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Kyrgyzstan & Uzbekistan News

This Section is contributed by Kazkommerts Securities

September 1, 1998

Latest Kazakhstan Weekly News

o On August 28 the Som/Dollar rate fell to 20.0704 against 19.8436 on August 21 and was at 19.51 two weeks ago. (Reuters).

o The Kyrgyz government and the National Bank of Kyrgyzstan intend to hold the inflation rate at 12% per annum in 1998 or at 15% per annum in case of aggravating economic factors. The National Bank's foreign exchange policy aims at smoothing possible fluctuations in the currency market, according to the to its general plan for 1999. Among the major steps to be taken is the reduction of the money mass to 16.5% of the GDP and the money base to 15.5%. The GDP growth rate is expected to be 3.2% in 1998 and the industrial output will grow 3.1%.(Reuters).

o The Minister of Finance of Kyrgyzstan, Talaibek Koichumanov, said at briefing on Monday 24 that the budget deficit in 1998 will be held at the planned level of 4.3% to the GDP and that the budget spending will be reduced by more than 112.0m Som (some US $5.58m) over the year. Beginning in 1997 the country has been reducing its budget deficit by half each year. According to a 3-year IMF programme ESAF-2 adopted in the current year, Kyrgyzstan has pledged further reduction of its budget deficit. (Reuters)

o Kyrgyzstan's foreign debt totalled US $1.368bn as of July 1998. Of this sum, the portion of debt to CIS country is US $240.4m; some US $1.128bn is borrowed from international financial institutes. In the first quarter of 1998, Kyrgyzstan repaid US $20.0m to Uzbekistan, Turkey, and Switzerland of which amount US $9m was a principal debt. Sum total, for 1998, the country is planning to repay US $43.4m of its principal debt. (Reuters)

o The Ministry of Finance, Talaibek Koichumanov, and the Chairman of the National Bank of Kyrgyzstan, Marat Sultanov, said at a press conference on August 28 that Kyrgyzstan is not threatened by the current financial crisis seen in Russia. According to Mr. Sultanov, unlike Russia's Central Bank, the National Bank of Kyrgyzstan is completely independent and gives recommendations to the government and the Ministry of Finance, who follow these recommendations. He said that issues of T-bills in Kyrgyzstan are monitored. Non-residents hold 14% (US $4.5-4.8m) of the government securities market while the National Bank's reserves total 4.0 billion Soms (US $198.8m). The Ministry of Finance made a decision to reduce the issue of T-bills after their average yield boosted to 50-60% last Thursday. According to its Chairman, the National Bank is not going to resort to currency interventions in order to back the national currency, nor it is going to introduce a pegged Dollar rate. "We have a floating rate which will prevent attacking our market", he said. The bank, on the contrary, intends to reduce currency interventions to US $30-35m in 1998 from US $94m in 1997 and to increase hard currency reserves to US $215-220m by the end of the year. (Reuters)

o The German Development Bank has extended a US $90m loan to Kyrgyzstan to upgrade the high voltage line Chaldovar-Kemin. The loan was granted for 40 years. Kyrgyzenergo, the national utility company, will be holding a tender among foreign firms to carry out the work. (Vechernii Bishkek)

o The Central Bank of Uzbekistan decreased the Sum/Dollar rate to 102.90 last week from 102.30 for the previous week. (Reuters).

o The financial crisis in Russia would affect the Sum rate and prices which, nevertheless, would not have a significant impact on the Uzbekistan's economy, Islam Karimov, the President of Uzbekistan, said at a session of Olii Mazhlis (Uzbek's parliament) last week. He backed his statement by stating that relatively few Russian banks are involved in Uzbekistan as well as the fact that settlements are only made in hard currency. According to him, the trade turnover with Russia does exceed 15-20%. The president said that the government, along with Russian banks, are undertaking measures to minimise the negative impact of the Russian crisis on the Uzbek economy. (Reuters)

o According to the Deputy Prime Minister and the Chairman of the State Property Committee of Uzbekistan, Victor Chzhen, a governmental commission is working on proposals to foreign investors to participate in tenders and auctions to buy material blocks of shares in companies as well as entire companies. (Biznes-Vestnik Vostoka).

o Marubeni Corp said on Thursday, August 27^th that it had won az contract worth 6.5 billion yen from Uzbekistan Railways. Marubeni will supply 25 passenger cars, maintenance parts, a repair factory and machine tools by the end of the year 2000. The Japanese government is providing a 5.5bn yen loan to help fund the project. (Reuters)