Azerbaijan Economy going on life support capital controls as oil crunch worsens

January 19, 2016 By administrator

Going down The shops are closing one by one, prices are rising, wages are being delayed and people are panicking. This is how Azerbaijan, the Caspian Sea nation and ex-Soviet republic of nearly 10 million people, is ringing in the New Year.

The manat, Azerbaijan’s national currency, is plummeting with the price of oil — which accounts for 94 percent of the exports of the nation and 73 percent of the budget. The currency has lost most of its value against the dollar after the government dropped its support for the manat, but not before burning through half of the nation’s hard currency reserves, Reuters reported.

The first protests against price hikes and salary delays have began in the cities of Lankaran, Agjabady and Siyazan. In Lankaran, local residents closed the Baku-Astara road despite police attempts to prevent the protest, according to Meydan.TV.

And Azeri President Ilham Aliyev, the nation’s dictator, doesn’t seem to have a plan to rescue the nation beyond saying he will impose price controls.

Economic expert Natig Jafarly called president’s attitude to the current situation “Soviet-administrative”.

“The president and his team don’t understand or they don’t want to believe what is happening in Azerbaijan. We were waiting for the anti-crisis plan, but instead of that we saw kind of a Soviet-administrative attitude,” Jafarly said. “And this will cause a deeper crisis. It is more than clear that the present government is not able to save this country from the crisis, and the way of resolving of these problems is not the only economic reforms, but political reforms, the re-establishment of a management system – all these processes go through the parliament re-election as a first step,” Jafarly posted on his official Facebook account.

While waiting for Aliyev to come up with a plan, Azerbaijan will not have the benefit of civil society or an independent press, both long-repressed elements of society. Some of the main figures in civil society or journalism are in prison, including Intigam Aliyev, Anar Mammadov, Bashir Suleymanov, Khadija Ismayil and Rasul Jafarov.

And Aliyev’s poor human rights records mean it cannot count on help from the European Union, unlike other nations.

On Jan. 11, the price of oil fell to $31 a barrel, while Azerbaijan’s cost per-barrel of prodcution is $11.

Jafarly wrote that Azerbaijan’s state budget for 2016 counts on $50 a barrel for oil. But such a price rise is not expected this year. That means the government will have difficulty financing such projects as the the Baku-Tbilisi-Gars railway project.

The manat has tumbled by more than a third since the central bank abandoned its peg to the dollar last month. In the past week, the dramatic deterioration has sparked half a dozen protests in a country unaccustomed to widespread dissent.

“President Aliyev is in uncharted territory at the moment,” said Livia Paggi, central Asia and Caucasus analyst at risk consultancy GPW. “The government has been unable to stabilise the situation via conventional means. Now they are trying to restore currency stability by killing foreign exchange transactions.”

The wave of protests is unusual in a country where the government tolerates little opposition. In Siyazan, a small town north of the capital, 55 protesters were arrested last week. Further protests were reported in other towns this week in response to unemployment and rising prices, although the relatively affluent capital Baku has remained calm.

The government has announced measures to ease the impact of the manat’s fall, including a VAT exemption for bread and flour and a rise in pensions by 10 per cent.

Prices grow by 30% in Azerbaijan ahead of New Year because of devaluation, experts predict third devaluation

December 26, 2015 By administrator

f567c0713cfdba_567c0713cfdf8.thumb The chairman of the Central Bank of Azerbaijan (CBA) said that they would not allow manat ‘to float’ in any direction and that the CBA would use auction to offer a certain amount of the currency and follow the supply and demand formation process. This shows that the CBA again intends to spend currency reserves in the market, a step that does not solve the problem completely, said Gubad Ibadoglu, the chairperson of the Economic Research Centre, according to Minval.az.
Ibadoglu does not exclude a third, ‘even more severe’ wave of devaluation.

“Despite the much-discussed fall of the Russian rouble and the Ukrainian hryvnia, prominent experts share the opinion that the weakest national currency of 2015 is the Azerbaijani manat,” Ukrainian online magazine Profi-forex.org writes.

