Days after being removed from his senior Cabinet post and his role as a key aide to Turkmenistan’s president, Palvan Taganov is reported to have been arrested.
Announcing the dismissal during the January 5 Cabinet meeting, President Gurbanguly Berdymukhamedov listed multiple shortcomings by Taganov, including failure to contain corruption.
CA-News website went further on January 7, reporting that Taganov has been detained on unspecified charges.
Corruption has becoming a recurring public theme in Turkmenistan as authorities seek to explain away the increasingly apparent economic malaise gripping the country.
Taganov’s brief was evidently vast and he had access to the highest echelons of power paralleled by few others in Turkmenistan.
He was simultaneously appointed deputy prime minister and administrator of the presidential apparatus and Cabinet in September 2013. The following January, his role was slightly amended to put him in charge of trade and the state commodity and raw materials exchange.
Taganov was again named chief of the presidential administration in August 2015, replacing Shamuhammed Durdyliyev, who was moved over to deal energy, construction and utilities sectors. Durdyliyev’s primary brief has been to get the capital, Ashgabat, ready for the 5th Asian Indoor and Martial Arts Games in 2017, which are being touted as a international showcase for the country.
Taganov's control extended over the foreign economic relations, the chamber of industry and trade, and the union of industrialists and entrepreneurs.
So Berdymukhamedov’s criticisms suggests maladministration across a wide array of offices.
Dwindling remittances from Russia to Tajikistan are being squeezed yet again by government measures preventing migrant laborers from wiring Russian rubles.
New rules that came into effect on February 2 obliged people in Tajikistan receiving transfers made in rubles to collect the funds exclusively in the domestic currency, the somoni.
That appears on first analysis to have been motivated by a desperate urgency at the national bank to build up its foreign cash reserves and keep the somoni on an even keel.
At least two major wire companies popular with migrant laborers in Russia have in turn reacted by stopping the transfer of rubles to Tajikistan, and accepting only other currencies, such as dollar or euros. An employee at one of the wire companies, Zolotaya Korona, said the ruble ban had come into effect on February 4.
In effect, this arrangement will require Tajik workers in Russia to first convert their increasingly devalued ruble salaries into a foreign currency, thereby incurring a commission, and then sending that cash home, also against payment. Although people collecting the cash in Tajikistan can still draw the funds in whatever currency they were wired (as long as it is not rubles), there are concerns the government could soon extend the restrictions to dollars and euros.
The fall in the value of the ruble against the dollar has been slower than that of the somoni since the start of the year, so the value of the remittances is being pinched. The ruble has lost 5 percent against the dollar over that period, while the somoni has fallen by around 13 percent.
The picture is grim as it is.
Remittances for the January-September period in 2015 dropped about 65 percent to $1.054 billion, compared to $3.016 billion over the same period the previous year.
Kyrgyzstan’s government is coming to the assistance of debtors battered by the U.S. greenback’s rise against the local currency, but it is unclear how useful, widespread or sustainable a new som-for-dollar debt scheme will be.
Nearly 3,000 people that took out large loans in dollars for housing in the first half of 2015 were left unable to make payments as the som plummeted by over one-fifth against the dollar in the last six months of the year, largely on the back of economic peril in Russia.
A government initiative presented on February 1 allows those people to exchange their outstanding dollar debt for Kyrgyz soms at a favorable rate of 62.144 soms — a rate from July 1, 2015, before the dollar began its climb towards the roughly 76 soms it costs now.
The government has put aside over $7.5 million to plug the gap between the exchange rate of yore and the current one and is only intervening in loans worth $40,000 or less.
The questions surrounding the scheme relate to whether this will be too little, too late, and whether the government will expand the plan to other struggling debtors that borrowed large dollar sums in the second half of the year — on July 2, for instance.
Also, the interest on the loans will remain at the high market rate of nearly 16.76 percent, even if the original loans were secured at a lower rate. Whether the most troubled debtors will be able to make these payments remains an unknown.
Restrictions on the circulation of cash out of Turkmenistan have reportedly been extended to a service popularly used to make transfers to relatives abroad.
The foreign-based Alternative News of Turkmenistan reported earlier this month that Western Union branches in the country had limited transfers out of the country to just $300 per transaction. The payment could be made only in manat at the state-approved exchange rate, which is lower than the black market rate. Operations carried out with a credit card incurred an additional surcharge equivalent to 8 percent of the sum being sent.
