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Kyrgyzstan & Uzbekistan News

This Section is contributed by Kazkommerts Securities

December 7, 1998

Latest Kazakhstan Weekly News

o On 5 December, the National Bank of the Kyrgyz Republic set the official Som/Dollar exchange rate at 28.9185 per one U.S. Dollar. (Reuters)

o According to the National Statistics Committee, inflation in Kyrgyzstan was 1.2% on a month-on-month basis in October.

In the first 9 months of 1998, Kyrgyzstan had a trade deficit of USD 197.3m. It was USD 37.1m in the corresponding period of 1997.

The unemployment rate decreased slightly to 3.4% in October from 3.6% in September. (Reuters)

o The National Bank of Kyrgyzstan, in attempt to stabilise prices and to support the purchasing power of the Som, introduced a new discount rate on 1 December. It also cancelled the compulsory participation of primary dealers in T-bill auctions. The discount rate will not be fixed at 50% as it was earlier. Instead, it will be determined once week as the average rate based on the results of T-bill auctions. The Lombard crediting of commercial banks will be effectuated with the new discount rate. (Reuters)

o Last Thursday, the average yields on T-bills stood at 88.87% for 12-month papers, at 79.12% for "the six", and at 86.60% for "the three". They decreased from, 91.81%, 80.36%, and 89.56%, respectively, at the previous auction on 26 November. (Reuters)

o The government of Kyrgyzstan sent to parliament on Thursday, 3 December, a new 1999 draft budget which takes into account the most pessimistic outlook for next year. According to Finance Minister Talaibek Koichumanov, the draft budget does not exclude another financial crisis in Kyrgyzstan in March 1999. It envisages an average annual exchange rate of 33 Soms per U.S. Dollar next year. The budget revenues next year are planned at 6.7bn Soms (USD 231m) and spending is expected to reach 7.5bn Soms, thus leaving a budget deficit of 800 million Soms (USD 27.6m)or 2% of the GDP in 1999. Social spending accounts for 50% of total spending. GDP growth is predicted to be 3.2%. (Reuters)

o Kyrgyzstan is currently conducting negotiations with Russia to restructure the USD 132.8m of debt Kyrgyzstan owes to Russia. The Central Asian country wants to repay the debt by supplying commodities that are needed by but not produced in Russia. Kyrgyzstan's Prime Minister Kubanychbek Zhumaliev told Reuters that Kyrgyzstan has agreed to pay fully the accrued interest rate to Russia. According to the Finance Ministry, Kyrgyzstan's debt to Russia was formed in 1992-93. The payment of a 5% interest rate started in 1995 while the principal debt is due in 2001. (Reuters)

o Gold production in Kyrgyzstan reached 21 tonnes in the first 11 months of 1998, up from 17.4 tonnes in 1997. In 3-4 years, Kyrgyzstan will be able to produce up to 31-32 tonnes of gold annually, should the development of the Dzherui and Taldybulak-Levoberezhny mines begin on time. Gold exports from Kyrgyzstan account for 40% of total export earnings. The joint venture with Canada's Cameco Corporation which operates the huge Kumtor gold mine, dominates Kyrgyzstan's gold output. Kumtor produced 15.6 tonnes of gold last year. (Reuters)

o More than 1 billion hectares of agricultural land in Kyrgyzstan are now privately owned, and 700,000 peasants will have to legalise their ownership rights. According to the Ministry of Agriculture, Kyrgyzstan has 10,619 million hectares of agricultural land. New laws on the registration of real property and land are being worked out. Amendments will also be introduced to the Land Code, Law on the State Land Register, and the Civil Code. (Reuters)

o On 1 December, the Central Bank of Uzbekistan reduced the official Sum/Dollar rate to 108.85/USD from 108.47 on the previous week. (Reuters)

o Beginning next year, Uzbekistan will start selling shares in 30 large companies to foreign investors, an official of the State Property Management Committee said to Reuters. The relevant resolution of the Cabinet of Ministers envisages the privatisation of these companies using a case-by-case scheme, whereby 25-50% of the shares will be sold through auctions. The top three companies to be privatised in 1999 are the Almalyk Mining and Metal Plant (46.5% to be sold), the Tashkent Aviation Company (25%), and the National Foreign Trade Bank (40%). Other companies put on the list for 1999 include, cable and cement plants, a paper plant, a telecommunications company, and two electronics plants. The document also lists 159 small and medium enterprises whose shares will be sold to foreigners on the stock and OTC markets. Plus, there is a list of 69 companies to be sold via investment auctions in 1999-2000. (Reuters)