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Covid-19 – Eurasia Checkup Watchate

June 9th 2020

Local and regional politics heat up in early summer 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.

Oil price supports currencies. The steady rise in the oil price has

allowed almost all currencies in the region to add to recent gains.

This has further added to the feeling of optimism that the worst

impact on regional economies is now past.

Easing of lockdown accelerates. All countries are moving quite

quickly to ease lockdowns as governments become more

focused on economic recovery.

Infections pass 600,000. There were 71,083 new cases

registered last week, albeit almost 53,000 were in Russia.

Georgia only registered 22 new cases and Mongolia only nine.

Death rate is still low. The total number of deaths increased by

only 1,140 to a relatively low 7,502 for the region of almost 300

million.

Belarus protests expand. So-called slipper protests are

spreading across Belarus. But suggestions that this may lead to a

Ukraine-style revolution are still very wide of reality.

Kazakhstan arrests protestors. On the same day the new law

governing peaceful protests came into force, police broke up a

rally and, reportedly, arrested over 100 people.

Armenia-Azerbaijan tension rises. There is a noticeable increase

in the political and military tensions between Armenia and

Azerbaijan over Nagorno-Karabakh. Azerbaijan is now exporting

gas to Europe via the TAP pipeline and is looking to engage more

with Brussels and Washington.

Uzbek-Kyrgyz enclave fighting. There has been a flare up in the

Uzbek enclave in Kyrgyz. Tashkent has promised to invest over

US$100 mln in the region to boost the economy and create jobs.

Kyrgyz-Tajik border clashes. Clashes on the border continue.

Turkmenistan unveils new Bicycle Monument. The latest

monument to be inaugurated in Ashgabat is to the Bicycle. This

was done on World Bicycle Day, a UN backed date which was

initiated by Turkmenistan.

Ukraine president supports foreign land tenants. President

Zelensky said that he will strongly support the rights of foreign

owners, and tenants, of land in the country. He said he will not

allow discrimination in favor of local investors.

Efforts to open tourist season across the region. Most countries

across the region are pushing ahead with plans to open their

tourism sectors, although some have retained restrictions

against travelers from high infection rate countries.

Covid-19 in EurasiaPopulation*

Mln Cases Deaths

Armenia 2.96 13325 211

Azerbaijan 10.11 7876 73Georgia 3.99 818 13Belarus 9.45 49453 276Kazakhstan 18.72 13074 58Kyrgyz Republic 6.49 2055 24Mongolia 3.26 194 0Russia 145.92 476043 5963Tajikistan 9.48 4609 48Turkmenistan 6.00Ukraine 43.80 28471 818Uzbekistan 33.34 4448 18

Eurasia Total 293.52 600,366 7,502

Source: *Worldometers, **WHO at June 9th

Coronovirus**

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

Armenia Dram 481.97 -0.6%

Azerbaijan Manat 1.70 0.0%Georgia Lari 3.08 -7.0%Belarus Ruble 2.37 -11.2%

Kazakhstan Tenge 397.93 -3.8%Kyrgyz Republic Som 74.22 -6.0%

Mongolia Togrog 2,806.01 -3.1%Russia Ruble 68.67 -9.7%

Tajikistan Somoni 10.28 -5.7%Turkmenistan Manat** 22.00 -13.6%

Ukraine Hryvnia 26.63 -10.6%Uzbekistan Som 10,145.1 -6.0%Brent, $ p/bbl 40.86 -38.1%Afghanistan Afgani 77.35 -0.3%Iran Toman** 17,750 -24.8%

Source: Bloomberg, Macro-Advisory

* as at June 9th

** 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 8.00% May -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 June 9th

GDP, $ billion and Growth, %GDP 2020E

bln, $ 2020E 2021E

Armenia $13.0 -2.2% 4.5%Azerbaijan $45.0 -2.5% 2.0%Georgia $50.0 -5.0% 2.5%Belarus $13.9 -5.0% 3.5%Kazakhstan $157.0 -2.5% 4.0%Kyrgyz Republic $9.4 -3.0% 4.0%Mongolia $12.5 0.5% 4.5%Russia $1,568.0 -3.5% 2.5%Tajikistan $8.2 0.5% 4.0%Turkmenistan $50.0 2.0% 5.5%Ukraine $136.0 -6.0% 4.5%Uzbekistan $55.3 1.3% 5.0%

Total, average $2,118.3 -3.3% 2.9%

Source: Bloomberg, Macro-Advisory

GDP, % Change YoY

2

Covid-19 – Eurasia Checkup Watchars Update

Armenia

Reported cases: 13,325 +3,316 (week-on-week)

Reported deaths: 211 + 53 (week-on-week)

Dram-US$ exchange rate: 481.97 0.4% (WoW) + 0.5% (MTD) - 0.6% (YTD)

Government actions & regulations

No more hospital beds. Prime Minister Pashinyan announced that the country had run out of hospital beds

on June 3rd and that the highest number of new cases of the disease was recorded on the same day. The

Chairman of the Board of Trustees of the Yerevan State Medical University (YSMU) Vahan Artsruni said that

the department and specialists have been allocated specifically for Covid-19 patients in the first clinical

hospital of YSMU, but the ministry did not provide the department with the opportunity to act.

Wearing masks rule extended. On June 4th, the government extended mask-wearing requirements to include

all public spaces rather than simply closed ones.

PM’s family tests positive. The PM also announced this week that he, his wife and three daughters tested

positive for Covid-19. Although Pashinyan claimed to have contracted the virus from a waiter, there are

rumors that he might have gotten it at a banquet in Nagorno-Karabakh, which he visited on May 21st.

Pashinyan was criticized for not having worn a mask when he visited the enclave. He and his family are self-

isolating at their residence and the PM says that none of them have any symptoms of the virus.

Government criticism. Pashinyan is also under criticism for using what some feel are extreme methods to

force people to follow rules. He has resorted to public shaming on his Facebook page, collecting pictures of

people violating rules and posting them as a warning to others, in fact calling upon the public to send pictures

as examples. Pashinyan said that law enforcement officials are experiencing the same types of problems that

healthcare workers are in terms of capacity deficit. He claimed that the new measures he is taking to control

the virus are called for in order to bring the situation back under control. Nonetheless, many consider his

actions excessive, and he has been criticized by journalists.

Fines and closures. Since the beginning of the state of emergency, police have issued 1,232 fines and closed

134 businesses. Minister of Health Arsen Torosyan said that testing has increased in number from 20 per day

to 200 a day.

Armenia - Covid-19: New Cases (Bar - RHS) & Deaths (Line - LHS) June 9th

Source: World Health Organization

3


Lockdown in the city of Sevan has been extended by a week until June 10th. The city has been locked down

since May 25th and was due to reopen on June 3rd. However, the governor of the Gegharkunik region

determined that disease spread has not yet been sufficiently contained.

Armenia-based airlines have been banned from entering the EU. The European Union has forbidden all

Armenia-based airlines from flying to the bloc under latest changes made to a list of unsafe carriers. The EU

has raised concerns about the country’s regulatory oversight of its airline industry. The list is usually updated

twice a year. It is based on deficiencies found during checks at European airports, carriers’ use of antiquated

aircraft and an assessment of shortcomings of non-EU airline regulators.

Monetary response and impact

Additional liquidity for banks. The Central Bank of Armenia (CBA) may provide additional liquidity funds in

the event of difficulties emerging in the financial system. CBA official Andranik Grigoryan stated this at

Wednesday’s videoconference, presenting the 2019 report on financial stability in the country. According to

him, all the positive trends that were observed in the banking sector of Armenia in 2018 had continued in

2019 as well. He stressed the importance of high levels of liquidity and capitalization of banks, which, as per

Grigoryan, is the key to the success of financial stability. The CBA official added that Armenia’s commercial

banks have so far revised the terms of loan obligations of 540,000 individuals and 17,000 legal entities.

