Covid-19 in Eurasia GDP, $ billion and Growth, · 2020-05-13 · Covid-19 – Eurasia Check-up...

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Covid-19 – Eurasia Check-up Watchate

May 12th 2020

Waiting and hoping

This is a weekly update of the most important news and events in the

Eurasia Region with specific emphasis on the impact of the virus, and

any actions that governments take, on the economy and the business

environment. See our separate Covid-19 Russia Checkup report for

more detailed information and analysis concerning Russia’s response

and the economic impact in that economy.

Russia jumps again. The infection rate in Russia rose by 76,000

to 221,344 last week. Elsewhere the increase was 13,500.

Death rate remains low. The number of deaths rose by 831, with

653 of these in Russia. Overall, the death rate across the region

is low relative to the EU or US. Mongolia has yet to record any

deaths.

Turkmenistan remains “clear”. The government still refuses to

acknowledge any Covid-19 cases in the country, although there

is plenty of credible evidence to the contrary.

Easing has started. All countries in the region have started to

ease lockdown restrictions. The aim is to have almost all

economic restrictions cancelled by end June.

Currencies remain stable. The stable oil price helped the ruble

to rise modestly last week and that has helped all other regional

currencies to also ease upwards. There were no major monetary

policy actions across the region last week.

Belarus election set. Parliament in Minsk has approved the date

for the presidential election on August 9th. The president had

earlier made clear that he sees no reason for a delay.

Central Asia border clashes. There have been some border

clashes between Kyrgyz, Tajikistan and Uzbekistan. But nothing

major, and such clashes are almost routine since the end of the

USSR. Border delineation was not made very clear.

IMF alters Ukraine plan. The IMF has cancelled the plan for a

US$5.5 billion Extended Fund Facility (EFF) and says negotiations

must restart for a downgraded Standby agreement (SBA). This

should suit Ukraine better as it cancels the focus on difficult

structural reforms and shifts the priority to more urgent macro

management.

Critical Ukraine bank reform bill set for May 13th vote. Any

additional lending is still critically conditional on the passage of

the Bank Reform bill. The vote on this is set for May 13th and the

government says it is confident it has enough support.

Armenian brawl. Parliament erupted into a brawl last week as

opposition deputies criticize the government’s anti-crisis

measures and the suppression of political opposition.

Kazakhstan stable. There has been no disruption or fallout from

the removal of Nazarbayev’s daughter Dariga as Speaker. For

now, all is calm.

Covid-19 in EurasiaPopulation*

Mln Cases Deaths

Armenia 2.96 3,392 46

Azerbaijan 10.11 2,589 32Georgia 3.99 639 11Belarus 9.45 23,906 135Kazakhstan 18.72 5,240 32

Kyrgyz Republic 6.49 1,037 12Mongolia 3.26 41 0Russia 145.92 221,344 2,009Tajikistan 9.48 661 21Turkmenistan 6.00Ukraine 43.80 16,023 425Uzbekistan 33.34 2,509 10

Eurasia Total 293.52 277,381 2,733

Source: *Worldometers, **WHO at May 12th

Coronovirus**

Currency Movement vs US Dollar, YTD*Currency v US$* YTD, %

Armenia Dram 487.31 -1.7%

Azerbaijan Manat 1.70 0.1%Georgia Lari 3.20 -10.6%Belarus Ruble 2.44 -13.5%

Kazakhstan Tenge 420.27 -9.0%Kyrgyz Republic Som 78.03 -10.6%

Mongolia Togrog 2,790.40 -2.6%Russia Ruble 73.46 -15.6%

Tajikistan Somoni 10.27 -5.6%Turkmenistan Manat** 20.00 -5.0%

Ukraine Hryvnia 26.82 -11.2%Uzbekistan Som 10,131.1 -5.0%Brent, $ p/bbl 30.05 -54.5%Afghanistan Afgani 76.33 1.1%Iran Toman** 17,070 -21.8%

Source: Bloomberg, Macro-Advisory

* as at May 12th

** commercial or street rate

Benchmark Interest Rates, %Current, % AdJusted bbs, +/-

Armenia 5.00% Apri l -25

Azerbaijan 7.25% Apri l no

Georgia 8.50% Apri l -50Belarus 8.75% Feb -25

Kazakhstan 9.50% Apri l -250Kyrgyz Republic 5.00% Feb -75

Mongolia 9.00% Apri l -100

Russia 5.50% Apri l -50Tajikistan 11.75% Apri l -100

Turkmenistan

Ukraine 8.00% Apri l -200Uzbekistan 15.00% Apri l -100

Source: Central Banks, Macro-Advisory

* at May12th

GDP, $ billion and Growth, %GDP 2020E

bln, $ 2020E 2021E

Armenia $13.0 1.0% 4.0%Azerbaijan $45.0 -2.0% 1.0%Georgia $50.4 -5.0% 1.2%Belarus $14.2 -2.0% 3.5%Kazakhstan $157.0 -2.0% 3.0%Kyrgyz Republic $9.4 0.5% 3.0%Mongolia $12.5 2.0% 4.0%Russia $1,568.0 -3.5% 2.0%Tajikistan $8.2 1.0% 3.5%Turkmenistan $50.0 2.0% 5.5%Ukraine $141.8 -4.0% 3.0%Uzbekistan $55.5 1.7% 5.0%

Total, average $2,125.0 -3.1% 2.3%

Source: Bloomberg, Macro-Advisory

GDP, % Change YoY

2

Covid-19 – Eurasia Check-up Watchars Update

Armenia

Reported cases: 3,392 + 885 (week-on-week)

Reported deaths: 46 + 7 (week-on-week)

Dram-US$ exchange rate: 487.31 - 1.5% (WoW) - 1.6% (MTD) - 1.7% (YTD)

Government actions & regulations

Easing slowly. The state of emergency is not due to end until May 14th (although it may be extended) but a

number of restrictions have been lifted for workplaces. They must abide by the following restrictions:

Rules for staff: Staff members must be informed about sanitary and safety standards. Employees’

temperatures must be taken at designated times throughout the course of the day and recorded.

Handwashing at regular intervals is required, sanitizer must be available, and PPE must be worn. In

beauty salons, masks and gloves must be changed every three to four hours. Also, workplaces must

be disinfected on a daily basis.

Rules for customers: In retail businesses, customers are required to maintain an area of 8 spm

between themselves and other customers. Temperatures of customers should be checked and

registered. Shops are available to those over 65 exclusively between the hours of 10:00 and 12:00.

In restaurants, there should be at least 1.5 m between tables. Groups must not exceed five people.

Additional assistance packages. The Prime Minister gave a speech summarizing the activity of the 16

government assistance packages to date. He said that assistance has been provided to over 21,000 businesses

and over one million people. Armenian banks and credit organizations have suspended loan repayments for

472,000 people and 15,000 legal entities. Pashinyan also said that the government has allocated ADM5.0

billion worth of utility payment assistance, two billion of which is prepayment for next month.

The government created the seventeenth in its series of assistance packages this week. This package is

directed towards tech companies and was introduced by Hakob Arshakyan, the Minister of High Technologies.

The package aims to support high-tech businesses affected by the crisis and also to promote innovation within

the field. Beneficiary candidates must meet several criteria, including compliance with the Law on State

Support in the Sphere of Information Technologies, having a clean tax record for the last 12 months, not

having received grants from the Ministry of High Technologies in the last 12 months.

Returning diaspora. Since March, over 70,000 Armenians have returned to the country with financial

assistance both from the government and diaspora Armenian organizations.

Armenia - Covid-19: New Cases (Bar - RHS) & Deaths (Line - LHS) May 12th

Source: World Health Organization

3


The government has also increased the capacity for Covid-19 patients in hospitals. Bed capacity for those infected has increased from 300 to 1500, with another 150 soon to be added. Also, over 6,000 people have been quarantined in hotels.

