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Covid-19 – Eurasia Check-up Watchate

May 6th 2020

An air of optimism as summer approaches

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, others less so. While the number of Covid-19 cases

in Russia jumped by 30% last week, in the rest of the Eurasia

region the increase was only 12,817.

Tajikistan admits to infections. The government admitted to a

first case on May 1st and, within days, has raised that to 128.

Turkmenistan is the last holdout. The government refuses to

acknowledge the virus in the country but a lot of anecdotal

evidence points to a large number of deaths from the virus. The

WHO has cancelled a planned inspection visit.

Several governments have started to ease restrictions. Some

countries started to ease social restrictions as of May 4th. This is

a holiday period in most countries and pressure has been building

in many states to end the tight restrictions. Governments have

yielded to this even while warning that restrictions may have to

tighten if the numbers deteriorate.

Most others have set mid-May timelines. Other states, such as

Russia and Ukraine, are “indicating” that they will start easing

from mid-May. This also reflects the pressure from people.

Central banks are cutting rates. Central banks in Armenia,

Georgia, Russia and Tajikistan have eased their policy interest

rates over the past ten days. This is mostly to try and ease

pressure in the economy and is against the backdrop of hope that

inflation will remain within, or close to, target rates.

Currencies recover. Most currencies in the region have edged a

little higher last week. This is partly the positive contagion from

the oil price rally and reflects the hope that easing may soon end

and worst-case economic scenarios avoided.

Azerbaijan will not devalue the manat. Four of the country’s

major banks have been taken into administration by the central

bank but the government says it will not devalue the currency.

Ukraine prepares for the critical bank bill. President Zelensky

said he hopes the critical Bank Reform bill will be approved by the

Rada on May 11th. This is the critical legislation required to unlock

the US$5.0-8.0 billion IMF aid package. But there are already

some challenges being prepared for the other key law, i.e. land

reform, and while these are unlikely to succeed, it shows that the

political situation in the country remains volatile.

Kazakhstan. President Tokayev has ousted Nazarbayev’s

daughter, Dariga, as speaker of parliament. The action raises

concerns about the risk of political and policy instability.

Covid-19 in EurasiaPopulation*

Mln Cases Deaths

Armenia 2.96 2507 39

Azerbaijan 10.11 1984 26Georgia 3.99 593 9Belarus 9.45 17489 103Kazakhstan 18.72 4121 29Kyrgyz Republic 6.49 843 11Mongolia 3.26 41 0Russia 145.92 145268 1356Tajikistan 9.48 128 2Turkmenistan 6.00Ukraine 43.80 12697 316Uzbekistan 33.34 2189 10

Eurasia Total 293.52 187,860 1,901

Source: *Worldometers, **WHO at May 5th

Coronovirus**

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

Armenia Dram 480.07 -0.2%

Azerbaijan Manat 1.70 0.3%Georgia Lari 3.20 -10.6%Belarus Ruble 2.45 -14.1%

Kazakhstan Tenge 424.10 -9.8%Kyrgyz Republic Som 78.91 -11.6%

Mongolia Togrog 2,789.12 -2.6%Russia Ruble 74.22 -16.5%

Tajikistan Somoni 10.25 -5.4%Turkmenistan Manat** 19.50 -2.6%

Ukraine Hryvnia 26.97 -11.7%Uzbekistan Som 10,139.4 -5.9%Brent, $ p/bbl 29.11 -55.9%Afghanistan Afgani 76.25 1.2%Iran Toman** 16,200 -17.6%

Source: Bloomberg, Macro-Advisory

* as at May 5th

** 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 May 5th

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 -2.5% 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 -2.3% 2.3%

Source: Bloomberg, Macro-Advisory

GDP, % Change YoY

2

Covid-19 – Eurasia Check-up Watchars Update

Armenia

Reported cases: 2,507 + 699 (week-on-week)

Reported deaths: 39 + 10 (week-on-week)

Dram-US$ exchange rate: 480.07 -0.1% (WoW) -0.1% (MTD) -0.2% (YTD)

Government actions & regulations

Easing started on May 4th. Starting on May 4th, Armenians can again dine (in outdoor seating), go shopping

anywhere, except a mall or other large markets, and travel without restrictions (though public transportation

remains suspended). Factories of all sorts are allowed to reopen, as are hairdressers and beauty salons.

