Tag Archives: Tajikistan

Telia asks Tajikistan for clarification

FEB. 28 2017 (The Conway Bulletin) — Swedish telecoms company Telia has asked the Tajik government for a face-to-face meeting to explain a tax investigation against its local subsidiary, Tcell, which has slowed its previously agreed sale to the Aga Khan Fund for Economic Development. Telia wants to sell its Central Asian subsidiaries after a corruption scandal in Uzbekistan damaged its reputation.

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(News report from Issue No. 319, published on March 3 2017)

Remittance flows to Tajikistan continues to slow

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DUSHANBE, FEB. 22 2017 (The Conway Bulletin) — Tajiks working in Russia sent $1.9b back to Tajikistan in 2016, representing around a third of the national GDP, Russian presidential aide Yuri Ushakov said quoting Central Bank statistics.

The data underlines the fall in the value of the remittances being sent back from Russia, where a drop in oil prices and Western sanctions imposed after Russian interference in eastern Ukraine, has hit the economy and pushed it into a recession.

“Over 870,000 Tajikistan citizens are working in Russia. The amount of their money transfers to the motherland was $1.9 bln in 2016, corresponding to one third of the republican GDP,” Tass news agency quoted Mr Ushakov as saying.

Remittances of $1.9b is around 15% lower than in 2015, which was itself nearly 50% lower than in 2014. The proportion of Tajikistan’s national economy that remittances makes up is also down sharply. Previously, remittances sent to Tajikistan from Russia accounted for around half of its GDP.

Tajikistan and Kyrgyzstan are often described as being the most remittance-dependent countries in the world.

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(News report from Issue No. 318, published on Feb.24 2017)

Tajik president sack deputy finance minister

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FEB. 21 2017 (The Conway Bulletin) — Tajik president Emomali Rakhmon fired the country’s deputy finance minister Umed Latifov in a move that observers have said probably hints at in-fighting among Tajikistan’s elite over a murky deal between Russia’s Rusal aluminium producer and Talco, Tajikistan’s aluminium smelter and its most important economic asset. No official reason was given for sacking Mr Latifov who had been in the job since July last year.

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(News report from Issue No. 318, published on Feb.24 2017)

Tajikistan and Uzbekistan cancel flight at last minute

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DUSHANBE, FEB. 20 2017 (The Conway Bulletin) — After months of build- up and a successful dry-run, the start of a regular commercial flight between Dushanbe and Tashkent was cancelled at the last minute.

Both sides blamed the other for cancelling what would have been the first regular service between the Tajik and Uzbek capitals for 25 year and a tangible sign that relations between the two countries had started to improve after years of feuding.

Somon Air, Tajikistan’s main airline, was due to make the flight, a repeat of a one-off flight it made earlier this month. It said that Tashkent airport had contacted it and said that permission to make the flight had been withdrawn for security reasons. Tashkent airport denied this and said that the flight had been cancelled because Somon Air had failed to submit the correct paper- work in time.

Having tried to pin the blame on Tashkent airport for the flight failing to fly, Somon Air then admitted it had been at fault and promised to make the flight over the “next few days”.

Media later report that Somon Air had fired Alisher Rustamov, director of commercial operations, for failing to ensure that the flight took off.

Relations between Uzbekistan and its neighbours have improved markedly since Shavkat Mirziyoyev became president at the end of last year. His predecessor, Islam Karimov, was known to be cantankerous and relations with his neighbours had soured during his presidency. He died in September 2016 and his daughter, Gulnara, who had harboured ambitions to succeed him, was sidelined.

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(News report from Issue No. 318, published on Feb.24 2017)

Two Tajik banks lose licences

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DUSHANBE, FEB. 24 2017 (The Conway Bulletin) — Tajikistan’s Central Bank withdrew operational licences for Fononbank and Tajprombank, two months after it unveiled a $490m plan to save its banking sector from collapsing under the weight of bad debt.

It two terse statements, the Tajik Central Bank avoided giving details on just why it had withdrawn the banks’ licences but it did say that it was studying the banks’ various issues.