The monthly limit on how much can be transferred was set at $1,000 per person.
Operations also required presenting various documentation, including the Soviet-vintage propiska and employment record book, which evidently reflects the authorities desire to monitor who is sending what, where and when.
Although strict, the apparently informal rules appear to have not done enough to stem the outflow of dollars.
Alternative News of Turkmenistan cited sources inside the country as saying Western Union has now introduced a new cap. Customers can no longer transfer amounts larger than their monthly salary.
If correct, the fact that people are believed to have been funneling more money out than they officially earn — presumably offloading their cash savings in the process — is a stark testament to mounting loss of trust in the domestic currency.
When demonstrations begin taking place in the town of Naryn in Kyrgyzstan, the authorities need to start worrying.
As Kloop.kg reported, about 200 people gathered on January 27 on the main square of the high-altitude town for a rally to complain about issues including electricity tariffs and lack of transportation links in the region.
Maybe the most sensitive issue, however, was related to the salary bonuses paid to workers in mountainous locations. State employees there receive a 50 percent additional payment to compensate for the arduous living conditions, but lawmakers had been considering scrapping or minimizing that allowance to save costs. The government earlier in the week hastily ditched the proposal in recognition of its potential to provoke unrest, but that has not entirely soothed moods.
Not only do Naryn residents want the allowance to remain in place, but they also want it raised to 70 percent of their salaries. The Naryn rally was peaceful and proceeded without incident.
When former President Kurmanbek Bakiyev was toppled in 2010, it was at the culmination of quality of life protests that first gained momentum in Naryn, so the government is acutely aware of the need to placate discontent.
With that in mind, remarks made in parliament on January 27 by a member of the main coalition force, the Social Democratic Party of Kyrgyzstan, were particularly provocative.
Hot on the heels of a graft scandal that has blighted a flagship exhibition to be staged in Kazakhstan’s capital comes news that its budget is being slashed – again.
With Kazakhstan in the throes of economic crisis, President Nursultan Nazarbayev has approved cuts of 53 billion tenge ($140 million) to the budget for hosting EXPO-2017 in Astana next year.
“We have to look at budget spending, taking account of hard times,” Akhmetzhan Yesimov, the official in charge of organizing the project, said in remarks quoted by Tengri News on January 26.
The latest cuts bring the total reduction in public spending on the exhibition to 131 billion tenge ($345 million), a dramatic slump forced by the fall in global oil prices.
That is around one-tenth of the originally expected total expenditure of $3 billion, most of which was to come from private investors but with a significant chunk provided by the state.
The project’s financial well-being was not helped by officials previously in charge of organizing it pilfering some $27 million dollars from the construction funds.
Kazakhstan is scrambling for ideas on where to cut as it enters its worst economic crisis since the 1990s. Some economists are forecasting negative growth this year for the first time in nearly two decades.
Critics of the EXPO see it as a vanity project that is wasting money at a time of crisis, though when Kazakhstan won the hosting rights in 2012 oil prices were riding high and growth was buoyant.
As bad as things may have got for Kazakhstan, authorities have tended to grasp the tender slip of consolation that the economy was expected to grow in 2016, if only slightly.
Analysts at the London-based Economist Intelligence Unit now beg to differ and are predicting that Kazakhstan is set for its first year of negative growth in nearly two decades.
“We have revised our forecast for Kazakhstan and now expect GDP to contract for the first time since 1998,” the think tank tweeted on January 22.
An accompanying table showed that the EIU believes the economy will shrink by 2 percent this year, posting negative growth for the first time since 1998.
Years of near double-digit growth were fueled by surging oil prices, and the slump has accordingly been caused by the collapse in the cost of the commodity, which accounts for about one-quarter of Kazakhstan’s economy.
EIU’s prediction, the gloomiest one out there for Kazakhstan, piles on the misery as the country comes to terms with the economy slowing to just 1.5 percent last year, down from 4.3 percent in 2014.
The government is now recalculating its budget, with the most pessimistic scenario based on oil costing just $16 per barrel on average over the year, Prime Minister Karim Masimov said last week. The government’s core scenario is based on $40 oil, well above the sub-$30 per barrel mark registered most of last week.