Educational and recreational facilities will remain closed.

Prime Minister accepted it is a risk. Prime Minster Pashinyan said that, despite the still rising number of cases,

“We can’t be locked inside for a year. Our work during this [outbreak] showed that if we knew that if one

more month of the strictest restrictions would defeat the pandemic we could do that. However, the fact is

that it is not possible, and our statistics from the past two months have shown that.”

Government backtracks with some supports. At the end of April, there were protests following the

government’s reversal on a promise to cover the electricity bills of those in need through the period of the

crisis. The government had initially announced that it would assist those unable to pay their bills as a result

of job losses related to the coronavirus situation. However, when it became clear that even people who did

have the means to pay their bills were also accepting government handouts, the prime minister reversed his

promise. The protests forced a compromise and the government now says it will assist people whose

electricity bills are between AMD10,001-25,000 and natural gas bills between AMD30,000-40,000.

Refining assistance programmes. Economy Minister Khachatryan refined a government financial assistance

program for businesses that includes assistance in the form of subsidies, co-financing, and refinancing. The

type of financing depends on whether a given business needs assistance to pay salaries, to acquire equipment,

or for other purposes. He also announced an adjustment to an agricultural program based upon increasing

demand. Loans intended for cattle breeding are to increase from AMD15 to 50 million, and loans for sheep

breeding will increase to AMD30 million.

The government also unveiled the latest in its series of assistance programs. The Fifteenth Assistance

Program was initiated by the Environment Ministry and involves planting local willow species in the highlands

near river banks. This program will create 1,000 temporary jobs over the course of 10-15 days and will involve

the allocation of over AMD200 million for the planting of two million trees.

Armenia - Covid-19: New Cases (Bar - RHS) & Deaths (Line - LHS) May 5th

Source: World Health Organization

3


Monetary response and impact

Central bank cuts rate as inflation remains low. Armenia’s central bank on April 28th lowered the country’s

key refinancing rate to 5.00% from 5.25%. Previously, the national lender cut the rate to 5.25% from 5.5% in

March after maintaining it as unchanged in January. Armenia’s consumer price index moved up by 0.5% in

March MoM and fell 0.1% YoY.

Targeting ill-gotten wealth. A new law adopted by parliament would allow prosecutors investigating

unexplained wealth to petition courts in Armenia to take hold of any property worth more than US$100,000

and acquired after 1991, the year of the country’s foundation. Prosecutors would then have six months to

prove whether or not the property was acquired illegally.

OCCRP raised concerns. “While some are praising the law as an important step in tackling corruption

in Armenia and bringing it closer to European standards, others have deep misgivings about how the law could

be implemented,” the OCCRP said in a report.

“For one, while it applies to properties going back some thirty years, there are no provisions for

owners who can’t prove the legitimacy of their ownership due to lost or damaged documents,” it

added.

“The next problem is that they demand that the owner of the property prove that he has acquired it

in a conscientious way,” Varuzhan Hoktanyan, program manager at Transparency International's

Anti-Corruption Center, was quoted as saying.

“Now the question is, if he doesn't have that evidence, what will they do?” he asked, questioning

whether owners are really obliged by someone to keep such evidence for so many years, adding: “Is

there such a legal act?”

Nor are there any provisions as to what the state will do with properties it would seize—something

that former justice minister Arpine Hovhannisyan asked.

Planning to go further. Following the passing of the unexplained wealth law, the Armenian parliament is

considering legislation that would make Armenians’ private banking information available without a court

order.

Armenia Dram - US Dollar Exchange Rate

Source: Trading Economics

4


Azerbaijan


Reported Deaths: 26 + 4 (week-on-week)

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


Lockdown extended but some exceptions allowed. The Azerbaijan government has extended its quarantine

until May 31st, but a number of restrictions have been lifted. Certain sectors of the state will return to their

usual activity as of May 4th. The center of Sustainable and Operational Social Security will once again provide

targeted state social assistance. In addition, retail will again be allowed to function. Beyond this, beauty salons

and cosmetic services will be allowed to open, as well as legal entities. The authorization system for people

leaving their homes will cease as of May 4th, with the exception of the cities of Baku, Sumgait, Ganja, Lankaran,

the Absheron region, and the Nakhichevan exclave.