Arastun Orujlu, the director of East West Research Centre told Minval.az that the authorities will probably try to supress any form of mass protest against the second devaluation, although it can be quite risky. “Still, the authorities will do that for the simple reason that they have no alternative. They never dealt seriously with economy, never paid attention to the real social and economic development of the country. They were more concerned with creating an illusion of a good life, development, prosperity, and this illusion is now ruined, something that could have been expected,” Orujlu said.

Ekho.az, a local newspaper, writes that labour migrants, whose number may be reduced by 50 percent, have started to flow out from Baku to regions. According to the newspaper, the labour market of Azerbaijan ‘has been in fever’ since the first wave of devaluation in February. “We know, that it is easier to find a job in the capital, while the regions already suffer a real economic stagnation. There is no job, and this forces young citizens, who are capable to work, to look for a ‘labour happiness’ in Baku or in Russia. However, the labour workers outflow from the capital conditioned with the manat devaluation started back in February. The second wave of devaluation will increase the deurbanisation process,” Ekho writes.
“According to non-official data, there are about 1 million internal labour migrants in Baku today, who have arrived from different regions of Azerbaijan. I think if the current difficult economic situation persists, 50 percent of them will have to go back home,” independent economist Seyfal Aliyev told the newspaper.
Turan agency writes that the trading sector remains unstable and the prices of food and other products continue growing. The correspondents of the agency observed from 30 to 40 percent rise of prices of both local and imported products. “Even the factory-made bread costs 10 gapiks more. Meanwhile, the price of a number of dairy products still remains unchanged. The price of cigarettes went up by 50 percent,” the agency writes.

Haqqin.az reports that manat devaluation led to a 20 percent rise of medicine prices on average. Pharmacy owners say the prices will still go up.

The wholesale prices of flour reportedly rose by 20 or 25 percent.

The deputy health minister of Azerbaijan, Elsevar Agayev, said the sales of several types of medicine may be limited in Azerbaijan to avoid a deficit and cease of medicine sales in the market as a result of the devaluation, Trend agency reports.

Local APA news agency reports that the prices and weight of factory-made beard sold in the stores differ. A loaf of bread, supposed to weigh 500 grams according to state standard, weighs 420 grams. A monitoring shows that the entrepreneurs in the market are choosing between reducing the weight of the bread and rising its price.

“The stores have run out of cigarettes. The companies do not supply the product. Today we received only bread and dairy products. We are still not told anything. We are waiting,” a sales assistant told Qazqaz.info, as cited by Oxu.az.

Azerbaijan Railways CJSC has raised the price of rail tickets to international destinations as a result of the manat devaluation, head of the press service of the CJSC Nadir Azmammadov told Trend agency. Ekho.az reports a 30 percent decline of sales of New Year tours abroad and notes that the devaluation has made many Azerbaijani citizens forget about the holiday being just ahead.
“AZAL has rose the prices of air tickets and hotel booking is done in accordance with the dollar rate. As a result, many travel agencies are breathing their last. Today, only the citizens who have purchased their tours well in advance will go on New Year trips, and they are not many,” economist Seyfal Aliyev told Ecko.az.

The manat’s fall will hurt the already fragile banking sector of Azerbaijan, Fitch Ratings Agency said https://www.fitchratings.com/site/fitch-home/pressrelease?id=997144.
According to the agency, the devaluation will have a negative impact on banks’ asset quality, as loan dollarisation is high. The devaluation will also lead to a reduction of the capital adequacy indicator of the banks.

“We expect that some banks will not meet minimum prudential capital adequacy ratios at end-2015. <…> In the medium term, the devaluation will have a negative impact on banks’ asset quality, as loan dollarisation is high. The share of dollar-denominated loans in the sector was around 50% at end-3Q15 and will probably rise above 60% following today’s move. Because most of the country’s borrowers do not have access to foreign currency revenues, their debt service capacity will be impaired. Asset quality in the sector is further undermined by the weak business climate in the broader economy,” the agency said in a statement.

According to the agency, liquidity support to the banking sector should be available from the central bank, in case of need. The central bank already introduced a currency swap arrangement with the banks to bolster local-currency liquidity this year. Azerbaijan’s very strong sovereign balance sheet provides a ‘considerable buffer,’ with the State Oil Fund of Azerbaijan’s assets at USD34.7bn at 1 October, equivalent to 65% of forecast end-2015 GDP. The sharp exchange rate adjustment eases the oil shock’s fiscal impact by boosting the local-currency value of oil revenues and a floating currency should help stabilise reserves.