Unruly parliament. Prime Minister Pashinyan and Edmon Marukyan, the leader of the Bright Armenia Party,

engaged in what is described as a very nasty and bitter exchange after members of their respective parties

brawled on the Armenian parliament floor on Friday. The brawl erupted in the presence of Pashinyan and his

ministers as the opposition attacked pro-government deputies for their angry reactions to opposition criticism

of the government. Marukyan was heckled by some of those deputies affiliated with Pashinyan’s My Step bloc

and shouted back at them during his speech. One of them, Sasun Mikaelyan, then punched him before other

lawmakers from My Step and the Bright Armenia Party joined in the resulting fistfight or shoved and chased

each other in the chamber.

Monetary response and impact

Ameriabank rating reaffirmed. Moody's Investors Service has re-affirmed the Ba3 long-term local currency

deposit rating of Armenia’s Ameriabank and kept its outlook at stable. According to Moody’s, Ameriabank's

loans to the small and medium sized enterprise (SME) segment, which of all segments is seen as most

vulnerable to the coronavirus pandemic, accounted for 17.4% of the lender’s total loans. The bank's loans to

individuals accounted for 25% of the total loan book, and were almost equally split between mortgages and

consumer loans, it also noted.

Pressure to open the Amulsar gold mine. An internal report by the European Union Delegation to Armenia

states that the UK and US have pressured the country over the controversial Amulsar gold mining project.

Local residents and environmental activists have in the past two years blockaded the unfinished US$400

million project, bringing them into conflict with British-American mining company Lydian International and

the Armenian government. The internal EU report, dated October 2019, touches on the international

dimension to the Amulsar standoff, “As a result of the nearly two-year blockade, Lydian has been unable to

access the Amulsar site and finish construction on the project, which is backed by resource investment funds,

the European Bank for Reconstruction and Development (EBRD), as well as the UK and US governments.

Trade with Iran grew in 1Q20. Recorded Iran-Armenia trade grew by 3.4% YoY to US$74.6 million during the

1Q20, ILNA reported on May 9th. Data issued by Armenia suggested that exports from Iran made up the bulk

of trade. However, a significant chunk of exports from Armenia were not listed, including pork consignments

and bootleg alcohol, which remains popular with a significant number of Muslim Iranians when it is not off-

limits. Imports from Iran’s small neighbour increased 104% to reach US$19.1 million in the first quarter, while

Iran’s exports to Armenia stood at US$55.5 million, marking an 11.5% decline y/y.

Armenia Dram - US Dollar Exchange Rate

Source: Trading Economics

4


Azerbaijan

Reported cases: 2,589 + 605 (week-on-week)

Reported Deaths: 32 + 6 (week-on-week)

Manat-US$ exchange rate: 1.696 0.2% (WoW) 0.2% (MTD) 0.3% (YTD)


High profile corruption arrests. The Azerbaijani authorities have been rounding up local officials accused of

corruption. Among the alleged crimes: improperly giving out permissions to leave home amid a strict

coronavirus stay-at-home regime. The Prosecutor’s Office said that it had carried out operations around the

country against six local officials. All six have been charged with illegally issuing exemptions to the country’s

electronically enforced isolation rules. Two were additionally accused of stealing food aid from the state-run

charity, the Heydar Aliyev Foundation, intended for poor Azerbaijanis. Those arrests followed the detention

of the head of the Bilasuvar district on charges of embezzlement, abuse of power, and bribery. Another district

head, from Imishli, was also arrested although details of the charges have not been published.

Criticism from opposition. Opposition groups accuse the authorities of ignoring high-profile corruption and

say the arrests are simply a case of promoting a good-tsar / bad-boyars narrative as public discontent with

the government has been exacerbated by the state’s inconsistent response to the coronavirus outbreak and

the prospect of hard times resulting from dropping oil prices.

Good tsar. Aliyev announced that he is personally taking charge of complaints from a number of Bilasuvar

residents who say that their former district chief stole land from them. And one MP suggested that law

enforcement officials in the several districts under investigation also should be punished, because they didn’t

inform Aliyev of the problems. “They should have immediately informed the relevant organs and the head of

state about the illegal activities in the regions,” the MP, said. “If these reports and information had reached

the head of state in a timely fashion, the situation wouldn’t have gotten to this point.”

Opposition activists arrested. Two more opposition activists were arrested on May 9th for supposedly

violating the quarantine. Elkhan Aliyev and Ali Imanhanly, both of the Popular Front Party, were arrested and

will be detained for 30 days. As with previous arrests of oppositionists, journalists and watchdog groups

question the validity of the charges.

Azerbaijan - Covid-19: New Cases (Bar - RHS) & Deaths (Line - LHS) May 12th


5


Public discontent rising. People in villages and rural areas have been complaining that restrictions imposed

by the state of emergency are affecting their basic livelihoods in extreme ways. Some have complained that

the travel ban prevents them from reaching hospitals when necessary and that there are no medical supplies

available in their areas. Victims of domestic violence say that their inability to leave their homes prevents

them from being able to go to neighbours’ houses when violence erupts at home. Others say there are

extreme shortages of food. In addition, there are complaints about a lack of education regarding safety

measures and the dangers of the virus itself in rural areas. People are concerned the virus is likely to spread

faster in these areas because the government has not conducted a sufficient awareness campaign for them.


Fitch downgrades SOCAR outlook. Explaining its decision, Fitch said it expected the NOC to struggle with

higher leverage owing to lower than previously forecast oil prices between 2020 and 2022. The agency

predicts Brent oil to average US$35 per barrel in 2020, rising to US$45 in 2021 and US$53 in 2022. SOCAR’s

oil output is also anticipated to be lower than earlier thought as a result this month’s OPEC+ deal on supply

cuts. The Azeri government has pledged to scale-back national supply to 554,000 barrels per day in May and

June, versus 763,900 bpd in March. SOCAR accounts for roughly a third of total production. Fitch expects the

company’s output to decline by 11% in 2020 and only recover to the 2018 level of 256,000 bpd in 2022. Its

capital investments are anticipated to total AZN12 billion (US$7 billion) in the 2019-22 period, down from an

earlier guidance by Fitch of AZN14 billion. SOCAR’s liquidity amounted to AZN7.8 billion at the end of 2019,

while its short-term debt stood at AZN4.6 billion. The liquidity includes AZN6.8 billion in cash and cash

equivalents and AZN1.0 billion in undrawn credit relating to the modernisation of the Heydar Aliyev oil

refinery. SOCAR’s working capital inflow is projected to be AZN0.8 billion in 2020 and the same level the

following year. It will generate negative cash flow in both years, Fitch has forecasted.

Iran wants border trade to resume. The Iranian president’s Chief of Staff has held telephone negotiations

with Turkey and Azerbaijan to remove obstacles to the resumption of trade ties that were introduced in the

battle against the coronavirus pandemic, Iran newspaper has reported. Mahmoud Vaezi subsequently called

on Turkey and Azerbaijan to resolve problems affecting trucks at border points. Several reports and posted

video footage have lately relayed how long jams in Iran, Turkey and Azerbaijan remain a terrible dilemma for

truck drivers transporting trade consignments.

Southern Gas Corridor. The industry and Aliyev administration may still have some big news to celebrate in

2020 if plans to get Azeri gas flowing to the European Union market are realised. Azerbaijan in the months

ahead hopes to announce a first shipment of gas—from the Caspian Sea Shah Deniz field—to southern Italy

via a set of interlinked pipelines that make up the Southern Gas Corridor (SCG). Although delayed, the last leg

of the SCG—the Trans Adriatic Pipeline (TAP) that connects Albania to Italy taking a route across the Adriatic

Sea seabed—is now very near completion.

Azerbaijan Manat - US Dollar Exchange Rate


6


Belarus

Reported cases: 23,906 +6,417 (week-on-week)

Reported deaths: 135 +32 (week-on-week)

Ruble US$ exchange rate: 2.437 + 0.7% (WoW) -0.8% (MTD) -13.5% (YTD)


Parliament has set the country's presidential election for August 9th. Earlier in May, President Lukashenko

said that the authorities are not going to postpone the election due to the coronavirus epidemic. "Belarus is

going to have the presidential election sooner. We have no reason to postpone it. There is no possibility to

postpone the election, according to the constitution," he said. "Therefore we will hold the election. We will

set the date soon. It is going to be summer, definitely. The deadline is the end of August."