List of businesses permitted. Azerbaijan formally lifted the closure notice on several types of businesses as

part of attempts to ease controls. As part of the now-permitted list of businesses able to reopen, these include:

individual teaching and tutorial, bookstores, newspaper kiosks, stationery shops, print shops, photo studios,

domestic cleaning, tailoring, cosmetic stores and services, clothing retail, shoe shops, jewellery and pawn

shops, mobile phone stores, computer stores, furniture shops, car sales, flower stores and agricultural stores.

Support for low income families. Azerbaijan’s leading mobile operator, Azercell Telecom, continues to

support low-income and other types of vulnerable families in the country during the crisis. The company

announced another charity project aimed at distributing food packages to 4,000 low-income families in the

regions of Azerbaijan under lockdown during the month of Ramadan. The company is working with the

Ministry of Labor and Social Protection to obtain accurate lists of needy families.

Aliyev claims support. President Aliyev is reported to have received an unusually high number of letters

praising his leadership during the crisis. Citizens have written in extensive detail about the both the specific

programs enacted by the government, as well as the president’s exemplary leadership capabilities in general.

State television has also featured reporters reading some of the letters aloud to the public.

Easing restrictions for foreigners. The State Migration Service (SMS) has requested foreigners in the country

not to report at police stations for the next 60 days, Report news agency reported on April 28th. The SMS noted

that foreigners' stays in the country will be extended for 60 days, taking account of the ongoing threat from

coronavirus (Covid-19) spreading among government employees. The agency added that the SMS will extend

the stay period of foreigners registered at hotels and private accommodation. The country has started to

return foreigners in the country, with the Iranian embassy announcing on April 27th that a bus full of its citizens

had been given permission to return across the border to Iran.

Azerbaijan - Covid-19: New Cases (Bar - RHS) & Deaths (Line - LHS) May 5th


5



No plans for devaluation. The central bank of Azerbaijan on May 1st said it would hold its refinancing rate at

7.25%, but adjusted its rate corridor, setting its lower boundary at 6.75% and upper boundary at 8%, compared

with the previous 6.75% and 9.0%. Elman Rustamov, the governor of the regulator, said the central bank

forecast annual inflation would be between 2% and 6% this year. Several government officials have said the

country is not under pressure to devalue the manat.

Banks placed in administration. Temporary administrators have been appointed for Atabank, AGBank,

NBCBank and Amrah Bank, which are among Azerbaijan’s 15 largest financial institutions. No official

explanations were given for the move, but there is speculation on the market that the banks could face closure

or could be merged with other lenders. The central bank has also reduced the amount of capital Azerbaijan’s

banks have to hold, implying that they were having trouble meeting the old requirements. A central bank

source is quoted by Reuters as saying that “all four banks had been facing liquidity and financial sustainability

problems”. Interfax, meanwhile, reported that: “The order affects deposits totalling AZN7.3 billion (US$4.3

billion) and protects the interests of 8.3 million people.”

Protection for some depositors. Customers of Azerbaijan’s Atabank and Amrah Bank, two lenders which had

their banking licences cancelled on April 27th, will be refunded their deposits from June 1st , the chairman of

the Central Bank of Azerbaijan (CBA) was quoted as saying.

EBRD support. The European Bank for Reconstruction and Development announced plans to invest more than

US$250 million in Azerbaijan for projects in the public sector, including energy, infrastructure, and ICT.

EBRD to help advance privatizations. Officials from Azerbaijan and the European Bank for Reconstruction and

Development (EBRD) held discussions on prospects for cooperation in supporting the privatization of state-

owned enterprises, Caspian News reported on April 30th. EBRD President Chakrabarti reportedly said that the

development bank wants to start discussing the commercialization and privatization of Azerbaijan’s state-

owned enterprises in the medium term. “This can be done through a public investment holding. We are

already working with the government [of Azerbaijan] on the formula of public-private partnerships in the field

of legislation.