The Armenian parliament voted Wednesday to limit the Central Bank's capacities. According to the

amendments, the provision of the law allowing the Central Bank to publish the names of unscrupulous

creditors will be repealed.

ADB loan. The Asian Development Bank has provided a US$20 million capital loan to Armenia’s Electric

Networks.

Increasing property taxes. The government approved the draft amendments to the Tax Code, whereby

property tax will increase in Armenia. Minister of Finance Atom Janjughazyan presented the issue, noting that

they have decided to tax real estate corresponding to wealth. He noted that Armenia lags behind among 38

countries in terms of the property tax/GDP ratio. "This is because the real estate’s cadastral value, which

differs significantly from the market value, is taken as a basis for taxation [in Armenia]. As a result of this

change, the potential of property taxes is expected to increase 4.3 times; this will allow communities to

provide better quality when resolving their problems,” Janjughazyan said. The minister informed that this new

system will be introduced gradually within three years, and not the market values, but the values that are

close to the market values will be used as a basis for real estate taxation. As a result of the proposed changes,

it is expected to also increase the level of financial stability and independence of local self-government.

Armenia Dram - US Dollar Exchange Rate

Source: Trading Economics

4


Azerbaijan

Reported cases: 7,876 + 2,214 (week-on-week)

Reported Deaths: 73 + 5 (week-on-week)

Manat-US$ exchange rate: 1.70 0.0% (WoW) 0.3% (MTD) 0.0% (YTD)


Azerbaijan sees rise in cases recently. Azerbaijan has seen a sharp rise in cases recently, therefore the

government has decided to re-introduce a strict lockdown. On June 3rd a senior official announced that,

starting from the following weekend, residents of Azerbaijan’s largest cities (Baku, Sumgait, Ganja, Lenkoran

and Absheron) will be completely forbidden from leaving their homes between Friday evening and Monday

morning, with a few exceptions. All shopping malls, catering facilities, pharmacies and stores were closed.

Some exemptions. People working in hospitals and social service institutions, as well as for utility companies,

communications, logistics, and energy companies are exempt.

On June 3rd, masks became mandatory in all public places. Officials have warned that there would be “severe

punishments” for those who violate the new rules. People with beachfront properties are particularly vexed

because they were expecting to be able to go to the beach during the weekend.

More arrests of activists. Three activists protesting a police crackdown were detained and later released this

week. Gyulnar Mehdiyev, Rabiya Mammadova and Nargiz Absalamova were detained for protesting the

forced dispersal of students protesting in front of the Education Ministry. The students had been demanding

the abolition of tuition during the spring semester because of economic difficulties caused by the quarantine.

Criticism of government actions. A former US ambassador to Azerbaijan released a statement this week

criticizing the US for failing to take a stand against human rights violations in Azerbaijan. Ambassador Richard

Kozlarich, along with David Kramer, chief researcher at Florida International University, published a statement

in the European Center for Policy Analysis criticizing the US’ unequal treatment of countries that commit

human rights violations. The authors claimed that politicians and partners in the West had been “bribed” by

the Azerbaijan government to remain silent in the face of unjust arrests and treatment of political opponents.

Return of the stranded. On June 2nd, approximately 100 of the Azerbaijani citizens waiting on the Russian

border to return home were allowed to cross back into the country. However, the number of people stranded

continues to increase as an increasingly large number of Azerbaijanis feel the need to return home. Those

that were not given permission have expressed frustration at the “selection criteria” and said that it is not

clear why some people have been chosen for the specially designated busses and others have not.

Azerbaijan - Covid-19: New Cases (Bar - RHS) & Deaths (Line - LHS) June 9th


5


Financial aid to religious groups. President Aliev signed a decree on June 2nd that will allow for financial

assistance to be given to the country’s religious groups. Approximately three million manat will be allocated

not only to Muslim groups, but to the Russian Orthodox Church, the Catholic Church, the community of Jews

in Baku, and the Albanian-Udine Christian community.

Turkey and Azerbaijan extend visa-free regime to 90 days. Turkey and Azerbaijan have extended their mutual

visa-free regime from 30 days to 90 days in an attempt at boosting tourism and business travel. "Citizens of

both sides holding a valid passport shall be exempted from visa requirements for 90 days in order to enter,

transit, exit and stay temporarily in the territory concerned," said a statement posted in Turkey’s Official

Gazette. Turkey was the third-largest source of tourists that visited Azerbaijan in January, according

to Azerbaijan’s State Statistical Committee. Of 226,000 foreigners that travelled to the South Caucasus

country in the month, 10.6% were Turkish.

Criticism of Armenia. Leyla Abdullayeva, spokesperson for Azerbaijan’s Ministry of Foreign Affairs, told

News.Az that Armenians keep making attempts to strengthen the occupation of the internationally

recognized territories (Nagorno-Karabakh) of Azerbaijan, in violation of the rights of hundreds of thousands

of internally displaced persons. Such attempts indicate that the Armenian leadership do not realize their

responsibility but are also indifferent to the future of their country and its population,” she said.

New agriculture program. The Food and Agriculture Organization (FAO) of the United Nations (UN) together

with the Azerbaijan government will begin to develop a new program starting from the second half of 2020,

Melek Chakmak, Head of the FAO Partnership and Liaison Office in Azerbaijan, told Trend. The program will

cover the period of 2021-25, Chakmak added. "As known, the FAO organization has been cooperating with

Azerbaijan for more than 20 years. This cooperation is planned on the basis of five-year program documents

and is aimed at supporting the country's top priority areas," Chakmak noted.

BP on June 4th turned over the rights to operate the South Caucasus Pipeline (SCP)—one of a series of

interconnected pipelines due to start carrying Caspian Sea natural gas from Azerbaijan to the European Union

this year via Georgia, Turkey, Greece and Albania and a seabed link to Italy—to a subsidiary of Azerbaijani

state energy firm Socar. BP will continue to operate the Sangachal natural gas processing and oil production

terminal in Azerbaijan, the Baku-Tbilisi-Ceyhan (BTC) oil pipeline. In late May, Azerbaijani media reported that

TAP had started introducing its first gas into the Albanian section of its pipeline. The latest project update

from TAP reportedly stated that gas from Azerbaijan should reach Italy via its pipeline before the end of this

year. Environmental protests in Italy have caused some delays in the realization of TAP.

Azerbaijan Manat - US Dollar Exchange Rate


6


Belarus


Reported deaths: 276 +36 (week-on-week)

Ruble US$ exchange rate: 2.370 1.2% (WoW) +1.5% (MTD) -11.2% (YTD)


US and EU warn over election preparations. The missions of the US, the UK and the EU on behalf of the EU

member states represented in Minsk have urged the Belarusian authorities to take the measures necessary

to hold a safe, peaceful, free and fair August election. "We expect Belarus to invite officially OSCE/ODIHR

observers in due time and urge the Belarusian authorities to demonstrate in deeds its willingness to make

progress in the implementation of the recommendations of the previous OSCE/ODIHR Election Observation

Reports," they said in a joint statement on June 3rd."Noting in particular that the process of registration of

candidates should be fair and transparent, we emphasize that no politically motivated restrictive measures

should prevent potential candidates fulfilling the registration procedure."