Fitch also highlights Azerbaijan’s high dependence on oil and gas, with hydrocarbons accounting for 95% of goods exports, 75% of budget revenues and 40% of GDP in 2015.
According to Report.az, a number of commercial banks in Azerbaijan have temporarily stopped giving out credits both in dollars and in manats. Mainly, the consumer credits have been limited. The banks say the sale of credit products was stopped in order to carry out a due analysis of the situation.

Levan Kalandadze, Georgian expert on economics, says the December devaluation of manat may have a negative impact on Georgia, with the rise of prices of Georgian products in Azerbaijan and reduction of currency flows from the neighbouring country. This may also result in a decline of Azerbaijani investments in the Georgian economy in 2016.

The major importers in Azerbaijan have started to reconsider their pricing policy. According to Minval.az, the company Veyseloglu had announced it switched to a floating pricing policy.
APA agency reports that the prices in the consumer market continue going up following the December 21 devaluation.

Nusret Ibrahimov, the CEO of MBA Group consulting agency, told APA that both the imported construction materials and those of local production have become more expensive. “In total, a 15 or 20 percent rise of prices is possible. The COGS of construction materials is between 38 and 40 percent in the construction market. If the price of the construction materials rises by 7 or 8 percent, the share of the construction market in COGS will not exceed 3 percent,” the company said.

Mustafa Abbasbeyli, the CEO of the supplier of Japanese cars into the Azerbaijani market, told APA that the prices of the imported cars would rise in accordance with the devaluation level.
Haqqin.az reports that Music Gallery, one of the best-known electronics stores in Baku, which had closed down immediately after manat’s fall, opened on 23 December and shocked the customers with its prices. The customers told the website that a Business Laptop from Apple is sold for 7720 manats.

The website cites ANS Press as reporting that Baku bus terminal has stopped selling tickets.
Economist Natig Jafarli, the executive secretary of REAL movement, told Turan and Voice of America that there was no need for a new drastic devaluation. “The rates of the CBA currency reserves reduction will also slow down. However, the decrease of economic activity will result in a reduction of tax incomes of the state budget,” the expert said.

He added that the local products, whose share, as claimed by the government, makes up 55 percent in Azerbaijan economy, will also become more expensive. This is explained by the fact that the raw material for many products is imported. According to the economist, administrative methods will not be capable to restrain the prices and a serious inflation is expected with prices rising for 25 or 30 percent.

Another Azerbaijani expert, economist Gubad Ibadoglu, wrote on his Facebook that the Central Bank is operating a ‘prospectless’ practice of spending currency reserves. “If the Central Bank does not rely on a really diversified economy, the country will face a third wave of devaluation,” the expert writes as cited by Turan.

According to Minval.az, the devaluation will also hit the media. “The newspapers could hardly stay afloat before the devaluation. Our incomes will remain the same while our spending will grow twice. It is hard to predict what is in store for us,” said Alesker Suleymanov, the CEO of the newspaper Yeni Musavat, as cited by the website.

Meanwhile, amid the panic among the population and business connected with the almost 50 percent devaluation of manat, the Youth and Sport Minister of Azerbaijan, Azad Rahimov, said the devaluation will not tell on the budgets of Islamiada and Formula1, as their budgets were calculated in dollars. However, he said Azerbaijan will not cover the travel and accommodation costs for the the Islamiada athletes, as they did during the European Games in summer 2015.

As of the daytime of 24 December 2014, manat rate is 1.5528 AZN/USD, 1.6974 AZN/EUR, 0.0223 AZN/RUR, according to the website of the Central Bank of Azerbaijan.

On 21 December 2015, the Central Bank of Azerbaijan made a decision to switch to a floating rate of the national currency manat. As a result, the exchange rate of the US dollar and Euro to manat rose by 47.6 percent and 47.9 percent and stood at 1.55 manats and 1.685 manats, respectively.

Terrorism and Turkish Economy’s growth are intertwined.