Dealing with protests. Belarusian authorities briefly detained in different regions of the country dozens of

supporters of the nation's popular blogger, Sergei Tsikhanovski, who is critical of the Belarusian authorities.

The blogger, who had been touring Belarus over the past weeks and recording the grievances of local people

amid the coronavirus outbreak, was arrested in early May. He was pulled over by traffic police. The blogger

livestreamed police’s attempt to get him out of the vehicle, including the country's special task police unit

officer’s threat to smash its side window. The next day, about 40 people gathered in the regional centre

Gomel, chanting slogans against the President and expressing their support for the blogger.

Expelled Russian TV crew. The Belarusian authorities revoked the media accreditation of a news crew of the

Russian Channel One and deported its correspondent from the country after his report about the snowballing

coronavirus crisis in the country. The report said that April's Orthodox Christian Easter services and a state-

organised nationwide Subbotnik had led to a surge in new coronavirus cases in the country.

President is critical of Russia. President Lukashenko had previously slammed Russia's media for their

coverage of the coronavirus epidemic in Belarus. "They provide disgusting information, saying that the

Belarusian president wants people to treat with a tractor, vodka, sauna [...] you know, it was a joke. But there

is part of a joke in every joke," state news agency BELTA quoted Lukashenko as saying on April 13th. "I would

like to tell those Russians who are spreading this crap: don't touch us. We are not asking anything from them.

We are doing our best to protect and save ourselves." "Come to Belarus and see it with your own eyes. But

why are you making fools of us in Russia? Why do they make Russians think that Belarusians are some crazy

people."

Belarus - Covid-19: New Cases (Bar - RHS) & Deaths (Line - LHS) May 12th


7



Foreign exchange reserves increased by US$96 million, or 1.2% month-on-month, to US$7.9 billion in April,

following a 12% MoM drop in March, according to the National Bank of Belarus (NBB). The result was

attributed to the purchase of foreign currency at the Belarusian currency stock exchange by the NBB, as well

as higher prices for monetary gold, the obtaining of budget revenue in the foreign currency, and revenues

from selling government bonds denominated in foreign currency by the Finance Ministry. According to the

NBB monetary policy guidelines for 2019, the volume of international reserve assets as of January 1st, 2020

should be at least US$7.1 billion.

New debt placed in Moscow. The coupon rate of a RUB10 billion (US$135 million) bond placement on the

Russian financial market has been set at 8.5%, which is the minimum figure for Belarusian flotations in Russia,

according to the Finance Ministry. The Finance Ministry has put together a bid book for bonds with the

maturity period of five years. The bid book contains over 40 bids. The maturity period has been raised from

three to five years in comparison with the bonds floated in 2019.

Belarus Ruble - US Dollar Exchange Rate


8


Georgia

Reported cases: 639 + 46 (week-on-week)


Lari US$ exchange rate: 3.201 0.0% (WoW) 0.1% (MTD) – 10.6% (YTD)


Easing of restrictions. Prime Minister Gakharia announced the lifting of the state of emergency that will take

place at various stages throughout the month of May. Within the plan, all manufacturing activities will be

resumed, as well as certain categories of retail and wholesale businesses, and the cities of Tbilisi, Rustavi,

Gardabani, and Marneuli. Details of the plan are as follows:

On May 11th, the borders of Tbilisi will be opened. All manufacturing will be resumed, and retail and

wholesale stores will open, with the exception of clothing and shoe stores and shopping malls.

On May 14th, travel restrictions will be lifted in Rustavi and Gardabani.

On May 18th, travel restrictions will be lifted in Marneuli.

But with conditions. Despite these changes, Gakharia noted that the nationwide curfew between 9pm and

6am will remain in force. Also, all businesses will be required to comply with hygiene rules established by the

Ministry of Health, including social distancing measures and wearing masks in commercial spaces.

The government announced that it will reopen for tourists in July. The package will total GEL200 million and

will include tax breaks and exemptions, direct subsidies, fiscal incentives, as well as other types of support.

The plan will take place in three phases, with relevant businesses opening, although they must begin

implementing public health and security guidelines according to standards set out by the WHO and other

international organizations.

The government plans to undertake a marketing campaign branding Georgia as a safe destination in

an unsafe world

The second stage of the project involves creating special tourism zones

The third will begin on July 1 with the opening of national borders and resuming of some flights.

Tax breaks to help tourism sector. All tourism-related businesses will be exempt from property tax for four

months and will have income tax payments deferred until November 1st . The government will subsidize 80%

of interest payments on loans to small hotels for six months. In addition, tourism-related businesses can

receive assistance in loan restructuring.

Georgia - Covid-19: New Cases (Bar - RHS) & Deaths (Line - LHS) May 12th


9


Hotels will be subsidised to assist with their loan obligations. All facilities with an annual turnover of up to

GEL20mn (practically more than 95% of the hotel industry in the country) will receive an 80%-subsidy for

interest paid on loans of up to GEL5.0 million (GEL60.0 million impact on the state budget). Tourist operators

will be funded when it comes to participation in international exhibitions.

Exemptions for restaurants. For restaurants, the property tax exemption and the tax deferral will be applied

as well. They will, moreover, benefit from a specific credit guarantee scheme.

Resumption of flights to Georgia. On the resumption of flights to Georgia, Economy Minister Natia Turnava

explained that the period before July 1st would be used for negotiations with partner airlines and to determine

the directions from which tourists will enter in the first restoration phase. “It is important for us to use this

time to conclude negotiations with low-budget companies that have flown with us so far and will continue to

fly, and not only with them, because you know that many companies fly to Georgia and our open skies policy

is one of our priorities,” the minister said. According to Turnava, the government was actively communicating

with WizzAir to see check on the airline’s readiness to meet all international safety standards set by the World

Tourism Organization. "There will be a specific plan for May and we are working on a shortlist of services that

WizzAir is ready to serve. We are also working with countries through diplomatic channels to create safe

corridors,” Turnava also said.

Tension with Armenia. The discrepancy in coronavirus cases between Georgia and Armenia has brought out

tensions between the two countries and led to accusations towards one another. While Georgia’s numbers

have remained relatively low by global standards, Armenia’s have been proportionally much higher. Although

Georgia credits early testing and quick, efficient safety measures to its low numbers, reports have surfaced

that Armenia has accused Georgia of falsifying its statistics for the sake of appearances. Armenia also claims

to be testing more people than Georgia, and some claim that this is the reason for Armenia’s higher numbers.

Suspend diplomatic ties with Ukraine. Georgia is recalling its ambassador in Kyiv for consultations following

the appointment of former Georgian president and ex-Odessa governor Mikheil Saakashvili to the position of

Chairman of the Ukraine President’s Executive Committee on Reforms. But Georgia is only making a protest

and this should not lead to a permanent dispute between the two. "Georgia is not considering the possibility

of breaking off diplomatic relations or reviewing the strategic partnership," a government spokesperson said.


UNDP aid. The UNDP announced that it will support 40,000 face shields, produced by a Georgian company,

to be distributed to frontline personnel. The shields will be provided to healthcare staff, local civil servants

and other “at-risk” personnel in the country. The first batch of 16,000 shields will be distributed this week in

a joint project with the EU. The goal of the project is to assist the private sector in revitalizing itself amidst

the crisis.

Georgia Lari - US Dollar Exchange Rate


10


Kazakhstan

Reported cases: 5,240 +1,119 (week-on-week)


Tenge-US$ exchange rate: 420.27 + 0.9% (WoW) + 1.3% (MTD) – 9.0% (YTD)


Easing from Monday 11th. Kazakhstan lifted the state of emergency, imposed due to the coronavirus

pandemic on May 11th, but quarantine restrictions remain in place, Kazinform news agency reported. The

state of emergency was originally set to end on April 15th, but the end-date was postponed until May 11th.

