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Kyrgyzstan & Uzbekistan News

This Section is contributed by Kazkommerts Securities

November 9, 1998

Latest Kazakhstan Weekly News

o The official Som/Dollar exchange rate has been unchanged from 23.3475 set up by the National Bank of Kyrgyz Republic on 24 October 1998. (Reuters)

o In February-March 1999 Kyrgyzstan is supposed to receive the second USD 20m tranche of the Asian Development Bank's loan worth USD 40m, the spokesman of the president's administration, Sadriddin Zheenbekov, said at a briefing on 26 October. The loan will be channelled to the budget and is earmarked to introduce corporate governance in Kyrgyz industry. The loan has been extended for 40 years with a 10-year grace period at 0.75% per annum. Presently, corporate governance has been introduced at 230 enterprises. (Reuters)

o Over the first 9 months of 1998, the industrial growth rate decreased to 6.9% from 39.5% over the same period last year. According to the chairman of the National Statistics Committee, Zarylbek Kudabaev, the drop in industrial growth in Kyrgyzstan might have resulted partially from the financial crisis in Russia as large Kyrgyz companies who export to Russia had to reduce production. He said that trade between Kyrgyzstan and Russia had diminished 1.5 times since July. At the same time, he believes that despite the decline in industrial growth in January-September, Kyrgyzstan may achieve the planned GDP growth of 3.6% thanks to the agricultural sector. (Reuters)

o The Chairman of the National Bank of Kyrgyzstan, Marat Sultanov, said at a news conference on 2 November that the Som is continuing to lose value because foreign investors are withdrawing money from the country. He said the Russian turmoil is also to blame for the decrease. Since July, the Som has dropped from 17/USD 1 to 24-25. Sultanov said that the National Bank has spent 12% of its hard currency reserves since August. (RFE/RL)

o A press release from the National Bank of Kyrgyzstan dated 3 November says that due to a lack of money resources with commercial banks in September, the repo market was activated and its turnover increased 1.5 times compared with that in August. The repo rates increased, accordingly, to 68.4% from 38.0%. In September, the cost of credit resources rose due to the growth of yields on T-bills, and the Lombard rate increased from 60% to 70% on 1 September. (Reuters)

o The Fitch IBCA rating agency has assigned Bishkek, Kyrgyzstan, the long-term foreign currency credit rating B+ and the short-term credit rating B. A press release said that this is the first time the agency has given a local level rating in Central Asia. According to Fitch experts, Biskek has a diversified economy which has been growing continuously since 1996. The agency characterises Kyrgyzstan as the most democratic and market-oriented country in Central Asia.

o From 3 November, the official Sum/Dollar rate of the Central Bank of Uzbekistan has been 107.3/USD. (Reuters)

o The Australia-based Western Mining Corporation (WMC) and the Uzbek Government may soon sign an agreement on a joint venture to produce gold, a spokesman of the State Committee for Mineral Resources told Reuters. The negotiations are expected to resume on 9 November, so the agreement should be concluded in the near future. The WMC became the winner of a tender for the gold deposit Zarmitan in the Samarkand region in February 1996. Since that time the parties have been negotiating and the date for signing the agreement was postponed several times. According to the Committee, the deposit holds 25 million tonnes of gold ore with the average concentration of gold 10g per tonne. The JV is expected to start constructing gold extraction facilities with a capacity of 2 million tonnes of gold ore per year. (Reuters)

o Uzbekistan's auto industry has raised USD 1bn in investment, however, Central Asia's best-known venture is suffering due to the troubles in its major market, Russia. Kudrat Parpiev, the chairman of the Uzavtoprom Industry Association said at a news conference last week that companies worth USD 280m had been found to make auto parts in Uzbekistan. These are: Turkey's KOC Holding, which intends to open a USD 70m joint-venture in Samarkand by the year-end, and a joint-venture with Daewoo Corp. However, according to an Uz-Daewoo Auto Plant official, exports have fallen dramatically since the economic crisis in Russia in August whereas they saw a 29% rise in volume in the first 9 months of 1998. (Reuters)