry and agriculture.
CASA-1000 is the $1b World Bank- backed project for Kyrgyzstan and Tajikistan to generate electricity to export to Pakistan, via Afghanistan. This project hinges on a series of new dams being built in Tajikistan, including the Rogun Dam on the Vakhsh River, part of the wider Amu Darya system.
Relations between Uzbekistan and Kyrgyzstan and Tajikistan have become so strained in the past over the issue that at times it has threatened to destabilise the region.
With the final deal on CASA-1000 signed in Istanbul earlier this month, relations between Uzbekistan and its upstream neighbours are likely to become more strained, as this latest complaint appears to forewarn.
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(News report from Issue No. 260, published on Dec. 11 2015)
DEC. 1 2015 (The Conway Bulletin) – Kyrgyzstan’s Central Bank decided to keep its interest rate unchanged at 10% for the third month running because of slowing inflation. It also said that its reserves had fallen by 12% this year as it tried to defend its currency.
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(News report from Issue No. 259, published on Dec. 4 2015)
DEC. 2 2015 (The Conway Bulletin) – New York-based Human Rights Watch (HRW) accused the authorities in Kyrgyzstan of banning their Bishkek office director from entering the country and crushing free speech.
The accusation will hurt Kyrgyzstan’s international reputation as a place for Westerners to visit and for Western companies to do business. Direct foreign investment and tourism are important to Kyrgyzstan’s economy.
Mihra Rittmann, the HRW Kyrgyzstan director, said she had been refused entry at Manas airport. In June the Kyrgyz authorities had rescinded her work permit.
“Kyrgyzstan’s decision to ban me is highly disappointing on a personal as well as a professional level,” Ms Rittmann told the Bulletin from Berlin where HRW has its European headquarters.
“We are keen to clarify the grounds for the ban and to resolve the situation such that I can return to Bishkek and continue Human Rights Watch’s work in country.”
Kyrgyzstan has not commented.
According to Ms Rittmann, she saw a note at the airport which described her as a “persona non- grata”.
Over the past few years, Kyrgyzstan has shifted from a relatively pro-Western stance to a more pro-Russia outlook. As the US quit its air base outside Bishkek last year, Russia was increasing its involvement in Kyrgyzstan by boosting aid money, pulling the country into its Eurasian Economic Union trade bloc and strengthening its military commitments.
HRW in Kyrgyzstan, led by Ms Rittmann, has also been documenting what it has described as a decline in human rights and free speech, from attacks on ethnic Uzbeks and homosexuals to a new law, similar to a Russian law, that makes it harder for NGOs to accept funding from overseas.
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(News report from Issue No. 259, published on Dec. 4 2015)
DEC. 4 2015 (The Conway Bulletin) — Oil prices fell by 2.3% to $43/barrel of Brent crude this week.
Tethys Petroleum shares jumped 15% in one day on Dec. 2 to 4.88p, but fell later in the week to close at 4.50p on Friday, a 5.9% increase over the last week.
Roxi Petroleum shares fell sharply to 7p on Friday, down 10% from last week.
Gold prices rose by 2.7% this week to $1,086/ounce, which, together with positive industrial news, propped up the region’s principal gold miners.
Kyrgyzstan-focused miner Centerra Gold gained around 6% this week on the Toronto Stock Exchange, closing at 7.61 Canadian dollars on Friday.
After announcing a new financing deal for its gold deposit in Armenia, Toronto-listed gold miner Lydian International shares gained 30% in just two days. Lydian share price then fell back to 0.27 Canadian dollars on Friday.
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(News report from Issue No. 259, published on Dec. 4 2015)
DEC. 4 2015 (The Conway Bulletin) — The Kyrgyz som continued its slump against the dollar and now trades at above 75.5/$1. The Central Bank chairman Tolkunbek Abdygulov said the exchange rate had changed because of a speculative attack and promised to continue to intervene to prop up the currency. The regulator said that local bank FinanceCredit was found guilty of speculative trading of the som. In addition, the Central Bank fined several exchange points across the country for speculating on currency rates.
In Tajikistan, the somoni was stable at 6.7/$1, after a rough week. On Nov. 30, media reported that Dushanbe residents had to pay around 7.5somoni for $1. The Central Bank reacted by drafting a decree that shut down the remaining private exchange bureaus in the country. Earlier in April, it had forced the closure of over 800 out of a total of 1,500 exchange bureaus because it said they were taking advantage of the unstable currency markets.
On Dec. 1, the Central Bank also reported the arrest of six employees of exchange bureaus for currency speculation. As with the Kyrgyz incidents, the details of these so-called speculative attacks have been difficult to pin down.
But none of this is surprising in Central Asia’s currency markets.
We witnessed a similar trend in Kazakhstan in 2014, when a devaluation of the tenge was followed by speculative attacks on the currency and interventions to keep the tenge from plummeting. This was repeated this year again in Kazakhstan.
It is likely that both Tajikistan and Kyrgyzstan will follow this trend and crack down on private exchange bureaus to strengthen their control over exchange rates.
In much of the rest of the region, currencies did not move. The exception was Uzbekistan. The Uzbek sum reached a new record trading low, officially, at 2,755/$1. In the last year, it lost almost 15% of its value.
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(News report from Issue No. 259, published on Dec. 4 2015)
NOV. 28 2015 (The Conway Bulletin) – A $60m Chinese-built oil refinery opened in Tokmok in the north of Kyrgyzstan, the second refinery that China has constructed in the country. Both the Chinese-refineries will rely on Russian crude oil to operate. Kyrgyzstan has been facing a shortage of refined petrol products.
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(News report from Issue No. 259, published on Dec. 4 2015)
NOV. 30 2015 (The Conway Bulletin) – The authorities in Tajikistan sent two Kyrgyz men to Kyrgyzstan for allegedly trying to recruit people to join the radical IS group in Syria and Iraq, media reported. Central Asian governments are worried about an increase in IS recruiting in the region.
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(News report from Issue No. 259, published on Dec. 4 2015)