The country declared the emergency regime on March 15th and locked down its borders. The government

has introduced a US$14 billion stimulus package to help combat the economic impacts of the pandemic along

with the collapse in oil prices.

Resumption of internal flights. Air Astana resumed scheduled flights from Almaty and Nur-Sultan to regional

centres across the country after the end of the Kazakh state of emergency on May 11th. Services to Aktobe

and Kyzylorda cities from Almaty and Nur-Sultan will relaunch on May 12th and May 13th, respectively,

whereas flights to Oskemen from the two cities are set to restart on May 13th and May 14th. Flights to other

parts of the country will resume after the reopening of local airports.

Almaty airport sale. Turkish airport operator TAV said it has signed a share purchase agreement to buy Almaty

International Airport. TAV added that it, along with consortium partner VPE Capital, would pay US$415 million

for 100% of the shares in the airport. Almaty International Airport will become the 15th airport in TAV’s global

network.

Media restrictions criticised. The OSCE representative on freedom of the media welcomed a decision by the

lower house of Kazakhstan’s parliament to decriminalise defamation and urged the Kazakh authorities to

repeal articles on “Insult” and “Distribution of Deliberately False Information”. He also called for the removal

from the Criminal Code of articles protecting the “honour and dignity” of Kazakhstan’s first president

Nazarbayev; current president Tokayev; parliamentarians; and other government officials.

Kazakhstan - Covid-19: New Cases (Bar - RHS) & Deaths (Line - LHS) May 12th


11


US Aid. The United States Centres for Disease Control and Prevention (CDC/CAR) has pledged US$1.68 million

to support Kazakhstan in managing its ongoing coronavirus (Covid-19) outbreak as part of a US$6.8 million

package of assistance for the Central Asian region. “CDC Central Asia has been supporting the ministries of

health in Central Asia since the beginning of the outbreak by organising training, and providing technical

assistance on emergency operations, laboratory operations, infection prevention and control, screening at

ports of entry, risk communication and community engagement, and disease surveillance,” a statement from

CDC Central Asia said. “CDC has also been translating technical guidance documents published by leading

international public health organizations into Russian for distribution.”


NBK sales. Kazakhstan’s central bank sold US$817.5 million from the rainy-day National Fund on the domestic

market in April. The sales were directed at transferring funds to the Kazakh state budget. At the same time,

such sales help prop up the Kazakh currency, the tenge. Pressure on the tenge eased in April and, as such, the

central bank did not use any of its own funds for interventions on the currency market.

Economic actions and impact

AIFC expects a leading debt role. The Astana International Financial Centre (AIFC) is reportedly working on a

“massive influx of additional financing” from the World Bank, Asia Development Bank (ADB), European Bank

for Reconstruction and Development (EBRD), and the International Monetary Fund (IMF), Forbes cited

anonymous sources working at AIFC. The report added that AIFC believes it can become a financial hub to

help rebuild Central Asia as Chinese investments, such as the Belt and Road Initiative, have been put on hold

while the coronavirus emergency has put the region on lockdown.

Kazakh Tenge - US Dollar Exchange Rate


12


Kyrgyz Republic

Reported cases: 1.037 +194 (week-on-week)


Som - US$ exchange rate: 78.027 1.1% (WoW) 1.3% (MTD) - 10.6% (YTD)


Kyrgyz authorities announce a second support package. The Kyrgyz Republic has announced a second

package of measures to support businesses worth KGS40 billion (US$507 million), the government said. The

second package is aimed at a phased restart of economic activity and gives financial support to small and

medium-sized business (SMEs) owners. The revised second financial package comprises 19 measures,

including the preferential lending to businesses and several fiscal measures, including revising the obligations

of tax contracts and restructuring the debt on taxes and social contributions.

Businesses focused on export and food security will also get financial aid, according to the revised business

support package.

Funding the extra help. The Kyrgyz government said it had set aside KGS40 billion (US$507 million) from

external structuring programmes. Another KGS17.5 billion (US$126 million) has been obtained from other

sources, such as the Russian-Kyrgyz Development Fund and the Eurasian Fund for Stabilisation and

Development.

Another flare up on the Tajik border. The Kyrgyz-Tajik border saw three Kyrgyz border guards and two Tajik

citizens wounded in a shootout in a disputed area, authorities on both sides said, blaming each other for

initiating the violence. Border conflicts are not uncommon in the area – ever since the USSR collapsed,

Kyrgyzstan, Tajikistan and Uzbekistan have never managed to complete a border demarcation in the Ferghana

Valley. The area is home to many Tajik, Uzbek and Kyrgyz exclaves. The Kyrgyz side reported that the clash

first broke out between the residents of Kyrgyzstan’s Batken province and Tajikistan’s Sughd province as

dozens of people on both sides began throwing rocks at each other.

Tensions rise on Uzbekh border. Kyrgyz border authorities said on May 5th they had prevented potential

clashes near an Uzbek exclave, Sokh, located inside Kyrgyzstan’s territory, RFE/RL reported. Tensions near the

Uzbek-Kyrgyz border have been rising due to a dispute around the usage of irrigation water. Kyrgyz border

guards said they had fired warning gunshots on to prevent possible violence. Sokh is an ethnic Tajik-populated

Uzbek territory within the Kyrgyz Batken region – shootings are not an uncommon occurrence there.

Kyrgyz Republic - Covid-19: New Cases (Bar - RHS) & Deaths (Line - LHS) May 12th


13


US Aid. The US Centre for Disease Control and Prevention (CDC) is providing Kyrgyzstan US$1.38 million to

combat coronavirus (Covid-19), the director of the organisation for Central Asia, Daniel Singer, said. According

to Singer, the CDC plans to spend the money on the purchase of equipment, reagents, training of health

workers and support from the Ministry of Health to protect the health of the Kyrgyz population.

Amending export restrictions. The Kyrgyz Ministry of Economy has proposed amending

emergency export rules for several items from the country brought in late March amid the coronavirus (Covid-

19) epidemic. Named “On the introduction of a temporary ban on the export of certain types of goods from

the Kyrgyz Republic”, dated March 22nd, 2020, the law banned the export of certain things, including noodles

and medical kits. The law imposed a specific temporary ban on the export of pasta, napkins and other

antibacterial agents from the Kyrgyz Republic, the report noted. The amendment to the emergency rules

proposes allowing the export of antibacterial agents from the Kyrgyz Republic as soon as possible, to build up

export potential.

EBRD helps uranium legacy problems. The European Bank for Reconstruction and Development (EBRD) said

in a statement that efforts to overcome Central Asia’s uranium mining legacy are “making progress despite

the global coronavirus pandemic”. They include the signing of a contract for remediation works in Shekaftar

in the Kyrgyz Republic. The Shekaftar mining complex includes three closed mines and eight mining-waste

disposal areas that contain about 700,000 cubic metres of waste from mining operations. A risk to public

health is posed by radioactive waste-rock dumps, scattered around the village and next to a school. “Once a

thriving community based on uranium mining, today, due to its geographical position near the border with

Uzbekistan and to the closure of the mines, Shekaftar has an unemployment rate of 70 percent,” the

statement said. “The first remediation works will focus on the closure of six shafts and the relocation of five

waste-rock dumps to an existing dump at a more remote location.”

Kyrgyz Som - US Dollar Exchange Rate


14


Mongolia Republic



Togrog-US$ exchange rate: 2,790.4 0.0% (YoY) 0.0% (MTD) -2.6% (YTD)


Political gesture to Russia. Mongolian officials have handed over 20,000 face masks to Russia, according to AKI PRESS on May 11th. The donation was presented by Advisor to the Prime Minister and Secretary-General of the Mongolian Soldiers’ Association Togol Togoo to Russian Ambassador Ivan Azizov.

