Monochrome by Centil Law: Running tally

As Kazakhstan, Kyrgyzstan and Uzbekistan prepare to cautiously emerge from quarantine next week, battling other challenges along the way, they draw estimates of the economic consequences and think of next steps.

President Tokayev stated that state-led measures in responding to the damage caused by COVID-19 cost Kazakhstan $13bn, which is about 8% of the country’s GDP. Public expenses included a 10% indexation of pensions and social allowances, a $100 lump-sum allowance to the unemployed, financial aid to farmers, free healthcare to all and tax exemptions on salaries until 1 July. 

Put under the strain from heavy rains and windy storms, part of a wall of Uzbekistan’s Sardoba Dam collapsed and inundated 22 villages including on the Kazakhstan border, displacing nearly 100,000 and 5,400 people respectively, according to official statistics. The economic damage is estimated at nearly $1bn. Mr Mirziyoyev took it upon himself to supervise the construction of the Dam, which finished as recently as 2017.

Continuing to benefit from foreign financial assistance in its fight against the social and economic ravages of COVID-19, Kyrgyzstan received a $50m loan from the Asian Development Bank. ADB’s new COVID-19 Active Response and Expenditure Support (CARES) program was set up to support the beneficiary-countries’ social assistance, fiscal stimulus capacity and aid to SMEs.

News spread of a rising number of COVID-19 cases amongst employees at Kazakhstan’s largest oilfield, Tengiz, in the west of the country. With 160 people now tested positive, 17,000 workers will be repatriated to their hometowns by the end of next week. Earlier cases were identified in April, in response to which Tengizchevroil introduced stricter regulatory measures, but continued operations.

Being amongst the latest to announce the number of COVID-19 cases on national soil, Tajikistan received $189.5m from the International Monetary Fund under its Rapid Credit Facility Disbursement program to support the country’s rehabilitation from the human and economic consequences of the pandemic. Medical and social assistance spending will be prioritised.

In response to China’s reduced demand in gas, Kazakhstan, Turkmenistan and Uzbekistan discussed a shared proportional cut in supplies along the Central Asia–China pipeline. In March, PetroChina issued a force majeure notice, reducing Kaztransgas exports by 20-25%. Last year China imported 33.2 Bcm from Turkmenistan, 10 Bcm from Uzbekistan, 7.1 Bcm from Kazakhstan.

On a brighter note, Kazatomprom won Dioxitek’s public tender to export its uranium ore concentrate to Argentina. Kazakhstan also has ongoing deals to supply uranium to Brazil and 950 tons to Iran. Despite the need to cut its production by 17.5% this year as a COVID-19 containment measure, the Kazakh nuclear company intends to fulfil its sales obligations for 2020.

Uzbekistan’s Ministry of Energy published an updated Concept Note, setting new targets for solar, hydro, wind and nuclear power generation at 5GW, 3.8GW, 3GW and 2.4GW respectively by 2030. Meanwhile, the share of natural gas-fired power capacity is to be reduced from 84.8% to 45% of the total national energy production. Ambitious.

In an unexpected turn of events, President Tokayev dismissed his predecessor’s daughter, Dariga Nazarbayeva, as Senate speaker and replaced her with Maulen Ashimbayev, his campaign manager at the previous elections. According to the presidential decree signed in October 2019, Tokayev is required to obtain Nazarbayev’s approval for appointments to most governmental positions, including this one.

Crippled by the pressure from the price inflation, COVID-19 and the US sanctions, Iran changed the name and cut 4 zeros from the face value of its national currency. In this way, Rial, which devalued by 60% since 2018, became Toman and is now worth an equivalent of 10,000 rials. It is believed that Iran’s Central Bank has two years to complete this transition and this raises questions regarding the state of the economy.

As some of you expressed interest in staying informed of developments in Central Asia, we are excited to inform you that next Tuesday, 12 May we are running a webinar on the implications of COVID-19 for businesses in Central Asia. We hope this will give us a chance to engage with you more closely.

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