November 16, 2015 By administrator

In 1960 Turkish economy was only $12 Billion it took 40 years to reach $196 Billion, 9/11 happen Islamic government of Erdogan come in power Turkish economy suddenly surge in 10 year grow from $196 Billion to close to one Trillion dollars, remember Turkey has no oil no gas then how the economy grow this fast? Turkish dictator spending billions $$$ building mosques all over the world, building places worth Billions, multi billion dollars project like bridges, airports, Turkish airline buying airplane faster than anyone else so the question is where all this multi billions dollars come from?

Iraqi Kurdistan: The KRG Economy: Booming or Dooming? oligarchy & Money laundering

March 8, 2015 By administrator

By Harem Karem and Kamal Chomani:

he Ibrahim Khalil and other border points have generated huge revenues – for whom?

‘Kurdistan is booming’ was the Kurdistan Regional Government (KRG) oligarchy’s catchphrase – often echoed by short-sighted foreign businessmen – over the past decade. Undoubtedly, there has been development: hundreds of hotels and skyscrapers have mushroomed in the region, the standard of living has improved in comparison with the civil war era, and public services have improved to some extent.

However, this ‘booming economy’’ – or, as we call it ‘capitalism on steroids’ – hasn’t been due to the smart strategic planning of astute visionary members of the oligarchy. Instead, it has been primarily due to the billions of dollars poured into the region following the invasion of Iraq, mainly through international development programs, large-scale international money laundering and natural resources exporting – smuggling through the backdoor or by official routes.

Since 1992, for example, tens of millions of dollars per day have been generated at the border points with Turkey and Iran such as Ibrahim Khalil, Hajyomaran, Bashmakh and Khanaqeen. Until recently this income was not officially recorded and it was often appropriated by the dominant political parties, the KDP (Kurdistan Democratic Party) and PUK (Patriotic Union of Kurdistan). Even now there is a lack of transparency surrounding these funds.

As a result of the lack of long-term planning, mismanagement and the oligarchy’s attempt to thwart progress and divert projects for its own gain, most developments have benefited a tiny gang of greedy, money-munching monsters at the heart of government, while the majority of ordinary citizens have struggled to make ends meet.

By implementing half-baked populist policies to keep the populace submissive and prolong their exclusive grip of power, the oligarchy has deliberately promoted complacency and low productivity by creating a deformed welfare state – assigning nearly 80% of the national budget to a dole scheme and rewarding their hordes of lackeys by distributing public lands, luxurious cars and lucrative salaries at the national expense.

Such schemes have paved the way for thousands of villages to become deserted, the countryside abandoned and agriculture for internal consumption neglected throughout the region. Take the example of Sakran, one of 400-plus villages in the Choman area, situated in Eastern Choman (120 km North-East of Erbil). Until the nineties, it was self-sufficient and, what’s more, selling its products in the market. Sakran was a well-known agricultural brand in the Erbil province. All the people of this village were farmers. But, as a direct result of the KRG’s failed policies, the village is now deserted, with all its people living in the city and most receiving hand-outs from the KRG. Furthermore, local crafts have disappeared at an alarming rate: local products are fast becoming extinct, despite the fact that, historically, the region was self-sufficient through the centuries, resisting many calamities.

The ruling parties deliberately ignored the real needs of the countryside, putting farmers on the dole because they wanted to buy votes and strengthen their private militias. Sadly these local despots have managed to inflict a huge damage on society in two decades which the enemies couldn’t achieve in nearly a century. There is a saying among Kurds: “An axe cannot cut down a mighty oak-tree if the handle isn’t made of itself”.

The clientelist and kleptocratic practices of the oligarchy have paved the way for monumental failures politically, economically and in terms of government performance as well as the burgeoning grievances of the populace. The oligarchy has been wielding its axe to tear apart the society (‘divide and conquer’), running a patronage system to maintain a disproportionate hold on every aspect of power and business, together with multi-million-dollar, state-of-the-art propaganda machines to launch mass deception campaigns. How many millions, for example, are being allocated from the KRG budget to the Rudaw media empire owned by the prime minister?