EU MEPs issue sanctions threat. Leading members of the European Parliament responsible for EU-

Belarus relations have condemned the new wave of arrests of presidential election candidates, opposition

politicians and peaceful protesters in the country, and have warned Minsk about possible sanctions targeting

the officials responsible for these actions. "We are deeply concerned about the continued failure of

the Belarusian authorities to improve the election environment and their manifest lack of intention to create

conditions for a genuine level-playing field between the candidates," the MPs said in a statement. "Less than

a week ago, we already voiced our concerns in an official statement, deploring the crackdown on peaceful

protesters and civil society activists. Regrettably, in recent days we have been witnessing a substantial

deterioration of the situation."

Growing number of protests. The number of political protests, and the number of those attending them, has

been increasing in Belarus. People are pushing for more opposition candidates to be allowed take part in

elections. But, since the rallies and gatherings started more than a month ago, the president has ordered

arrests, including of two key opposition leaders, sacked his government, and vowed there will be no Maidan-

style revolution in Belarus.

Belarus - Covid-19: New Cases (Bar - RHS) & Deaths (Line - LHS) June 9th


7


New Prime Minister. On June 4th, Lukashenko named 46-year-old Roman Halouchanka, who previously

oversaw military industries, as prime minister. The appointment came a day after Lukashenka, who had been

promising a government shake-up ahead of the election, dismissed Sergei Rumas along with his government.

The President described his appointee as a “reliable man who can be trusted,” noting that “it’s very important

that patriots and professionals come to office now.” Observers see Golovchenko’s appointment as a sign of

Lukashenko’s intention to further tighten his grip ahead of the vote.

A defiant Lukashenko. The Belarussian president said that “we need to clench our teeth” and show more

discipline in order to repair the economic damage inflicted by the coronavirus pandemic and “save what we

have built.” “We need to mobilize to cope with multiple new challenges over a short period of time,”

Lukashenko said.

Well known blogger arrested. The new PM appointment came a day after police in the city of Gomel said

they had found some US$900,000 at a home belonging to Sergei Tsikhanouski, the blunt-talking vlogger whose

call for Belarusians to take up their slippers to squash Lukashenko, whom he calls a “cockroach,” has

resonated with many Belarusians. Tsikhanouski, 41, has traveled across the country preaching his desire for

an "independent" Belarus free of Lukashenko. His YouTube channel, A Country For Living, has more than

200,000 subscribers, and has documented alleged corruption and graft in Belarus. Tsikhanouski has been in

and out of jail on charges of holding unsanctioned meetings with supporters. He has been barred by election

officials from running for president, but his wife, Svetlana Tsikhanouskaya, has been allowed.


Foreign reserves of Minsk decreased slightly in May. The foreign exchange reserves of Belarus decreased by

US$3.7 million, or 0.05% MoM, to US$7.9 billion in May, following a 1.2% MoM drop in April, the National

Bank of Belarus reported. The scheduled repayments of foreign and domestic obligations in foreign exchange

for the total amount of US$220 million "had a negative impact on the volume of gold and foreign exchange

reserves in May," the regulator said.

Concern about transfer of accounts to state banks. The Belarusian operations of EY are "concerned" about a

recent decision that government-owned companies in Belarus should immediately transfer accounts to state-

run banks, believing that it may have a negative impact on the nation's business and investment climate and

undermine the stability of the national banking system. Pavel Laschenko, EY country managing partner

for Belarus, believes that the sudden transfer of accounts from banks with Russian or European ownership,

as directed, may deal a blow to Belarus’ investment climate, prompt investors to revise their expectations

and decisions in the medium run and affect the stability of the national banking system. "We also see other

risks as the decision may make loans more expensive, leading to higher costs for government-owned

companies, while service quality may worsen," he added in the statement. "We hope that the National Bank

of Belarus, as the banking regulator, will provide explanations regarding this decision."

Belarus Ruble - US Dollar Exchange Rate


8


Georgia

Reported cases: 818 + 22 (week-on-week)


Lari US$ exchange rate: 3.08 - 0.2% (WoW) 2.7% (MTD) – 7.0% (YTD)


On June 3rd, shopping malls and restaurant outdoor patios reopened. All stores are required to follow new

hygienic rules, including customers’ and employees’ wearing face masks. In addition, there are restrictions

on the number of people allowed on a given floor space at the same time.

Other lockdowns lifted. The government announced on June 4th that lockdown measures in Tetritskaro

municipality would be lifted. The decision was made following two weeks in which no new cases of the

disease were detected.

Fines for violating rules. The Parliament of Georgia will discuss a legislative amendment to the law on face-

covering regulations this week. New rules are about to come into force legally requiring citizens to wear face

masks on public transport or closed spaces. According to the changes into law, a fine of GEL50 can be imposed

on those who fail to wear a mask on public transport, taxes or closed spaces. The owner of the closed space

will face a fine of GEL500 for letting a person in a building without a face mask. The amendments also apply

to other violations of the rules of self-isolation and quarantine, for which a natural person will be fined GEL

2,000 and a legal entity GEL10,000.

Working on a recovery plan. The Georgian government is developing a post-crisis economic plan along with

experts from the University of Cambridge and the University of London. The plan aims to spur economic

growth and increase the economy’s competitiveness.

Excluding tourists from Covid countries. The head of the National Center for Disease Control and Public

Health announced this week that Georgia will not allow tourists to enter the country from Armenia or other

countries hit hard by Covid-19. Georgia has developed an ambitious program to re-start its tourism industry,

upon which the country’s economy relies heavily, as the summer progresses. The plan involves specially

designated “green zones,” or countries with particularly low Covid-19 infection rates, from which it will be

permissible for people to enter Georgia. Tourists will also be required to prove that they had not been infected

within 48 hours of arriving in the country. Armenia’s being included on the exclusion list adds to recent tension

between the two countries, having gotten into a competition over who has handled the crisis more effectively.

Armenia’s infection rates remain significantly higher than Georgia’s.

Georgia - Covid-19: New Cases (Bar - RHS) & Deaths (Line - LHS) June 9th


9


Transport service resume. Starting June 8th, intercity transport (bus, minibus) in Georgia resumes work.

Passengers must wear a face mask during the journey. Train travel will be resumed from June 15th.

Some hotels have reopened. Some hotels that obtain the Ministry of Health’s permission have resumed work

from June 8th. According to Georgian Hotels, Restaurants, and Cafe Federation, at this stage, hostels are not

permitted to reopen. As an exception, only those hostels that offer single room can reopen.

PM sees his position as safe … for now. Georgia Prime Minister, Giorgi Gakharia, said that it did not personally

and eventually matter to him which position he held in the government. He claimed that even being a farmer,

he would do his work. Questioned by a journalist whether or not Giorgi Gakharia would be Prime Minister on

the first anniversary of the so-called Gavrilov night, Gakharia answered: Yes, I will be Prime Minister. “It does

not matter whose interests serves the released information about my resignation. I am thankful that I have

already gained immunity and have no reaction. Whatever and wherever I am, I will be doing that work with

great responsibility. My answer is that you will be taking an interview from me on June 20th,” Gakharia said.


Currency exchanges reopen. From June 8th, currency exchange offices throughout Georgia have resumed

work. The National Bank of Georgia calls on currency exchange offices to strictly follow the recommendations

of the Ministry of Health.

Inflation creeps higher. In May, the Consumer Price Index increased by 0.2 percent compared to the previous

month, while the annual inflation rate amounted to 6.5 per cent. Regarding annual core inflation, the prices

increased by 5.9 percent, while the annual core inflation without tobacco amounted to 5.4 percent, the

National Statistics Office of Georgia said.

As of June 1st, up to 72,000 Georgian citizens applied for unemployment benefits. Eligible people must have

lost their income because of the crisis. The Minister of Health announced that GEL14 million was distributed

in payments for furloughed workers last week. In addition, the minister added that 51,000 self-employed

citizens have received allowances of GEL15 million.