Kazakhstan is also bearing the brunt of a slowdown in its major trading partners Russia, which is in full-blown recession, and China, which posted its lowest growth in a quarter of a century
Oil production is entering a new year of decline this year in Kazakhstan — a dismal omen for a country so heavily reliant on energy exports.
Energy Minister Vladimir Shkolnik said on January 15 in remarks quoted by the Novosti-Kazakhstan news agency that Kazakhstan expects to pump 77 million tons of oil in 2016, 3.1 percent down on the 79.5 million tons produced last year.
The fall is down to the gradual depletion of the country’s oil fields, most of which have been under development for decades. As the fields dry up, recovering the remaining crude becomes more expensive, and with oil prices now hovering obstinately at $30, drawing Kazakhstan’s deposits is becoming costly.
And this latest government forecast may be too optimistic.
Shkolnik said in September that Kazakhstan would slash its oil output forecast for 2016 to 73 million tons if the oil price hit $30, as it has done this week. He said 77 million tons would be the target if oil stood at $40 per barrel.
The decline has been in train for several years already.
Oil output dropped 1.2 per cent in 2014, to 80.8 million tons, and 1.6 percent last year, to 79.5 million tons.
But it is the disastrously low prices that are taking the toll on the economy. The government announced on January 15 that gross domestic product grew by 1.2 percent last year – a significant slowdown on the previous year’s 4.3 percent.
The government is to meet on January 19 to discuss cuts to this year’s budget in the face of the economic slump.
In a measure of Turkmenistan’s despair, authorities on January 12 halted the sale of all foreign currencies as demand for dollars and euros continued to pile pressure on the manat.
Workers at banks in Ashgabat informed customers that the restriction would remain in place indefinitely.
And while there have been reports on black market soaring, the signs are that illegal trading in foreign currency is being much more strictly policed than in earlier years. Bans on the sale of dollars occurred in the days of the late President Saparmurat Niyazov, when the manat experienced periods of high volatility, but access to the black was in those days far easier.
The official manat rate has stubbornly stayed fast at 3.50 to the dollar since January 1, 2015, when it fell from 2.85 in a sudden one-off devaluation.
Lines have been forming outside banks for several weeks now as people holding manat desperately seek to offload them for any currency they can obtain.
Banking authorities in the nearby countries, like Kazakhstan, Kyrgyzstan and Tajikistan, have meanwhile been compelled to relent to varying degrees and allow their national currencies to slide.
Opposition websites have reported that black markets in Mary and Balkanabat are selling dollars at 4.20 manat. That figure could not be independently confirmed.
Customers trying to exchange their manat have been told by officials at money exchange that if they plan to travel abroad, they should use Visa and Mastercard to draw foreign currencies from their Turkmen bank account. Those account-holders are eligible to convert $1,000 from manat into dollars onto their account, although they cannot not draw this in cash in-country.
Despite all the desperate and draconian measures being adopted by authorities in Tajikistan, the national currency has continued its downward trajectory.
The somoni officially closed 2015 at 6.99 against the dollar, but that slipped to 7.19 on January 6 — a more than 2.5 percent slide in under a week. (It has been a steady drop — although vastly less steep than Kazakhstan — since the start of 2015, when the official rate was 5.3 somoni to the dollar.)
And if at the end of the year, the dollar was selling in the banks at 7.45 somoni, banks’ websites are now showing 7.7 somoni. Meanwhile, banks are buying dollars at 7.4 somoni.
A $400 daily limit has also been placed on how many dollars account-holders can draw on their cards.
In December, the central bank suspected operations at all money exchanges points, citing speculation, leaving only banks the right to perform the transaction. Anybody carrying out unauthorized currency exchanges could face stiff penalties, the central bank said.
All the while, authorities assured people that there were enough foreign currency to go go around. Indeed, the central bank warned authorized credit organizations that failure to provide exchange service on more than two reported occasions could lead to penalties up to and including license revocation.
The warnings have had little effect. EurasiaNet.org visited several banks around the capital, Dushanbe on January 6 and found that banks authorized (obliged even) to sell dollars were unable (or unwilling) to do so. Banks will buy dollars, but refuse to sell it.
“If you want yuan, if you want Russian (rubles), you can have it, but we cannot sell you dollars. We are forbidden from selling it,” said a teller at one bank in Dushanbe.