In the words of the current finance minister, who took office less than a year ago as part of the coalition agreement, “out of almost 30,000 employees in the ministry, half of them do not exist”. Corrupt officials have registered their associates and party supporters to receive salaries without doing any work. It can be suspected that essentially the same is true for the rest of the ministries and local authorities.

Our quarrel here is not with those suffering from the KRG’s fraud and deception but with the oligarchy and those propagating its failed policies and corruption. Blinded by their own self-interest, and to feed the populist welfare state they have created, the oligarchy has pursued a myopic oil policy since 2007 without any due regard to existing oil and gas laws and ignoring national interests and experts’ warnings about the recklessness of putting all the eggs into one basket. Today, with the oil price at a record low, the total oil revenue at its best wouldn’t exceed $500 million each month, while the welfare state they have created requires $711 million. Additionally, the KRG needs $334 million to provide electricity every month and more than $200 million to protect its borders with IS and support the internally displaced people.

The oligarchy blames the budget dispute with Baghdad for all these problems, diverting attention from its own greed and lack of a viable economic strategy. Furthermore, the Kurdish oligarchy has been deeply involved with Baghdad since 2005, holding the positions of Iraqi presidency, deputy prime minister, deputy parliament speaker and several ministries including finance and foreign ministries.

The fact is that, over the past decade, more than $100 billion (and this is just the declared income) has poured into the KRG’s coffers and, not only has it failed to invest this wisely, but today the KRG owes nearly $18 billion – mainly to the oligarchy-owned giant companies and banks! We can safely say that the hundreds of luxurious hotels and skyscrapers are no substitute for what the region’s people urgently need: thousands of school buildings, hospitals, roads, dams and social wellbeing programs to look after the large numbers of people living below the poverty line.

There is a lack of official statistics but tens of thousands of the elderly have not received their pensions for the past three months. They turn up to their local bank each month only to be told it hasn’t got any money. Hundreds of thousands of teachers and other civil servants haven’t received wages for December, January and February. We know that most are struggling with their food and heating bills and those who live in rented accommodation or have a sick family member can often survive only through charity.

In conclusion, the booming economy has mainly benefited the corrupt political elite (oligarchy): many of them rapidly became millionaires and billionaires, while a majority of citizens are now seeing a dooming economy with increasing calamities

Source: kurdistantribune.com

ECONOMY Creation of the Franco Armenian Institute of Construction in Armenia (IFA-BTP)

May 21, 2014 By administrator

After the signing of a Memorandum of Understanding Premier in May 2013, the birth of this institute was signed Tuesday, May 13, 2014 in the premises of the Institute in Yerevan, attended by representatives of French Schools partners * representatives of ASIFA-BTP, and the Armenian Branch of the Institute.
The Armenian press and television covered the event.

This ambitious project initiated in 2011 by the Association of Support for IFA-BTP for its creation and sustainability (ASIFA-BTP), chaired by Michel Kevorkian, a professional construction now retired, aims however strong and mingled with humility:

• to participate in the modernization of Armenia’s education system, particularly in the specific construction,

• to train skilled workers, technicians and senior engineers who will address the growing shortage of professionals in Armenia.

In short, to modernize the industry creates jobs and wealth that the Republic of Armenia much needed now. Like any country that aspires to modernize its infrastructure, Armenia can not ignore any longer the absolute necessity.

This institute will be as Regional International train for careers in the construction of Armenian students from all backgrounds: Armenia, neighboring countries (Iran, Georgia, Russia), Europe, America … but also host non-Armenian students who wish to s’ form there.

Diplomas discerned at IFA-BTP affect all levels of education: Master of the CAP Engineers (Bac +5). They cover all sectors of the construction industry.

This first year will begin with the opening of two Prep classes in September 2014. Hopefully success and long life to the Institute.
* Higher Studies Engineering (HEI)
Establishment of Higher Education Associative
13 rue de Toul, 59046 Lille, France
Lycée Claude-Nicolas Ledoux / School of Building and Construction (EBTP)

Establishment of Vocational Education under contract with the State Association
18, 18bis Rue de Belfort-30 rue de la Paix, 94307 VINCENNES Cedex, France

Lycée Maximilien Perret Etablissement Public Education and Professional Versatile Place San Benedetto del Tronto BP 56, 94142 Alfortville, FRANCE