Government passed changes in a credit guarantee scheme to provide more state guarantees on loans in the

most productive sectors. The budget of the program will be GEL300 million (US$100 million) instead of the

initially announced GEL20 million.The credit guarantees are valid for no more than 10 years after the loan is

issued or restructured. Furthermore, along with the banks, microfinance organisations will be involved in the

program, for which an additional GEL30 million (US$10 million) will be allocated, economy minister Natia

Turnava said. The program will be administered by the Economy Ministry under the name "Produce

in Georgia". The government decree also stipulates that in order for a company to be eligible to participate in

the credit guarantee system, its revenue should not exceed a certain threshold and its existing loan liabilities

should not exceed GEL12 million.

Georgia Lari - US Dollar Exchange Rate


10


Kazakhstan



Tenge-US$ exchange rate: 397.93 + 0.9% (WoW) + 3.5% (MTD) – 3.8% (YTD)


As of June 6th, Kazakhstan eased quarantine measures for arrivals from abroad. According to the decree, persons arriving in Kazakhstan would have to be placed in a quarantine hospital for up to two days for conducting Covid-19 laboratory tests. Excluded are Kazakhstan government delegations; members of official foreign state delegations and international organizations arriving at the invitation of the Kazakh Foreign Affairs Ministry; employees of diplomatic missions, consular posts and missions of international organizations accredited in Kazakhstan and their family members; and airline crews. Persons who have arrived to Kazakhstan from abroad by flight and who have submitted a negative Covid-19 examination certificate (issued no later than five days before the date of crossing the border of Kazakhstan) are not subject to the quarantine measures.

Shymkent restrictions. The Chief State Sanitary Doctor of the city of Shymkent, has issued a decree extending the quarantine regime and restrictive measures there until June 22nd. The decree has been issued due to an increase in the incidence of coronavirus infection by 3.7 percent over seven days.

New law on peaceful assemblies enters force. Reforms, signed by President Tokayev define the number of people that can attend demonstrations, the availability of venues for rallies and the permission required to conduct such public events. Critics of the reforms have said that the new law falls short of international human rights standards. According to expert assessors, the bill requires authorities to grant “permission” for a peaceful assembly. The new law also bans foreigners from joining or organizing protests. HRW and other rights groups wrote a letter in April to Tokayev urging him to revise the public assembly law.

But arrests continue. Police in Kazakhstan's city of Almaty detained dozens of anti-government protesters who took to the streets on Saturday, June 6th even as a new, more liberal law on demonstrations was expected to come into force. But officials said that, while the law technically took effect on Saturday, it would need a five-day notice period before being applied in practice. They said opposition groups had failed to notify authorities about their plans to rally and were also breaching Covid-19 social distancing rules. Police, including riot units, cordoned off the main squares of Almaty as well as streets near the area where at least 100 activists had gathered, breaking up the protesters into smaller groups of dozens of people each. "Why are people poor in a country rich with oil and gas?" read one banner. After a brief confrontation, police detained a few dozen protesters and took them away in minivans.

Kazakhstan - Covid-19: Daily New Cases

Source: John Hopkins

78141

264

138

307

685

209

476

199

0

100

200

300

400

500

600

700

800

4390

5

4390

8

4391

1

4391

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0

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3

4392

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4392

9

4393

2

4393

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4393

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1

4394

4

4394

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4395

0

4395

3

4395

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4395

9

4396

2

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1

4397

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0

4398

3

4398

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4398

9

11



Policy rate unchanged. The central bank kept its policy rate unchanged at 9.5% at a rate-setting meeting on June 8th and added that it may consider easing monetary policy when global uncertainty decreases. The regulator cut its inflation outlook for 2020 to 8.0%-8.5% and forecast a GDP contraction of 1.8%, below its previously expectation of a 1.3% fall. The oil exports-reliant nation recorded an estimated US$1.2 billion current account surplus in the first quarter. However, the regulator expected the figure to turn negative later in 2020, placing “significant pressure” on the national currency, the tenge.

Further sale of KazAtom. Samruk-Kazyna has sold a 6.27% stake in the world’s biggest uranium miner Kazatomprom, raising US$206 million in the process. The company said it pressed ahead with the sale after seeing an improvement in market sentiment, with its share price up by a third since a March trough. A total of 15.9 million shares in the form of shares and GDRs were at the end of last week bought at a price of US$13 per GDR (a discount of around 6% to the market price) via an accelerated bookbuild for institutional investors at the London Stock Exchange (LSE) and Astana International Exchange (AIX). That led to aggregate gross sale proceeds of US$207 million.

KMG plans to spin-off KTG. KazMunayGaz (KMG) is planning to spin off its natural gas shipping and trading subsidiary KazTransGas and aims to seek consent from creditors to go ahead with the move, it said on June 5th. KMG owns both upstream and downstream assets along with subsidiaries operating the country’s oil and gas pipelines, KazTransOil and KazTransGas. The spin-off will allow KMG to focus on exploration, production and refining while keeping the infrastructure in the hands of the state as the company goes ahead with its listing plans.

KazTransGas to go to the sovereign wealth fund Samruk-Kazyna. Under the plan, KMG is set to hand over KazTransGas to sovereign wealth fund Samruk-Kazyna, the company said.Aside from shipping Kazakh gas to other Central Asian nations as well as China and Russia, KazTransGas acts as a trader. The company signed a contract to supply 5 billion cubic metres of gas a year to China in 2018 and later agreed to double that volume.

Russia key trade partner to Kazakhstan. Kazakhstan considers Russia its key trade partner, said President Tokayev in an interview with Komsomolskaya Pravda newspaper. According to the Kazakh President, volume of direct investment from Russia to Kazakhstan has amounted to US$15.7 billion. In 2019, the two-way trade increased by 6.2% compared to 2018 and totaled almost US$20 billion. President Tokayev also pointed out that over 7,000 Russian companies successfully function in Kazakhstan. Additionally, there are 3,500 joint Kazakh-Russian JVs. In the interview the Head of State emphasized Kazakhstan is planning to promote cooperation with Russia in oil and gas, petrochemical and other sectors.

FEZ in Baikonur. President Tokayev in an interview with Komsomolskaya Pravda said Kazakhstan is leading an initiative to create a free economic zone at the historic Baikonur Cosmodrome, which he believes would contribute significantly to the economies of his country and Russia, TASS news agency reported. Reports in January showed that Russia, Kazakhstan and the UAE were set to sign a trilateral agreement to modernize the ‘Gagarin’s Start’ launch complex at Baikonur.

Kazakh Tenge - US Dollar Exchange Rate


12


Kyrgyz Republic

Reported cases: 2,055 + 210 (week-on-week)


Som - US$ exchange rate: 74.22 -0.9% (WoW) -0.6% (MTD) - 6.0% (YTD)


New political alliance formed. Several political parties and movements in the Kyrgyz Republic, including

representatives of the Ata-Meken (Fatherland) Party, Ak Shumkar (White Falcon) Party, the Liberal

Democratic Party, the Social Democratic Party, the Jany Dem Youth Association and the Green Alliance group,

have established a new alliance called Jany Dem (A New Breath) to form a joint opposition bloc at

parliamentary elections scheduled for October. A memorandum of strategic partnership was signed on June

5th in a bit of a "renewal of political forces" in the country with "the co-operation with all political parties and

civil society", the leaders of the parties said. The Social Democratic Party, which currently holds the most seats

in Parliament, recently split in two, creating an opening for the opposition to make gains at the ballot box.

Resumption of transport services. The Kyrgyz government announced on June 3rd that it will resume domestic

flights and bus services in the country’s provinces starting from June 5th. It also said that charter flights from

China will be resumed this month in order to fly in staff for numerous Chinese investment projects. Many

projects are in stagnation now and their resumption is very important for us,” Asrandiyev told a government

meeting. “It is in our interest that [Chinese] specialists return to our country and continue their work.”