Tajik media later reported that customers of Fononbank and Tajprombank were unable to withdraw their savings.

A depreciation in the value of the Tajik somoni and a general economic downturn linked to a recession in Russia, which generates much- needed jobs and remittances, has pressured Tajikistan’s banking sector.

The government has already pumped millions of dollars into the country’s two biggest banks, Agroinvestbank and Tojiksodirot. It also promised in December to support Fononbank and Tajprombank. The government has also been talking to the IMF about receiving funds and the European Bank for Reconstruction and Development (EBRD).

Neither the IMF nor the EBRD has committed any funds yet, although the EBRD pledged last year to buy an undisclosed stake in Tojiksodirot for $100m.

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(News report from Issue No. 318, published on Feb.24 2017)

Central Asian leaders prepare to welcome Russian president Putin

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BISHKEK, FEB. 20 2017 (The Conway Bulletin) — Russian President Vladimir Putin is planning to visit Kazakhstan, Kyrgyzstan and Tajikistan on Feb. 27/28.

In Astana Mr Putin will bolster President Nursultan Nazarbayev who has taken an increasingly tough line on opposition figures and also against the media. In Dushanbe, Mr Putin is likely to discuss Tajikistan’s eventual membership of the Krem- lin-lead Eurasian Economic Union (EEU) with President Emomali Rakhmon.

But Bishkek will be the most complicated stopover for My Putin. There he will discuss a presidential election in November and the EEU.

“Possibly, the Kyrgyz authorities’ candidate will be chosen with the Kremlin, as loyalty to the President of Russia is important,” Bishkek based political analyst Mars Sariyev told media.

And then there is the issue of the EEU which Kyrgyzstan grudgingly joined in 2015. It’s popularity has waned as an economic downturn has bitten. Businessmen said import tariffs and sanitary certificates needed to export to EEU members had become a barrier for exports of clothes, meat, vegetables, and dairy products.

At Bishkek’s Dordoi bazaar, one of the biggest in Central Asia, opinion was mixed. Most complained but one trader saw it differently. He said that the EEU was also positive for some aspects of business.

“The only benefit is the fast growth of local textile manufacturers,” he said.

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(News report from Issue No. 318, published on Feb.24 2017)

Tajik aluminium smelter and Rusal near deal

FEB. 16/17 2017 (The Conway Bulletin) — Talco, the Tajik aluminium smelter owned through a series of offshore companies by the family of President Emomali Rakhmon, has struck a deal to end a long-running dispute with Russia’s Rusal, both Eurasianet and RFE/RL reported.

A court in 2014 ruled against Talco, in a ruling that focused on a breach of contract a decade earlier, meaning that it needed to pay Rusal up to $375m.

Now, Eurasianet and RFE/RL reported, Talco will pay Rusal the full amount it has been fined plus an extra sum for control of the Hyatt hotel and a business centre in Dushanbe, which Rusal had owned.

The deal appears to allow both sides to save face and also for Rusal to quit Tajikistan.

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(News report from Issue No. 317, published on Feb.17 2017)

More jobs needed in Tajikistan, says World Bank

FEB. 14 2017 (The Conway Bulletin) — Tajikistan desperately needs to create more and better jobs if its economy is going to grow at a sustained rate, the World Bank said in a new report. In its report, the World Bank said that only 43% of Tajiks of working age were in the job market. Remittances sent home from workers, mainly in Russia, is the biggest generator of GDP growth for Tajikistan.

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(News report from Issue No. 317, published on Feb.17 2017)

Comment: Central Banks face mess of their own making, says Kilner

FEB. 17 2017 (The Conway Bulletin) — First came the oil price collapse, then remittance flows started stagnating and (some) currencies (think of the tenge and the Azerbaijani manat) halved. Now the debt mountain, or perhaps debt tsunami is a better description, looms large, threatening to drown the countries of Central Asia and the South Caucasus.