Health sector funding. The Asian Development Bank (ADB) has approved US$30 million in extra financing for a health sector project in Mongolia to deal with coronavirus. “The government has taken effective measures to contain the spread of COVID-19, but Mongolia remains vulnerable to any possible surge in the number of cases as well as future infectious diseases and public health emergencies,” said ADB Country Director for Mongolia Pavit Ramachandran. “This additional financing for the Fifth Health Sector Development Project will support the upgrading of key hospital facilities to better prepare for future emergencies” he added.

ADB and JFPR aid. The ADB and the Mongolian government have signed an agreement for US$40 mln in loans and a US$2 mln Japan Fund for Poverty Reduction (JFPR) grant. The grants and loans are said to support the modernisation of government-owned irrigation networks and vegetable production in the country. The project will initially target 12 schemes along with directly associated infrastructure to provide irrigation services for over 8,000 hectares of land.

Help from Turquoise Hills. The Oyu Tolgoi mine company has donated MNT455mn (US$163,000) to the Mongolian government to support prevention efforts against COVID-19, including MNT100mn to the government of Mongolia through the Mongolian National Mining Association, MNT200mn to the Umnugovi Emergency Committee, and MNT10mn to the Khanbogd Emergency Committee through the Gobi Oyu Development Support Fund. Workers also launched a ‘Miners’ donation campaign in the fight against COVID-19 and raised over MNT145mn and donated it to the Ministry of Health.

Mongolia - Covid-19: New Cases (Bar - RHS) & Deaths (Line - LHS) May 12th


Mongolia Togrog - US Dollar Exchange Rate


15


Tajikistan



Somoni - USUS$ exchange rate: 10.265 -0.2% (WoW) - 0.2% (MTD) -5.6% (YTD)


US Aid. The United States Centers for Disease Control and Prevention (CDC/CAR) has pledged US$1.69 million

to Tajikistan adding to the US$1.0 million in assistance already provided by USAID to support the country's

efforts to combat the coronavirus (COVID-19) pandemic, the US Embassy in Tajikistan said. The funds will

assist in procuring laboratory supplies and equipment for coronavirus testing, organising training for public

health workers, and technical assistance for border health activities, along with helping develop and

implement clinical protocols.

IMF aid. The International Monetary Fund (IMF) has approved US$189.5 million in assistance for Tajikistan to

help it “meet urgent balance of payments and fiscal needs” due to the coronavirus (Covid-19) pandemic, the

IMF said. “The economy is currently projected to contract by 2% this year and the overall budget deficit could

rise to 7.7% of GDP,” the IMF said in a statement. “Additional concessional and grant financing from the

international community will be critical to close the remaining financing gap,” the fund added.

Increasing electricity export capacity. National Electric Grids of Uzbekistan, the country's state agency for the

transmission of electricity, has announced a tender for the engineering, procurement and construction of an

Asian Development Bank-funded (ADB-funded) 500 kV electricity transmission line between Uzbekistan

and Tajikistan. The tender is open to all bidders from ADB-eligible countries. The construction works for the

project are planned for completion within 12 months of the winning contract coming into effect. The single

circuit transmission line will run from the Guzar substation in Uzbekistan to the Regar substation in Tajikistan,

spanning a distance of 63.5 km. “[The 500kV transmission line] will enhance connections between

Uzbekistan’s and Tajikistan’s electricity grids and is an important part of our regional energy cooperation

strategy,” Dadajon Ainakulovich, chairman of the board of National Electric Networks of Uzbekistan, said.

Tajikistan Somoni - US Dollar Exchange Rate


16


Turkmenistan

Reported cases: N/A N/A (week-on-week)

Reported deaths: N/A N/A (week-on-week)

Manat (Commercial) US$ FX rate: 20.0 -2.5% (WoW) -2.5% (MTD) - 5.0% (YTD)


Claim that GDP rose 6.3% in 4M20. The state information agency TDH reports that President

Berdymukhammedov held a session of the Cabinet of Ministers via a video conference to sum up the

performance over the past four months. Deputy Prime Minister overseeing economy and finance Gadyrgeldy

Mushshikov, Minister of Finance and Economy Ezizgeldy Annamukhamedov and Chairperson of the Central

Bank Merdan Annadurdyev gave progress reports. The officials briefed about financial accomplishments and

stable growth of economic indicators: GDP rose by 6.3%, manufacturing – by 5.5%, foreign trade turnover –

by 1.5%, and wages went up by 10.4%. The Deputy Prime Minister also reported that “the forecast for the

social and economic development of Turkmenistan for 2020 was made taken into account the current global

economic situation”. According to TDH, after hearing all the reports, Berdymukhammedov “was pleased to

note that overall economic indicators suggest a stable growth”. At the same time, the head of state said that

the performance of banks is not properly organized and instructed that the cash turnover be reduced and

non-cash transactions be widely introduced. The President ordered the transition to non-cash transactions a

month ago. Following this, a daily limit for cash withdrawals in ATMs was cut from 800 to 200 manat.

Expecting a reduction. Summing up the results of the Cabinet session held on May 8th

President Berdymukhammedov was satisfied with the fact that the government managed to maintain a high

GDP growth rate, which amounts to 6.3%. At the same time, the head of state stated that the “global

economic situation remains extremely complicated” and the authorities expect a reduction in domestic

production. According to Berdymukhammedov, the current sharp drop in oil prices can lead “to a more

unfavourable situation than the financial crisis of 2008 and the fall in oil prices in 2014-15”. “As in previous

crises, during the sustainable economic growth the monetary policy is experiencing a shortage of funds to

meet the needs”, – the President said and added that the government has to significantly cut the state budget

expenditures as well as the expenditures of public sector organizations and companies.

Ordered to cut spending. All Deputy Prime Ministers were charged with the task of putting together proposals

on cutting expenditures and drawing up an amended state budget based on the results of the first six months

of the year. For instance, construction projects except those of “social significance” will be suspended.

According to Berdymukhammedov, the savings will be spent on rendering support to small and medium size

business as well as providing medical institutions with medications, personal protection items and diagnostic

equipment and prompt funding of quarantine-related expenses. The government was ordered to increase the

volume of export and control prices for groceries.

Turkmenistan Manat (Commercial Rate) -US Dollar Exchange Rate

Source: Chronicles of Turkmenistan

17


Ukraine Reported cases: 16,023 + 3,326 (week-on-week)

Reported deaths: 425 + 109 (week-on- week)

Hryvnia-US$ exchange rate: 26.82 + 0.6% (WoW) + 0.5 (MTD) - 11.2% (YTD)


Bank bill set for May 13th vote. The Ukrainian parliament will be able to adopt in final readings a bill that

includes restricting the return of failed banks to their former shareholders during the May 13th session,

according to First Deputy Head of the Servant of the People faction Oleksandr Korniyenko. He said that there

were "enough votes for the banking law's approval". At the same time, Korniyenko noted that not all deputies

of the ruling party support this bill. The Rada is going to consider the final readings of the bill according to a

simplified procedure. The bill’s approval, which will make it impossible to return the nation's largest lender

PrivatBank, nationalised in late 2016, to its former owners, oligarchs Ihor Kolomoisky and Gennadiy

Bogolyubov, is a key precondition for the IMF to initiate its loan programme for Ukraine, estimated at about

US$8 billion.

IMF changes the loan terms. The International Monetary Fund (IMF) has cancelled its agreement

with Ukraine for the extended US$5.5 billion Extended Fund Facility (EFF) and says negotiations must restart

for a downgraded Standby agreement (SBA) due to “political instability,” The IMF came to a principle

agreement with Ukraine in December 2019 to sign off a new extended EFF that normally would run over at

least three years in the wake of Ukrainian President Zelenskiy's election victory in April and the landslide

victory of his Servant of the People (SOTP) Party in August. However, the deal was never finalised nor

approved by the funds management board and so no money was disbursed. The IMF, Ukraine’s key donor,

was waiting for Ukraine’s Rada to pass various key pieces of legislation, including a bill to create a land market

and the so-called anti-Kolomoisky bill that would bar the state returning banks to their former owners if they

have been nationalised.