Dangerous Uzbek border clashes. The latest clashes between Kyrgyz and Uzbek citizens, which took place in

a disputed border region near Uzbekistan's Sokh exclave in Kyrgyzstan's southern Batken region, saw

25 Kyrgyz nationals injured, the Kyrgyz Health Ministry said. Residents of the Uzbek exclave told RFE/RL that

16 locals were injured, but there was no confirmation by Uzbek authorities. The villagers reportedly began

throwing stones at each other before several houses on each side were set on fire.

Border tension with the Tajikistan remain high: Tajikistan's Border Guarding Directorate accused Kyrgyzstan

of "attempting to destabilize" the situation in a disputed segment of the Kyrgyz-Tajik border following

another round of clashes. The latest claims of provocation came after a Kyrgyz man allegedly shot a 25-year-

old Tajik woman leading to her hospitalization with a gunshot wound. Kyrgyz Border Guarding Service officials

told RFE/RL that Tajikistan's allegation was under investigation. Tensions on the border have existed for years

since the collapse of the USSR and authorities on both sides of the border have accused each other of

escalating tensions.

Kyrgyz Republic - Covid-19: New Cases (Bar) June 9th


13


Ban on bankruptcy. It was announced that a moratorium on compulsory bankruptcy of enterprises was

introduced in Kyrgyzstan. According to the order of the Government, until the end of the year the Bankruptcy

Department of the Ministry of Economy of the Kyrgyz Republic suspended the initiation of bankruptcy

proceedings against business entities affected by the coronavirus pandemic.

Green Fund. The Ministry of Economy of the Kyrgyz Republic announced about beginning to accept

applications for the accreditation of national organizations in the Green Climate Fund. The Green Climate

Fund is a fund established under the UNFCCC as the operational body of the Financial Mechanism to assist

developing countries in adaptation and mitigation practices to combat climate change. Access to the Green

Climate Fund can be made through accredited multilateral international organizations that are responsible

for assisting in the development and design of projects, for their approval, monitoring and reporting on behalf

of countries.

Tourist season starts. Tourist facilities in Issyk-Kul are preparing for opening. Akylbek Osmonaliev, the

governor of the oblast said that much responsibility was entrusted to such facilities this year in order to ensure

safety for vacationers and create conditions for a comfortable stay. Since June 1st, the tourism sector has been

allowed to work, but preparations are still underway for it. Osmonaliev said that usually the season begins on

June 20th, and this time it will start a little later.

Kyrgyzstan poised to legitimize crypto mining. Lawmakers in the Kyrgyz Republic are considering a bill to tax

and regulate cryptocurrency mining activities. The bill, On Amending the Tax Code of the Kyrgyz Republic,

seeks to increase government revenue by establishing taxation obligations for miners, in addition to

establishing clear definitions for the terms “virtual assets” and “mining” within the context of

cryptocurrencies. If passed, the new taxation regime would comprise the first major step taken towards

cryptocurrency liberalization on the part of the Kyrgyz Republic, with the country explicitly prohibiting crypto

assets as a means of payment in July 2014.

New taxes and electricity tariffs. The proposed law would tax miners at a flat rate of 15% of profits generated

through the sale of mined crypto assets. The bill was first proposed in August 2019, and it is estimated that it

could add an additional US$4.2 million toward the Kyrgyz Republic’s roughly US$1 billion annual budget. The

parliament also discussed the introduction of a designated electricity rate for miners, following the Supreme

Council’s suggestion of US$0.05 per kilowatt-hour (KW/h) in December of last year — a 70% premium

compared to the country’s average price of roughly US$0.030 per KW/h.

Kyrgyz Som - US Dollar Exchange Rate


https://cointelegraph.com/tags/kyrgyzstan

http://www.eurasianet.org/node/68876

https://cointelegraph.com/news/kyrgyzstan-proposes-draft-law-to-introduce-crypto-mining-taxation

https://24.kg/english/69851_New_tariffs_for_electricity_heating_in_Kyrgyzstan_to_be_presented_in_2018/

14


Mongolia Republic

Reported cases: 194 + 9 (week-on-week)


Togrog-US$ exchange rate: 2,806.01 0.1% (YoY) 0.1% (MTD) -3.1% (YTD)


Campaign for Mongolia's parliamentary elections kick-off. Campaigning for Mongolia's parliamentary

elections began after the country's election commission approved a list of qualified candidates, Xinhua

reports. A total of 485 candidates from 13 political parties and four coalitions as well as 121 independent

candidates are running for the upcoming parliamentary elections scheduled for June 24, the GEC said in a

statement. The commission said 75 percent of the candidates are male and 25 percent are female.

IMF loan approval and statement. The Executive Board of the IIMF approved Mongolia’s request for

emergency financial assistance under the Rapid Financing Instrument (RFI) equivalent to SDR72.3 million

(about US$99 million, or 100% of quota) to meet urgent budgetary and balance of payment needs stemming

from the outbreak of Covid-19 and to support the most affected sectors and vulnerable groups. Following the

Executive Board’s discussion of Mongolia, Mitsuhiro Furusawa, Deputy Managing Director and Chair, made

the following statement:

“Mongolia has successfully avoided a domestic outbreak of Covid-19 thus far, helped by the early

introduction of social distancing and tight health protocols for cross-border flows. Nonetheless, the

pandemic has sharply reduced economic activity due to both the economic cost of the containment

measures and the fall in external demand. There is now an urgent balance of payments need and a

fiscal financing gap.

“The authorities have already taken a number of measures to limit the economic contraction and

help the most vulnerable. Recent revisions to the budget allow for higher health and social spending

as well as tax relief to affected households and businesses. In addition, the Bank of Mongolia has

eased monetary and financial policies to help prevent a disorderly contraction in bank lending to the

private sector.

Mongolia - Covid-19: New Cases (Bar - RHS) & Deaths (Line - LHS) June 9th


15


“Emergency financing under the IMF’s RFI will provide much needed support to respond to the

urgent balance of payments and budgetary needs. Additional assistance from development partners

will be required to support the authorities’ efforts and close the financing gap. The authorities’

commitment to high standards of transparency and governance in the management of financial

assistance is welcome.

“As the immediate threat to the economy subsides, it will be critical to resume key reforms begun

during the recent Extended Fund Facility arrangement. These include a return to fiscal consolidation

to reduce still high public debt, a more flexible exchange rate to build up foreign exchange reserves,

remedying AML-CFT deficiencies, and stronger supervisory enforcement to ensure that all banks

have sufficient capital.”

US$7.5 million Mongolian togrog-denominated bond raised by ADB. The Asian Development Bank (ADB) has

raised 21 billion Mongolian togrog (MT), about US$7.5 million, in a groundbreaking issue of the first offshore

MT-linked nomad bonds. The issue sets a new benchmark in the international bond market for frontier

currencies. The bond carries a 10.1% semi-annual coupon with an amortizing five-year maturity. Denominated

in MT but settled in US dollars, the bond issue was underwritten by ING Bank and sold to a European asset

manager. The proceeds are deployed to fund ADB’s Gender Inclusive Dairy Value Chain Project for Milko LLC

in Mongolia. “This is a milestone transaction for ADB’s local currency operations,” said ADB Treasurer Pierre

Van Peteghem. “The emerging and frontier markets have come under pressure during the pandemic,

therefore the ability to raise competitively priced term funding in Mongolian togrog at this time is a major

achievement with tangible benefits in terms of currency risk mitigation for ADB’s borrower.”