Kazakhstan is the latest to propose a major bailout of its banking sector. Finance minister Bakhyt Sultanov said on Feb. 13 that the government would potentially use $6.3b to prop up banks listing under the weight of bad loans. The Tajik government is in talks with the IMF to borrow cash to help prop up its banking sector and in Azerbaijan the government has been, as quietly as possible, buying up chunks of the biggest bank. It now owns more than 76% of the International Bank of Azerbaijan, allowing it to smooth out its debt crisis without attracting too much attention.

Ratings agencies and analysts have been warning of this denouement.

As long ago as December 2015, Standard & Poorsratings agency said: “Medium-term prospects for Kazakhstan’s banking system have deteriorated in 2015 due to lower oil prices, the economic slowdown (especially in non-extractive sectors) and the weaker tenge.”

And that prediction has been borne out.

The frustration is that we have been here before. In the Global Financial Crisis of 2008/9 bad debt built up in banks in Kazakhstan forcing the government to step in. It bought out BTA Bank, at the time one of the country’s biggest lenders, and a handful of smaller banks. It was expensive but staved off disaster and the Kazakh government pledged not to find itself in a similar position again.

The government finally offloaded BTA bank to pro-government businessmen in 2014/15 and proposed to impose rules and regulations that would require its banks to bulk up their capital and refrain from handing out loans, mainly mortgages, to people unworthy of them.

Clearly, the Kazakh Central Bank and other regulators across the region, have failed. Certainly they have not been helped by the sharp currency devaluation that made US dollar-denominated mortgages unserviceable.

Better macro-economic policies, tighter rules on lending and a more clear-headed approach to dealing with problems would surely have put the Central Banks in better positions than they now find themselves. Governments in the region are once again having to buy themselves out of trouble.

By James Kilner, Editor, The Conway Bulletin.

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(News report from Issue No. 317, published on Feb.17 2017)

Tajikistan-Uzbekistan flight resumes

FEB. 10 2017 (The Conway Bulletin) — >> So what has happened? I’ve read that a commercial flight has flown between Dushanbe and Tashkent

>> Yes, that’s right. This was the first commercial flight between the Tajik and Uzbek capital since 1992. In 1992, Tajikistan was just tipping over into a civil war when commercial flights were scrapped but they were never re-instated after the war petered out a few years later. By this time Emomali Rakhmon had secured himself as the president of Tajikistan, a position he still holds. Uzbekistan was then ruled by Islam Karimov, who died in September last year. The two men loathed each other, Karimov was notoriously cantankerous and Rakhmon is quarrelsome.

>> So, the row was entirely personal?

>> Much of it was but there was also a macro-political and economic angle too. Tajikistan has long-planned to build a dam at Rogun in the Pamir Mountains. This was a Soviet-era plan that never moved from the drawing board into reality. Tajikistan, though, needed to generate more electricity and has been looking for backers for years. And this irritated Uzbekistan and Karimov who argued that the dam would damage water flows downstream where Uzbek cotton fields needed to be irrigated. At times the row became so heated that it threatened to spill over into war that may have dragged in neighbours.

>> What has changed?

>> Karimov’s death in September changed Uzbekistan’s foreign policy outlook. The new president Shavkat Mirziyoyev has been far more positive in promoting relations with Uzbekistan’s neighbours. This has included Kyrgyzstan and Tajikistan. The resumption of a commercial flight between the two capitals may feel a bit of a token gesture but it is actually a very significant step forward for bilateral relations. Rakhmon actually invited Mirziyoyev to Dushanbe for a bilateral meeting last month. This was something that would have been unimaginable under Karimov.

>> And now that flights have resumed, what can we expect?

>> The first flight was operated by Somon Air, a Tajik airline. It is likely that the airline will look to set up a regular service between the two cities. And just making that link, just having it there, is an important part of the heeling process for the region. It’s blighted by complex borders, thanks Stalin, and disparate pockets of ethnic groups, making travel links important. This is especially so between Tajikistan and Uzbekistan. Many of the people living in Uzbekistan are ethnic Tajiks. Previously, to travel between the two cities, people had to make tortuous road trips that would take days.

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(News report from Issue No. 316, published on Feb. 10 2017)