Home | Asset Prices | News & Global Markets | Research | Search

Kyrgyzstan & Uzbekistan News

This Section is contributed by Kazkommerts Securities

February 1, 1999

Latest Kazakhstan Weekly News

o On 29 January 1999, the National Bank of the Kyrgyz Republic decreased the official Som/Dollar exchange rate to 30.5949 per one U.S. Dollar from 30.2595 a week ago. (Reuters)

o The Kyrgyz Government approved on Friday, 29 January a programme of measures to combat an economic crisis. Prime Minister Zhumabek Ibraimov called the programme "a plan of austerity measures". The plan calls for boosting industrial output, raising exports levels and reducing the budget and trade deficits. The national currency, the Som, lost about 70% of its value last year, largely due to Russia's crisis and exports fell. In addition, Kyrgyzstan is to repay USD 52m of its foreign debt in 1999 and another USD 80m in 2000. The government programme suggests a budget gap reduction to 2.1% of the GDP this year and to 1.8% in 2000. (Reuters)

o On 28 January 1999, the Kyrgyz Legislative Assembly approved amendments to the pension law whereby the retirement age was raised for men to 63 from 60 and for women to 58 from 55 by the year 2007. Raising the retirement age is one of the conditions for a USD 36m World Bank loan. (RFE/RL)

o According to the National Statistics Agency, Kyrgyzstan's GDP increased 1.8% compared with 1997. However, the increase was due almost entirely to the Kyrgyz-Canadian gold joint venture at the Kumtor deposit. Industrial output in 1998 amounted to Som 21.05bn (about USD 700m), up by 4.6% compared with the previous year. However, excluding gold production at Kumtor, it was 6.0% less than in 1997.

The country's foreign trade deficit increased sharply to USD 287.2m in the first eleven months of 1998 from USD 87.7m in the same period of 1997.

Annual inflation rose to 18.4% from 14.8% in 1997. The average monthly salary was 825 Soms (USD 28). (Reuters)

o Presidential press secretary Kanybek Imanaliev told Reuters on 25 January that a visiting IMF delegation had met President Askar Akaev and agreed to increase its aid to Kyrgyzstan to USD 28m from USD 15m. The loan is intended to mitigate the impact of Russian financial turmoil. The press secretary said that the IMF approved the Finance Ministry and Treasury reforms aimed at pursuing a more successful credit policy. The World Bank urges that the Kyrgyz Government speed up privatisation of the energy sector. On 26 January Prime Minister Ibraimov met a European Commission representative who confirmed that the EU will extend Kyrgyzstan EURO 1.0m (USD 1.156m) in 1999 to reform the country's health service. (RFE/RL, Reuters)

o The Kyrgyz Government is reportedly seeking a foreign investor to buy up to 51% in the telecom monopoly operator Kyrgyztelecom. A plan for the partial privatisation of the telecom group has been worked out with the help of Raiffeisen Investment AG (RIAG), a subsidiary of Austrian Raiffeisen Zentralbank Oesterreich AG. RIAG estimates the total market value of Kyrgyztelecom between USD 400m and USD 500m. (Reuters)

o On 26 January 1999, the Central Bank of Uzbekistan reduced the official Sum/Dollar rate to 111.18/USD (Reuters)

o Uzbekistan plans to establish a Development Bank with the participation of international financial institutions and an authorised capital of USD 10m. Apart from the National Foreign Economic Bank, the new bank founders are assumed to include the EBRD, Asian Development Bank, IFC and Germany's state investment company. The German development bank Kreditanstalt fuer Wiederaufbau (KfW) is prepared to grant DM 1.44m as technical assistance in establishing Uzbekistan's Development Bank.

The National Foreign Economic Bank is Uzbekistan's largest bank with an authorised capital of more than USD 500m. Recently, the bank has signed a EURO 15m credit agreement with KfW to support small and medium-sized business in Uzbekistan. The credit will be extended for 10.5 years with a grace period of 3 years. (Reuters)

o Uzbekistan has issued a decree to raise commercial banks' minimum capital requirements to USD 2.5m from USD 2.0m in the equivalent local currency from 1 January 2000. The decree also envisages cutting the maximum stake a single shareholder may hold in local banks in an attempt to facilitate decision-making in the sector. The maximum stake would be lowered initially to 20% from 1 January 2000 from the current 35%, then to 13% from 1 January 2001 and 7% from 1 January 2002. (Reuters)