Exports slip in 5M20. Mongolia’s total exports decreased by 40% or US$1.4 billion in the first five months of

2020. Mongolia exported 6.3 million tons of coal worth US$513 million, or 2.4 times less than during the same

period of last year. The country exported 671,000 barrels of oil, showing a four-fold decrease. Fluorspar export

increased slightly by 15,000 tons, reaching 237,000 tons. In the first five months, Mongolia’s total export

reached US$ 3.37 billion, according to the statistics of the Customs General Administration.

Mongolia Togrog - US Dollar Exchange Rate


16


Tajikistan

Reported cases: 4,609 +596 (week-on-week)


Somoni - US$ exchange rate: 10.281 0.1% (WoW) 0.1% (MTD) -3.1% (YTD)


USAID financial aid. The U.S. Agency for International Development (USAID), and the Aga Khan Foundation

(AKF) are initiating a combined US$2.6 million response to Covid-19 in Tajikistan over the next twelve months.

USAID and AKF will work to improve care for patients, especially for the severely and critically ill, create

employment opportunities, provide food support for the most vulnerable, and educate communities about

the virus to help reduce the spread. This brings the total direct US government contribution to support

Tajikistan’s efforts to combat Covid-19 to more than US$5 million, the US Embassy in Tajikistan said.

Border tension with the Kyrgyz Republic remain high: Tajikistan's Border Guarding Directorate accused

Kyrgyzstan of "attempting to destabilize" the situation in a disputed segment of the Kyrgyz-Tajik border

following another round of clashes. The latest claims of provocation came after a Kyrgyz man allegedly shot a

25-year-old Tajik woman leading to her hospitalization with a gunshot wound. Kyrgyz Border Guarding Service

officials told RFE/RL that Tajikistan's allegation was under investigation. Tensions on the border have existed

for years since the collapse of

Tajikistan Somoni - US Dollar Exchange Rate


17


Turkmenistan

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

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

Manat (Commercial) US$ FX rate: 22.0 0.0% (WoW) 0.0% (MTD) - 13.6% (YTD)


No Covid-19 cases – but lots of activity suggests otherwise. Speaking at an international briefing in the capital

of Ashgabat, Foreign Minister Rashid Meredov, who is also the Deputy Chairman of the Cabinet of Ministers,

emphasized the application of Turkmenistan's preliminary plan for acute infectious diseases and emergency

measures. On June 1st, Turkmenistan started the construction of a quarantine center along its border with

Uzbekistan and it plans to construct similar centers on the frontiers with Iran and Kazakhstan. Attending the

briefing were representatives of international organizations, members of the national press, accredited

journalists of foreign media outlets and bureaucrats of government institutions and

academicians. Amannepesov underlined that Turkmenistan has "fruitful cooperation" with international

agencies, including the UN, on the health care matters.

A visit of the WHO mission to Turkmenistan has been agreed. This was stated by the Director of the WHO

regional office for Europe Hans Kluge during a press conference, noting that the dialogue on the visit of the

WHO mission to Turkmenistan is being conducted with the foreign Minister and the Minister of health of the

country, the CIS Executive Committee reports with reference to the Sputnik news Agency. "A trip of the WHO

mission to Turkmenistan will be organized within two weeks," Kluge said, adding that the necessary

agreement has been reached, and at the moment the organization is working on the residence of WHO

representatives in the country. The visit of the WHO mission to Turkmenistan was scheduled for early May,

immediately after the trip to Tajikistan, but was then postponed indefinitely.

President Berdymukhamedov receives international cycling award. President Berdymukhamedov has been

awarded a medal for “the development of cycling throughout the world” during an online meeting on June

2nd. This was just ahead of World Bicycle Day, The President of the Union Cycliste Internationale (UCI) and

Chairperson of ARETI made the “in recognition of invaluable contribution and a large-scale campaign

undertaken by the President to promote cycling in Turkmenistan and bring it to an international level”. On

World Cycle Day, President Berdimuhamedov unveiled the capital city’s latest monument, the Bicycle

Monument (picture below). World Bicycle day, which was established in 2018 by a resolution of the United

Nations General Assembly on the initiative of Turkmenistan.

Bicycle Monument – Ashgabat

Source: AKIPress

18


Restarting trade with Iran. The Islamic Republic News Agency cited Tehran’s man in Ashgabat, Gholamabbas

Arbab-Khales, as saying that in view of the easing of coronavirus restrictions, the two countries have agreed

to restart road and rail traffic as of June 10th. This had been due to happen on June 1st, but the date was

delayed as facilities were being put in place for disinfecting cargo.

Air traffic is also returning. Turkish Airlines will resume flights to Ashgabat from July 1st. Turkmenistan’s own

ban on international air traffic is set to elapse on June 20th.

Claim that GDP expanded by 6.2% in 1-4M. At the beginning of the governmental meeting on June 6th, Deputy

Chairman of the Cabinet of Ministers Gadyrgeldi Mushshikov reported on the macroeconomic indicators of

the country. During January-May period of this year, the GDP growth rate amounted to 6.2 % and production

increased by 4.7 %, compared to the same period in 2019, according to the Deputy Prime Minister. At the

same time, the Chairman of the Central Bank Merdan Annadurdiyev reported on the work carried out by

credit institutions and on measures taken to improve their activities and expand their range of services.

TAPI Pipeline – still very unclear. After months of silence on the topic, a deputy chairman of the

Cabinet, told the president at a government meeting that the Turkmenistan-Afghanistan-Pakistan-India

natural gas pipeline project is now fully supplied with the necessary steel pipes. Last December the

Chelyabinsk Pipe Plant said it had sent Turkmenistan 150,000 tons worth of high-strength, corrosion-proofed

pipes. Ashgabat has paid the Russian company almost US$220 million. There remains a great deal of confusion

about the project with little actual evidence to show how far it has progressed.

Electricity exports are a priority. President Berdymukhamedov pressed officials at a recent government

meeting to optimize and modernize the domestic electricity sector. The country has held talks with

Afghanistan to supply that country with power and the Energy Ministry said it is drawing up a memorandum

of understanding to be signed with Russia on cooperation in the electricity sector. Details on what form this

cooperation will take are as yet scant, but the state news agency talks about Turkmenistan being plugged

back into the Central Asian Power System and, more intriguingly, getting involved in some form with a future

Eurasian Economic Union, or EAEU, common electric power market.

Trying to boost oil & gas investments. President Berdymukhamedov charged Deputy PM overseeing the oil

a& gas sector Myratgeldi Meredov with the task of attracting more investments into the sector to build new

facilities and maintain existing large-scale projects. He pointed out that global prices for oil and oil products

have seen a considerable decrease and instructed that the strategy for selling these products to overseas

customers be worked out. At the same time, Berdymukhamedov offered to repay the attracted investments

with oil products. It was previously reported that earlier the same day the advisor to the President on oil and

gas Yashgeldu Kakaev held talks with the Italian oil company ENI. As a result of negotiations, a representative

of ENI proposed to “optimize investments and activities in accordance with the current economic situation

with the view of preserving value and sustainability of assets in the interests of both parties”.

Turkmenistan Manat (Commercial Rate) -US Dollar Exchange Rate

Source: Chronicles of Turkmenistan

19


Ukraine Reported cases: 28,471 + 3,576 (week-on-week)

Reported deaths: 818 + 85 (week-on- week)

Hryvnia-US$ exchange rate: 26.63 +0.3% (WoW) + 0.9% (MTD) - 10.6% (YTD)


Mass gatherings and entertainment events prohibited. Ukraine will not yet allow mass gatherings and

entertainment events, as the coronavirus threat is not over, President Volodymyr Zelenskiy was quoted as

saying by RBC Ukraine on June 8th. Social distancing rules and face mask requirements should stay in place for

the time being, he added, speaking at a government meeting devoted to curbing the coronavirus (Covid-19).