Minsk Group approved. President Zelenskiy issued a decree confirming the members of Ukraine’s delegation

to the Trilateral Contact Group in Minsk to resolve the war in Donbass. The delegation will be led by former

president Kuchma, while his first deputy will be Deputy Prime Minister Oleksiy Reznikov, a partner in the

Asters law firm. The decree defines each of their responsibilities and allows for more MPs, state officials,

advisers and experts to be added. It also designates President’s Office head Andriy Yermak as the moderator

of the delegation’s activities.

Ukraine - Covid-19: New Cases (Bar - RHS) & Deaths (Line - LHS) May 12th


18


Saakashvili appointment. President Zelenskiy has appointed former Odessa governor and ex-Georgian

President Mikheil Saakashvili to the head of the Executive Committee for Reforms. The body has no formal

power and Saakashvili will act as an advisor to the president, but it puts the one-time president back into the

limelight. Georgia has sharply criticised the appointment of Saakashvili and has recalled the country’s

ambassador from Kyiv for consultations.


Inflation. In April, consumer prices in Ukraine grew by 0.8%, the State Statistics Service has reported. At the

same time, in April last year, price growth was higher: it was 1%, therefore inflation in April 2020 year-on-year

slowed to 2.1% from 2.3% in March and 4.1% in 2019. According to the State Statistics Service, underlying

inflation in April this year fell to 0.4% after the jump to 1.3% in March, whereas before it had been falling for

three consecutive months. Last April, underlying inflation was also 0.4%; as a result, annual inflation remained

at 3.1%.

NBK expects GDP decline of 5%. Ukraine’s economy will contract sharply in the second quarter of this year,

says the National Bank of Ukraine (NBU), before gradually recovering, but average growth will end 2020 with

a 5% contraction. The fall in real GDP will be 11.3%, similar, but not as bad as the 17% contraction seen in the

second quarter of 2015 caused by the economic dislocation of the Euromaidan protests, the National Bank

of Ukraine (NBU) said in its latest inflation outlook for 2020.

Budget deficit. Ukraine’s budget deficit was UAH23.5 billion (US$870 million) in January-April 2020, including

the deficit in the general fund of UAH33 billion, according to the preliminary estimates of the Finance Ministry.

The actual borrowing for the general fund of the national budget over the period came to UAH108 billion, or

84.1% of the plan, the ministry said as cited by Interfax Ukraine.

Ukraine's unemployment rate has climbed to 456,800 against the backdrop of lockdown measures aimed at

curbing the spread of the coronavirus pandemic, signifying an increase of 48% year on year, the state

employment service reported. Since the beginning of the coronavirus quarantine, the agency has registered

156,600 people as newly unemployed.

Coal production to resume. DTEK energy group will relaunch coal mines at Pavlogradugol and Dobropolyeugol

to achieve production forecast figures provided by the country's energy ministry, Dmitry Sakharuk, DTEK

general director, was quoted as saying by Liga news agency. According to Sakharuk, Pavlogradugol mines will

be launched on May 15 and Dobropolyeugol on June 1. "We have analysed [the] production forecast approved

[by the energy ministry] and see that there is demand for coal," he said.

Ukraine Hyrvnia-US Dollar Exchange Rate


19


Uzbekistan

Reported cases: 2,509 +320 (week-on-week)


Som US$ exchange rate: 10,131.1 0.1% (WoW) 0.0% (MTD) - 5.0% (YTD)


New colour coded zones. Uzbekistan’s Special Commission to Combat Coronavirus said that the country is set to ease lockdown restrictions over the coronavirus (Covid-19) outbreak and introduce red, yellow and green zones starting from May 8th.

The red zone will include regions that have registered coronavirus infections in the last 14 days. This allows the work of food stores, wholesale stores, building materials markets, workshops, retails banks, dry cleaners, law firms, insurance companies, shoe repair shops, slaughter houses, leather processing facilities, fast food outlets (only for delivery and pickup), pharmacies, as well as the collection, delivery and sale of agricultural products and the sale of seeds; also the sale of car spare parts, handicrafts, construction materials; walking near multi-storey buildings and courtyards with respect to social distancing.

The yellow zone will cover regions with infected people but no new infections registered over the previous 14 days. This will allow non-food stores, jewellery and flower shops, hairdressers and beauty salons (subject to special conditions), hotels (hostels and guest houses), car washes, car valeting, repair shops for household appliances, taxis (subject to special conditions), rides on bicycles and scooters without restrictions, as well as what is allowed in the red zone.

The green zone are regions where all patients have recovered. This allows the activity of parks (except attractions and entertainment), the movement of vehicles without permits, the visit of citizens to government department buildings, as well as what is allowed in the yellow and red zones.

Uzbekistan - Covid-19: New Cases (Bar - RHS) & Deaths (Line - LHS) May 12th


20



Loan from Dutch bank. Uzbekistan’s Bank Ipak Yuli has signed a US$5 million loan agreement with the

Netherlands' FMO Bank, Ipak Yuli's press service reported. The funds are to be directed at projects for small

enterprises, agricultural enterprises, women entrepreneurs and young entrepreneurs under the age of 35.

Bank Ipak Yuli previously signed similar credit line agreements with FMO in the amount of US$20 million in

August 2019 along with US$15 million in March 2020.

“This agreement allows the bank the opportunity for further growth and expansion of its activities in the field

of financing micro, small and medium enterprises (MSMEs) in Uzbekistan,” the Uzbek bank said.

US Aid. The US Agency for International Development (USAID), in cooperation with the Standardization,

Metrology and Certification Agency of Uzbekistan (UzStandard), has published a comprehensive manual

for Uzbekistan’s farmers and agri-firms to help them compete on international markets by adopting

agricultural practices in line with the international GLOBAL Good Agricultural Practice (GLOBAL GAP) standard,

the US Embassy in Uzbekistan said.

Energy Sector concept. Uzbekistan’s Energy Ministry has announced a “concept note” that outlines an

updated strategy for the Uzbek energy sector for the 2020-30 period. The country plans to increase its

installed and available generating capacity to 29.3 GW by 2030 from its current 12.9 GW along with raising

electricity production to 120.8 kWh from 63.6 billion kWh. “The development of renewable energy sources

will contribute to affordable electricity supplies in regions with current shortages,” the statement said.

“Renewable energy will improve environmental conditions, increase efficiency and stimulate the

development of local industries, infrastructure and job creation.” The concept note also includes plans to

reduce natural gas consumption to 12.1 billion cubic metres from 16.5 billion cubic metres. The ministry aims

to decrease electricity transmission losses to 2.35% and distribution losses to 6.5% - nearly half less than in

2019

Uzbekistan is again permitting Iranian trucks to enter the country. A spokesperson for the Islamic Republic

of Iran Customs Administration (IRICA), Ruhollah Latifi, said that Uzbekistan has lifted restrictions on the

“entrance and transit of Iranian, Afghan and Italian trucks” but remains vigilant on the potential for the

coronavirus to spread. “The crisis response committee of Uzbekistan has allowed Iranian, Afghan and Italian

trucks to travel in that country for road transport provided that they fully observe the health regulations,” he

added. According to the IRICA official, foreign trucks that carry shipments into or through Uzbekistan can stay

in the country for a maximum period of 10 days.

