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Kyrgyzstan & Uzbekistan News

This Section is contributed by Kazkommerts Securities

March 1, 1999

Latest Kazakhstan Weekly News

o On 27 February 1999, the National Bank of the Kyrgyz Republic set the official Som/Dollar exchange rate at 30.5608 per one U.S. Dollar. (Reuters)

o According to the National Statistics Committee, Kyrgyzstan's industrial output fell 3.9% in January 1999 compared with the corresponding period last year. In January 1999, a decline was reported in the metals, flour milling, fuel, light, chemical and petrochemical industries.

The country posted a trade deficit of USD 327.9m in 1998. The trade deficit in 1997 was USD 105.5m.

Consumer prices rose 18.4% between December and January. The number of unemployed people fell to 55,600 or 3.1% of the work force at the end of January from 55,900 in December last year.

Budget revenues totalled 5.995bn Soms (USD 198m) in 1998, which was 2.6% less than the target. Of this total, taxes accounted for 81.7%, non-tax proceeds made up 16.8%, and other revenues—1.5%. (Reuters)

o On 22 February, President Askar Akaev signed a law on the country's 1999 budget following a discussion of the budget in both houses of the Kyrgyz parliament. The budget posts revenues amounting to 6.7bn Soms (USD 219m) and expenditures in the amount of 7.5bn Soms (USD 245m) thus making a budget deficit of 0.824m Soms or 2.0% of the GDP. (Reuters)

o The Kyrgyz government has adopted a new social and economic development plan for 1999-2001. The plan envisages an aggregate economic growth of 11.5% during this period. Industrial output is to grow by 7% and agricultural output by 15.5%. Inflation is planned at 35%. (Reuters)

o An excess of Soms and the absence of sufficient demand for hard currency on the market have resulted recently in decreased yields on T-bills. On 18 February 1999, the average yield on 3-month papers fell to 46.66% from 48.7% at the previous auction. The average yields on 6-month T-bills and 12-month T-bills fell, respectively, to 51.57% from 53.85%, and to 55.15% from 55.80%. (Reuters)

o Kyrgyzstan intends to increase exports by approximately USD 100m in 1999 in order to reduce a foreign trade deficit, said the Minister of Foreign Trade and Industry, Esengul Omuraliev. According to him, some export companies are planning a 15% growth in their outputs in the current year. The ministry has submitted to the parliament a new law on tariffs to meet the requirements of the World Trade Organisation whom Kyrgyzstan joined last autumn. The minister said that the draft law envisages some protective measures for domestic producers. Plus, favourable conditions will be created for the import of commodities that are not produced domestically. (Reuters)

o The National Bank of the Kyrgyz Republic (NB) will maintain a stable national currency exchange rate and will hold inflation at 20% in 1999, says a statement released after a joint session of the government and the NB. Other key macroeconomic figures for 1999 include a 2-3% growth in the GDP and the reduction of the budget deficit to 2.0% of the GDP. (Reuters)

o The official Central Bank's Sum/Dollar exchange rate has been held at 111.54/USD since 2 February 1999. (Reuters)

o Japan's Mitsubishi Corp. and Turkey's Bursel plan to build a USD 66m spinning factory in Uzbekistan. This information was released to Reuters by a representative of Uzbekistan's light industry association, Uzbeklegprom. He said that a joint venture has been set up to build the plant in the town of Chinaz, not far from the capital of Tashkent. The factory will produce 5,300 tonnes of cotton yarn and 2,500 tonnes of linen per year. The company has an authorised capital of USD 15.5m. Uzbekistan owns 49%, Bursel holds 47.6% and Mitsubishi 3.4%. Japan's Eximbank is expected to provide around USD 45m in credits to help finance the project. (Reuters)

o Australia's Western Mining Corporation (WMC) and Uzbekistan's government may sign an agreement in the second half of March to establish a joint venture to produce gold. The WMC became the winner of a tender for the development of the gold deposit Zarmitan near the city of Samarkand. Since that time, the Uzbek party has postponed signing the agreement several times. However, the parties have eventually settled all their disputes and the joint venture will hopefully be created soon. According to the State Geology and Mineral Resources Committee, the Zarmitan deposit holds 25 million tonnes of gold with an average gold concentration of 10g per tonne. Under the agreement, a gold mining factory will be constructed to process about 2 million tonnes of ore per year. (Reuters)