"The easing of the lockdown regime will save the economy, but don't forget that the infection has not gone

away and we have to continue saving people's lives," he was quoted as saying by RBC Ukraine. "The strict

lockdown regime did its job and I'm sure that thanks to it, many lives were saved."

Further support for SMEs. The government has submitted to parliament a draft law that would launch

another program for entrepreneur support. Under the program, Ukrainian entrepreneurs will be entitled to

cheap loans at 0%. According to PM Shmyhal, the parliament, is expected to approve the draft law shortly.

He added that the government plans to earmark UAH10 billion (US$374 million) to support entrepreneurs hit

by the coronavirus (Covid-19) pandemic and lockdown measures triggered by it.

Zelenskiy supports foreign land tenant agreements. President Zelenskiy intends to support foreign land

tenants' long-term agreements after the land market is launched in the country. Speaking at a meeting with

local entrepreneurs in Khmelnitsky region, he said that the issue of allowing foreigners to buy land

in Ukraine is "quite sensitive." "It would be correct to give everyone an opportunity to buy land, and this will

be done after certain decisions have been made," he was quoted as saying by RBC Ukraine. "But you should

also know that we couldn't immediately allow everyone, including foreign companies, to buy land." "You are

calling for equal conditions," he went on to say, "but foreign companies have different conditions." According

to Zelenskiy, Ukrainian farmers should initially be given a chance to take loans at 2% annually for the purchase

of land. "Then we'll be able to open the market for everyone," he explained. "But we will still defend long-

term land tenant agreements for foreign companies that have been present in this market for a long time."

Ukraine - Covid-19: New Cases (Bar - RHS) & Deaths (Line - LHS) June 9th


20



Ukraine international reserves flat YTD. Ukraine’s gross international reserves declined by 1.3% month-on-

month to US$25.4 billion in May after 3.1% growth MoM in April, the National Bank of Ukraine (NBU) reported

on June 5th. The May result is close to where they started the year. The decrease in international reserves

over the past month was primarily driven by the repayment of a significant part of this year’s public debt,

according to the central bank's statement. Specifically, Ukraine paid a total US$1.5 billion in the equivalent

hryvnia to service and repay its public and publicly guaranteed FX debt. That includes US$1 billion in Eurobond

repayments, US$338 million in repayments on FX domestic government debt securities, and US$60 million to

repay the debt to the IMF.

Banking activity returning to normal. Ukrainian banks have already re-opened 89% of their branch offices,

up from 75% at the beginning of May, the press service of the National Bank of Ukraine (NBU) said in a

Facebook post on June 5th. "Banks, along with the whole country, are gradually returning to normal life," the

NBU said. "The banking infrastructure is resuming its activity; more bank branches are starting to operate

normally; ATMs, access to which was limited, in particular, in shopping malls, are ready to service customers

again. While the share of opened branches of banks was 75% at the beginning of May, today this figure has

increased to 89%."

Ukraine agricultural exports grew by 2% in 5M20 to US$9 billion. Ukrinform reported on June 4th, citing an

industry report, that "In January-May 2020, exports of agricultural and food products amounted to US$9

billion, which is 2%, or US$180.3 million, more than in the same period of 2019". According to the report, the

exports were dominated by grain crops, oil-bearing crops, and processed products.

Signs of recovery. The number of new entrepreneurs registered in Ukraine is roughly the same as the weekly

number of new registrations prior to the coronavirus pandemic, Prime Minister Denis Shmyhal said. "Over the

past week, over 5,000 new individual entrepreneurs and nearly 1,000 new companies have been registered,"

he said, adding that the government has been running a program aimed at supporting small and medium-

size enterprises (SMEs) hit by the pandemic.

Support for coal sector. The EU Delegation to Ukraine is ready to support the country's reform of the coal

industry, the country's Energy and Environmental Protection Ministry said following consultations with Matti

Maasikas, head of the EU Delegation to Ukraine, Interfax Ukraine reported on June 8th. According to Energy

Minister Olha Buslavets, apart from resolving current issues in the coal industry the ministry has started

developing a program to reform it. "We have a strategic task to transform and reform the coal industry, decide

on the further fate of the state coal-mining enterprises," she was quoted as saying. "The most painful question

is reform of coal mines in single-industry towns, in which the population fully depends on their operation."

Ukraine Hyrvnia-US Dollar Exchange Rate


21


Uzbekistan

Reported cases: 4,448 + 730 (week-on-week)

Reported deaths: 18 +3 (week-on-week)

Som US$ exchange rate: 10,145.1 -0.8% (WoW) - 1.0% (MTD) - 6.0% (YTD)


The biggest wholesale market in Uzbekistan Urikzor has reopened. The local authorities-controlled

establishment of safety measures at the Urikzor market for several days. Three disinfectant tunnels, social

distance marks, thermal scanner, special barrier for cars with goods and reminder posters are in place at the

wholesale market. Customers are asked to follow hygiene rules and keep social distance.

Consumer goods markets to restart work since June 15 in Uzbekistan. Consumer goods markets will restart

working in Uzbekistan since June 15th, according to the decision of the nation-wide commission for

coronavirus containment. Markets will have to follow new regulations in their work. Disinfection should be

done on regular basis. Entrances and exits need to have pyrometers and antiseptics, disinfection mats. Sellers

and customers should use medical masks and gloves and keep 2-meter distance. People with temperature

above 37, signs of infection or without individual protective gear should not be allowed to enter markets.


Roseximbank opens the first correspondent account in Uzbek currency for Russian banks. The REC Group

expands the capabilities of exporters and importers of Russian products, the press service of the Russian

Export Center said Roseximbank, a member of the REC group (Russian Export Center), opened the first

correspondent account in Uzbek currency for Russian banks, while simultaneously opening several ruble

accounts for banks in Uzbekistan, which is designed to expand the capabilities of exporters and importers of

Russian products. This was announced on Thursday by the press service of the REC.

Fitch rates several banks. Fitch Ratings has affirmed the Long-Term Issuer Default Ratings (IDRs) of Uzbek

Industrial and Construction Bank (UIСB, also known as Uzpromstroybank), Joint Stock Commercial Bank Asaka,

Agrobank (Agro) and Microcreditbank (MCB) at ‘BB-’, with Stable Outlooks. Fitch has also affirmed the banks’

Viability Ratings (VR). A full list of rating actions is at the end of this commentary. The affirmation of the banks’

IDRs reflects Fitch’s view of a moderate probability of support from the government of Uzbekistan in case of

need, as reflected by the banks’ Support Ratings (SRs) of ‘3’ and Support Rating Floors (SRFs) of ‘BB-’. This

view is based on majority state ownership, significant systemic importance (UICB, Asaka and Agro), important

roles in government economic and social policy (Agro and MCB), the low cost of potential support relative to

the sovereign international reserves and a track record of capital and liquidity support.

Uzbekistan - Covid-19: Daily new cases

Source: John Hopkins

22


FDI reached US$2.5 billion in 4M20. Between January and April of 2020, the total volume of foreign

investments reached US$2.5 billion, including FDI of US$1.7 billion and foreign loans of US$831 million. At the

same time, the growth rate to the same indicator in 2019 was 1.6 times. The share of utilized foreign direct

investment in the total investment increased to 26%. In the reporting period, 336 projects were

commissioned: eight large industrial enterprises and 328 industrial facilities of regional significance. The

leaders in attracting investment in the economy of Uzbekistan were Russia, China, Germany and South Korea,

and the total number of investing countries in the country’s economy was 37.