Uzbekistan Som-US Dollar Exchange Rate


21


Appendix 1: Benchmark & Policy Interest Rates

Armenia - Benchmark Interest Rate, % Azerbaijan - Benchmark Interest Rate, % Belarus - Benchmark Interest Rate, %

Source: Central Bank of Armenia Source: Central Bank of Azerbaijan Source: National Bank of Belarus

Georgia - Benchmark Interest Rate, % Kazakhstan - Benchmark Interest Rate, % Kyrgyz Republic - Benchmark Interest Rate, %

Source: National Bank of Georgia Source: National Bank of Kazakhstan Source: National Bank of Kyrgyz Republic

Mongolia - Benchmark Interest Rate, % Russia - Benchmark Interest Rate, % Tajikistan - Benchmark Interest Rate, %

Source: Mongolbank Source: Central Bank of Russia Source: World Health Organisation

Turkmenistan - Benchmark Interest Rate, % Ukraine - Benchmark Interest Rate, % Uzbekistan - Benchmark Interest Rate, %

No Information - approx 2.1%

Source: National Bank of Ukraine Source: National Bank of Ukraine Source: Central Bank of Uzbekistan

22


Appendix 2: Monetary & Fiscal Indicators & Forecasts

The forecasts for 2020-21 will change as the impact of the virus, and any government actions, becomes better

understood. Please check separate country reports for more detailed information and updates,

Growth IndicatorsPopulation GDP, $bln GDP/Cap US$GDP p/Cap US$ Upside, % GDP, % Change

mln 2020E 2020E PPP $ to PPP 2020E 2021E 2022E

Armenia 3.0 $13.0 $4,392 $9,178 109% 1.0% 4.0% 4.5%

Azerbai jan 10.1 $45.0 $4,447 $16,011 260% -2.0% 1.0% 2.0%

Belarus 9.5 $50.4 $5,333 $17,742 233% -5.0% 1.2% 1.5%

Georgia 4.0 $14.2 $3,559 $10,152 185% -2.0% 3.5% 4.0%

Kazakhstan 18.7 $157.0 $8,382 $24,738 195% -2.0% 3.0% 4.0%

Kyrgyz Republ ic 6.5 $9.4 $1,446 $3,447 138% 0.5% 3.0% 4.5%

Mongol ia 3.3 $12.5 $3,823 $12,209 219% 2.0% 4.0% 4.5%

Russ ia 145.9 $1,568.0 $10,746 $27,147 153% -3.5% 2.0% 2.4%

Tajikis tan 9.5 $8.2 $867 $3,061 253% 1.0% 3.5% 4.5%

Turkmenistan 6.0 $50.0 $8,319 $17,129 106% 2.0% 5.5% 5.5%

Ukraine 43.8 $141.8 $3,239 $9,233 185% -4.0% 3.0% 3.5%

Uzbekis tan 33.4 $55.5 $1,663 $6,240 275% 1.7% 5.0% 5.5%

Source: Respective National Statistics Services, Worldometers, Macro-Advisory Ltd estimates

Monetary Indicators

2020E 2021E 2022E 2020E 2021E 2022E 2020E 2021E 2022E

Armenia 3.0% 3.3% 4.0% 5.0% 5.0% 5.0% 480 470 470

Azerbai jan 3.5% 3.0% 2.8% 7.25% 7.0% 6.8% 1.7 1.9 1.9

Belarus 6.0% 5.5% 5.0% 8.5% 8.5% 8.0% 2.40 2.30 2.25

Georgia 5.0% 4.0% 2.8% 8.5% 8.0% 7.0% 3.1 3.0 2.9

Kazakhstan 6.0% 5.5% 4.5% 9.00% 8.00% 7.50% 420 400 380

Kyrgyz Republ ic 9.0% 7.0% 5.0% 5.00% 5.00% 4.25% 80.0 77.0 73.0

Mongol ia 8.0% 7.0% 6.0% 9.0% 9.0% 8.0% 2,800 2,750 2,725

Russ ia 5.5% 4.8% 4.0% 4.50% 4.50% 4.00% 70.0 68.0 65.0

Tajikis tan 11.0% 8.0% 8.0% 11.5% 11.5% 11.0% 10.2 10.7 10.7

Turkmenistan 12.5% 11.0% 10.0% 2.4% 3.0% 4.0% 3.5 4.2 5.0

Ukraine 6.0% 4.0% 3.0% 8.0% 8.0% 7.5% 27.0 28.5 29.5

Uzbekis tan 16.5% 14.0% 12.0% 15.0% 14.5% 12.0% 10,300 10,600 11,000

Source: Respective National Statistics Services, Macro-Advisory Ltd estimates

Inflation, eop % YoY Policy Rate, eop % YoY FX Rate v US Dollar, eop

Government Finances Budget Balance, % GDP Public Debt, % GDP

2020E 2021E 2022E 2020E 2021E 2022E 2020E 2021E 2022E

Armenia -4.0% -3.0% -2.0% -9.0% -7.5% -7.0% 57% 56% 55%

Azerbai jan -4.5% -3.0% -2.0% -7.5% -4.5% -2.0% 32% 36% 36%

Belarus -3.0% -2.5% -2.2% -4.5% -3.5% -3.5% 60% 62% 62%

Georgia -4.0% -3.0% -2.0% -9.0% -8.0% -6.0% 56% 54% 54%

Kazakhstan -5.0% -2.2% -1.5% -5.5% -4.0% -2.5% 25% 26% 25%

Kyrgyz Republ ic -6.5% -4.5% -2.5% -14.0% -11.0% -9.5% 65% 65% 62%

Mongol ia -4.0% -4.5% -4.0% -15.5% -12.9% -10.3% 85% 86% 90%

Russ ia -3.0% -0.5% 0.2% 1.0% 1.8% 2.4% 17% 16% 16%

Tajikis tan -5.0% -4.0% -3.5% -7.0% -4.5% -4.0% 55% 56% 57%

Turkmenistan -3.0% -2.5% -2.5% -3.0% -3.6% -3.6% 28% 30% 33%

Ukraine -5.0% -2.4% -2.4% -3.0% -3.5% -3.0% 61% 55% 53%

Uzbekis tan -4.0% -3.0% -2.0% -8.5% -6.0% -5.0% 28% 25% 26%

Source: Respective National Statistics Services, Macro-Advisory Ltd estimates

CA Balance, % of GDP

23


Appendix 3: Russian government actions

Date Action

3-Feb Restriction on entry by Chinese citizens, except through Sheremetevo airport

20-Feb Ban on entry by Chinese citizens

26-Feb Control of arrivals from South Korea, China and Italy

1-Mar Ban on entry by Iranian and South Korean citizens

2-Mar Moscow schools cancel swimming and large scale events

5-Mar Cancellation of St Petersburg International Economic Forum (June)

6-Mar Self-isolation of arrivals from China, South Korea, Iran, France, Germany, Italy and Spain

11-Mar Moscow ban on events with more than 5,000

Most fl ights to Italy, Germany, France and Spain suspended

13-Mar Ban on entry to Italian citizens and foreigners arriving from Italy

14-Mar Russia closes land border with Poland and Norway

Moscow school attendance optional

16-Mar Flights to Europe limited to Sheremetevo connections to major capital cities

Government announces economic stimulus package

Border with Belarus closed

Russia l imits entry by all foreigners until May 1st (diplomats and similar excluded)

19-Mar All persons arriving in Russia to observe mandatory 14 day quarantine

First patient with Covid-19 dies

21-Mar Public and private medical facil ities must register qualified personnel in a centralized database

Government meeting on measures to support the economy

Moscow government closes gyms and swimming pools

25-Mar President Putin visits Moscow's main isolation hospital at Kommunarka

26-Mar President Putin addresses nation, announces non-working week

Government introduces legislation to the Duma that would empower it to announce an emergency

Government announces cessation of all international fl ights from March 27th

28-Mar Moscow announces closure of cafes, restaurants and non-essential shops

30-Mar Prime Minister Mishustin closes borders to all traffic

2-Apr Presidential address extending non-working period to end April

4-Apr Russia closes air connections with other countries

5-Apr Government bans the imposition of penalties for nonpayment of household util ities

9-Apr President's l ive TV address to governors

10-Apr Tightening of Moscow quarantine - non-essential businesses close, permit regime introduced

11-Apr From April 15th, QR codes required in Moscow and Moscow region for car journeys

15-Apr New QR regime introduced, creating bottlenecks initially, resolved after a day

President announces new packet of support for businesses

16-Apr President announces cancellation of May 9th parades

18-Apr President signs decree automatically extending visas and other permits to June 15th

19-Apr Easter services in empty churches, some il legal gatherings, some regions allow services

20-Apr Demonstrations in Vladikavkaz

22-Apr All Moscow residents suspected of Covid-19 infection, or with respiratory difficulties, must stay home