According to the results of the reporting period, the most attractive for investors were the electrical

industry (growing 24-fold compared to the same period in 2019), the chemical industry (growing 13-

fold), leather and footwear (growing 2.5-fold) industries. The oil and gas industry (growing 2.3-fold)

and the construction materials industry (growing 1.6-fold) also show good performance.

At the same time, the growth trend of FDI and credit flows to projects of regional significance, the

total value of which in the reporting period made up US$958 million, increased by 2.6-times

compared to the same period in 2019. High growth dynamics by regions was observed in Jizzakh (13-

fold), Namangan (9.4-fold) and Surkhandarya (4.2-fold) regions.

According to the Investment Program, approved by the Decree of the President of the Republic of

Uzbekistan from January 9th 2020 No. PP-4563, in 2020 due to all sources of financing, the

development of investments in fixed assets is forecasted in the amount of UZS233.2 trillion, of which

foreign direct was US$7.1 billion and foreign investment and loans under the state guarantees were

US$2.7 billion.

More direct China-Uzbek train line. Trains along the China-Uzbekistan transport corridor will bypass

Kazakhstan and Russia and will run through Kyrgyzstan. The official ceremony of launch of the first train of 25

containers was held on June 5th in Lanzhou, Gansu province of China. The train will run through Kyrgyzstan

and Uzbekistan to Mary station in Turkmenistan, Uzbekistan Railway Company said. The Uzbek-Chinese joint

venture Silk Road International will handle container transportation from a train station in China’s Kashgar to

a train station in Osh. The new corridor is 4,380 km long. It is 300 km shorter than the route through

Kazakhstan’s Khorgos. The new corridor shortens the travel time by 5 days.

Trouble in Uzbek enclave. President Mirziyoyev is to visit the eastern Ferghana Region following clashes

between Kyrgyz and Uzbek citizens on May 31st in a disputed border region near Uzbekistan's Sokh exclave in

Kyrgyzstan's southern Batken region, Prime Minister Abdulla Aripov said. Residents of the Uzbek exclave told

RFE/RL that 16 locals were injured, but there was no confirmation by Uzbek authorities. The Uzbek Border

Guard Service said the situation was under control. Prime Minister Abdulla Aripov, who travelled to Sokh

shortly after fighting subsided promised at a meeting with local community representatives and that major

investment was forthcoming. Aripov said the government is looking at restoring an old airfield to ensure a

reliable form of access to the rest of the country. About US$100 million will be spent on overhauling Sokh, he

said.

Uzbekistan Som-US Dollar Exchange Rate


23


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

24


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% -2.2% 4.5% 4.5%

Azerbai jan 10.1 $45.0 $4,447 $16,011 260% -2.5% 2.0% 2.5%

Belarus 9.5 $50.0 $5,291 $17,742 235% -5.0% 2.5% 2.0%

Georgia 4.0 $13.9 $3,484 $10,152 191% -5.0% 3.5% 4.0%

Kazakhstan 18.7 $157.0 $8,382 $24,738 195% -2.5% 4.0% 4.0%

Kyrgyz Republ ic 6.5 $9.4 $1,446 $3,447 138% -3.0% 4.0% 4.5%

Mongol ia 3.3 $12.5 $3,823 $12,209 219% 0.5% 4.5% 4.5%

Russ ia 145.9 $1,568.0 $10,746 $27,147 153% -3.5% 2.5% 2.5%

Tajikis tan 9.5 $8.2 $867 $3,061 253% 0.5% 4.0% 4.5%

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

Ukraine 43.8 $136.0 $3,106 $9,233 197% -6.0% 4.5% 3.5%

Uzbekis tan 33.4 $55.3 $1,657 $6,240 277% 1.3% 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 7.0% 6.0% 5.0% 8.0% 8.0% 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 4.5% 3.7% 3.5% 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 Public Debt, % GDP

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

Armenia -4.5% -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 -3.5% -0.2% 0.2% 0.5% 1.0% 2.0% 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 GDPBudget Balance, % GDP

25


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 5000

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 1 May (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

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

4-Apr Russia closes air connections with other countries

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 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 President announces new economic support package

12-May Factories and non-customer businesses re-open in Moscow

14-May Random testing regime announced in Moscow

18-May President holds special meeting on emergency situation in Dagestan

20-May Sobyanin says multi-functional centers will re-open in Moscow

27-May Sobyanin extends self-isolation period to June 14th

2-Jun President approves economic recovery plan

8-Jun Mishustin relaxes travel restrictions for hardship cases

8-Jun Moscow City significantly relaxes movement and business restrictions

Source: Macro-Advisory, from Russian media sources

26


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 State of emergency lifted, quarantine remains in Nur-Sultan and Almaty

17-May Air Astana announces resumption of 30% of internal routes by end of May

18-May Cafés, restaurants, and religious buildings allowed to reopen outside quarantine areas

22-May Kazakhmys copper mine stops work for 10 days because of infection outbreak

7-Jun Air passengers from abroad avoid quarantine with a certificate

8-Jun Kazakhstan stops counting asymptomatic cases

Source: Macro-Advisory, from media sources

Date Action4-Feb Ukraine International Ai rl ines s tops fl ights to China

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

2-Mar Firs t patient identi fied, infected in Ita ly

10-Mar Fl ights to European countries reduced

12-Mar National quarantine for 3 weeks

Schools closed

Events with more than 200 people banned

Air connections with Ita ly closed

13-Mar Borders closed

Firs t death

16-Mar Pres ident addresses nation, clos ing bus , ra i l and a i r travel , and closes metro

Foreign nationals barred from entry for two weeks

17-Mar Al l a i r connections closed

Major ci ties close a l l reta i l outlets except pharmacies , food reta i l , gas s tations , banks

Government announces economic measures

3-Apr Measures to s trengthen quarantine, lasting ti l l Apri l 24th

8-Apr Government says quarantine l ikely to be extended

17-Apr Kyiv Pol ice say they wi l l s top people entering churches

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

4-May Quarantine extended to May 22nd

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

15-May Pres ident orders mass testing

18-May Government announces that beaches wi l l open this year

23-May Above ground publ ic transport and shops smal ler than 1000 square meters re-open in Kiev

25-May Kiev metro to open

5-Jun Army draft for school and col lege leavers cancel led

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

27


Appendix 6: Uzbekistan government actions

Date Action

21-Feb March investment summit cancel led

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

15-Mar Bar on entry for a l l foreigners

Al l univers i ties and schools closed for 3 weeks

16-Mar Suspends international a i r and road connections

Al l ci tizens arriving from abroad must observe 14 day quarantine

Spiri tua l Board of Mus l ims cancel Friday prayers

19-Mar Pres ident orders US$1 bi l l ion fund for Covid-19 fight, to be financed from abroad

22-Mar Tashkent shuts down a l l publ ic transport, only dis infected taxis wi l l operate

Government announces border closure

27-Mar Firs t death from coronavirus

1-Apr Sel f-i solation regime imposed in Tashkent and other regional centers

18-Apr Quarantine extended to May 10th

Uzbekis tan sends 5 mi l l ion medica l masks to Russ ia

20-Apr Private medica l insti tutions a l lowed to carry out coronavirus tests

25-Apr Some retai lers and bus inesses a l lowed to re-open

8-May Government divides terri tories into red, yel low, and green zones for di fferent quarantine levels

9-May Ban on mass events and vis i ting veterans for Victory Day hol iday

14-May Government extends lockdown unti l June 1st, some bus inesses a l lowed to re-open

Three regions declared coronavirus-free: Dzhizakskaya, Kashkarinskaya and Ferganskaya

24-May Minis ter of Health warns restrictions may be tightened

Source: Macro-Advisory, from media sources

28


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