24-Apr CBR cuts rates to 5.5%

28-Apr President extends non-working period to May 11th

30-Apr Prime Minister Mishustin announces infection, Belousov is acting Prime Minister

New testing regime starts in Moscow

6-May Governors allowed to relax self-isolation regime from May 11th

7-May Moscow announces l imited re-opening, self-isolation in place til l May 31st

8-May Mishustin returns to work

11-May Putin address to nation - announces extensive new measures (see Russia Weekly)

Source: Macro-Advisory, from Russian media sources

24


Appendix 4: Kazakhstan government actions

Appendix 5: Ukraine government actions

Date Action

12-Mar School holidays brought forward to March 16th

13-Mar First cases in Kazakhstan recorded

13-Mar President cancels Norouz holiday (March 22nd-23rd) and Victory Day (May 9th) celebrations

15-Mar Kazakhstan declares state of emergency - national quarantine

Entry ban for all foreigners except diplomats and official delegations

17-Mar Lockdown announced in Nur-sultan and Almaty - divided into sectors to reduce movement

Movement restrictions, non-food retailers close, restaurants delivery only

22-Mar Cessation of rail, air and road connections with Nur-sultan and Almaty

25-Mar Ban on export of nine food staple items

27-Mar Payment holiday on all loan payments from March 16th to June 15th

28-Mar Tougher quarantine in Nur-Sultan and Almaty

10-Apr President addresses government and nation, extends state of emergency to end April

12-Apr Non-working regime in Almaty extended to April 30th

18-Apr 72-hour visa-free regime suspended until November 1st

27-Apr State of emergency prolonged until May 11th

Some internal fl ights resume

11-May Expected government meeting to lift state of emergency

Source: Macro-Advisory, from media sources

Date Action

04-Feb Ukraine International Airlines stops fl ights to China

20-Feb Ukraine nationals evacuated from China - quarantined in Poltava, sparking local protests

02-Mar First patient identified, infected in Italy

10-Mar Flights to European countries reduced

12-Mar National quarantine for 3 weeks

Schools closed

Events with more than 200 people banned

Air connections with Italy closed

13-Mar Borders closed

First death

16-Mar President addresses nation, closing bus, rail and air travel, and closes metro

Foreign nationals barred from entry for two weeks

17-Mar All air connections closed

Major cities close all retail outlets except pharmacies, food retail, gas stations, banks

Government announces economic measures

3-Apr Measures to strengthen quarantine, lasting til l April 24th

8-Apr Government says quarantine likely to be extended

17-Apr Kyiv Police say they will stop people entering churches

18-Apr Zelensky says that quarantine measures may be relaxed after April 24th

22-Apr Quarantine measures extended to May 11th

4-May Quarantine extended to May 22nd

11-May Limited re-opening of shops, parks and restaurants

Source: Kiev Post, Macro-Advisory, from media sources

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Appendix 6: Uzbekistan government actions

Date Action

21-Feb March investment summit cancelled

4-Mar Block on entry by citizens of 40 countries with coronavirus infections

15-Mar Bar on entry for all foreigners

All universities and schools closed for 3 weeks

16-Mar Suspends international air and road connections

All citizens arriving from abroad must observe 14 day quarantine

Spiritual Board of Muslims cancel Friday prayers

19-Mar President orders US$1 bill ion fund for Covid-19 fight, to be financed from abroad

22-Mar Tashkent shuts down all public transport, only disinfected taxis will operate

Government announces border closure

27-Mar First death from coronavirus

1-Apr Self-isolation regime imposed in Tashkent and other regional centers

18-Apr Quarantine extended to May 10th

Uzbekistan sends 5 mill ion medical masks to Russia

20-Apr Private medical institutions allowed to carry out coronavirus tests

25-Apr Some retailers and businesses allowed to re-open

8-May Government divides territories into red, yellow, and green zones for different quarantine levels

9-May Ban on mass events and visiting veterans for Victory Day holiday

Source: Macro-Advisory, from media sources

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Who are we?

Macro-Advisory is an independent Eurasia-based consultancy providing international

companies and investors with strategic advisory services throughout the CIS-Eurasia

region

Macro-Advisory’s coverage footprint includes the entire CIS-Eurasia region plus Mongolia

For our clients we carry out market and sectoral analysis, risk assessments, and deep due-

diligence work across all of the key industry sectors in all of the countries in the region

We keep our clients fully informed of the relevant trends and events which impacts their

business

We assist local business teams and management in headquarters to help ensure a

strategic focus and success for our clients’ businesses

We are experts on the Eurasian Economic Union (EaEU) and help our clients assess the

opportunities and implications of the economic bloc

We are experts in the operation of the Chinese promoted Belt & Road Initiative (BRI) and

in helping our clients understand the opportunities arising from this expanding trade and

transport network

Our Competitive Advantages

Local. From our base in Moscow we cover the entire CIS-Eurasia region. We have an

available network of industry specialists across the region to assist with project work as

required. We also have offices in London, Washington, and New York, from which we are

able to regularly engage with our clients.

Independent. We are independent and this allows us to offer completely impartial advice.

We combine coverage of economics, politics, industry and social trends to provide the

most comprehensive analysis for our clients.

Experienced. The combined experience of our key personnel living and working in the CIS-

Eurasia region is over 150 years.

Network. We have built a substantive network of contacts in government and regulatory

agencies as well as in other relevant bodies. This allows us to consult with decision makers

and policy influencers, and to gain better insights into evolving events.

Commercial. All of our reports come with commercially relevant and, more importantly,

actionable recommendations.

Reports. All of our clients get regular reports updating and providing analysis of economic

and industry data as well as an assessment of all relevant news and events which are

important for companies and investors in the region.

Briefings. We host regular client briefings, including quarterly events with specialist guest

speakers. We also organize formal presentations for clients, including at management and

board level.

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Reports Suite* Russia Macro Monthly. This monthly update provides a record of all of the events which investors in Russia are interested in, such as economics, politics, monetary policy and all business related developments. This publication also has updated economic forecasts for Russia and all of the CIS-Eurasia states. We also provide reviews of all new books published which are focused on or which may influence the Eurasia region.

In Context. Whenever a topic arises which is both

topical and of concern to our clients, such as the

questions and threats posed by sanctions, we issue

quick response notes to place the topic into a proper

context. In these notes we highlight the areas of

concern and set out our opinion about what to expect

next and how to prepare for it.

Eurasia country reports. We issue regular updates for all of the countries in the CIS-Eurasia region. These will cover not only macro and political events but will also highlight business trends and focus on opportunities for investors, both existing and emerging. These reports also look at and explain any risks in respective investment scenarios.

Industry reports. The bulk of the work we undertake for our clients, for example, strategic industry analysis, is customized and is exclusive for the client. But, from time to time, we cover the general trends and focus on opportunities for investors in sectors which we believe have high growth potential. Over the past year we have issued reports covering agriculture, e-commerce, insurance, pharmaceuticals, construction, and many others.

Thematic reports. In this series of reports we look at interesting and emerging themes which have relevance across the CIS-Eurasia region and are not exclusive to one country. We issue regular updates on the development of the Eurasia Economic Union (EaEU), the expanding Belt & Road network and the investment opportunities arising from this, Caspian Corridor developments, and others.

Political briefings. For our clients we issue regular updates covering sensitive political issues in all of the countries of Eurasia. In these tightly controlled reports we are able to offer an un-biased and frank opinion about the events and set out the implications for businesses and investment risk.

*Refer to our web site (www.macro-advisory.com) for a full list of available reports

http://www.macro-advisory.com/

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Contacts

Moscow: +7 495 139 4703

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Email: [email protected]

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No warranties, promises, and/or representations of any kind, expressed or implied are given as to the nature, standard, accuracy, or likewise of the information provided in this material nor to the suitability or otherwise of the information to your particular circumstances. Macro-Advisory Limited does not accept any responsibility or liability for the accuracy, content, completeness, legality, or reliability of the content contained in this note.

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