Oil production to be reduced. BP will cut its Azerbaijan oil production by 76,000 bpd in May and June as part

of the country’s efforts to curb supply in line with an OPEC+ agreement, national oil company Socar said on

April 30th. Socar added that it planned to cut output by 17,000 bpd over the same period, while companies

that produce onshore oil would make cuts amounting to 3,000 bpd.

Azerbaijan Manat - US Dollar Exchange Rate


6


Belarus

Reported cases: 17,489 +6,200 (week-on-week)

Reported deaths: 103 +28 (week-on-week)

Ruble US$ exchange rate: 2.454 + 0.1% (WoW) -1.5% (MTD) - 4.1% (YTD)


Negotiating financial aid. Belarus is negotiating a loan package worth US$2.0-2.5 billion from international

lenders with the aim of mitigating the impact of the coronavirus crisis. According to First Deputy Prime

Minister Dmitry Krutoi, Belarus is currently in talks with international organisations, the World Bank, the

International Monetary Fund (IMF), the Development Bank of China, the European Investment Bank (EIB) and

several governments with a view to getting financial support to recover from the Covid-19 pandemic.

Managing with tight liquidity. The government is working on a weekly basis "in an attempt to attract

resources, to unload the budget, to support the sustainability of our public debt and the possibility of

refinancing it in the amounts we planned earlier this year", Krutoi said in a televised interview on April 26th.

Small reduction in external debt. The external state debt of Belarus declined by US$0.5 billion as of early

April, or 2.9%, to US$16.6 billion from early January, according to the nation's Finance Ministry. In January-

March, Minsk borrowed around US$247.7 million abroad. Specifically, Belarus borrowed US$222.7 million

from Russian banks and the Russian government, US$12.8 million from Chinese Import-Export Bank, and

US$4.2 million from the EBRD and Nordic Investment Bank (NIB).

EBRD to continue investing in Belarus. The European Bank for Reconstruction and Development has "a strong

pipeline of projects" in Belarus that should allow the lender to deliver in 2020 a total volume of financing in

line with the previous year record of over US$400 million. "We will focus on facilitation of trade, support to

SMEs and private sector companies and important infrastructure projects. Commercialization of the public

sector remains one of the important priorities for the bank and we will be engaging with state-owned entities

to facilitate this process."

No plans to cut the gas price. Russia is not going to reduce natural gas prices for Belarus in 2020, Russian

Energy Minister Alexander Novak said in an interview with news agency Interfax on April 29th. The Belarusian

government is seeking to reduce the price of Russian natural gas in 2020, which has been raised, Energy

Minister Viktor Karankevich said on April 9th. In February, President Lukashenko said that the country should

pay about US$90 per 1,000 cubic metres for Russian natural gas in 2020 instead of of US$127 per 1,000 cubic

meters currently.

Belarus - Covid-19: New Cases (Bar - RHS) & Deaths (Line - LHS) May 5th


7



0.3% Q1 growth. The economy grew 0.3% in Q1 according to Belstat. The World Bank forecasts a 4% decline

in GDP for this year as a result of the coronavirus pandemic.

Economy & trade

Trade deficit in Q1. Belarus's merchandise trade deficit stood at US$1 billion in January-March vs. a deficit of

US$982 million in the first three months of 2019, according to the nation's state statistics service Belstat. The

nation's exports of goods declined by 14.7% year-on-year to US$6.6 billion, while imports declined by 12.6%

YoY to US$7.7 billion. In March, the Prime Minister, Sergei Rumas, attributed the growth deficit to an increase

in imports of equipment and materials for the Belarusian nuclear power plant (NPP), as well as to the poor

execution of import-substitution programs. Rumas acknowledged that last year’s export growth target had

been missed after a 16% rise in exports in 2018. He described the lower-than-expected exports of petroleum

products as a key factor that had prevented the country from meeting the target.

Diversifying oil source. Belarus has bought the first batch of 80,000 tonnes of crude from Saudi Arabia, the

nation's petrochemical conglomerate Belneftekhim said on April 29th. A tanker with the crude is expected to

deliver this oil to the port of Klaipeda in Lithuania on May 11th, state news agency BELTA reported. According

to officials in Minsk, Belarus received about 2 million tonnes of oil in April. As much as 1.56 million tonnes was

delivered from Russia by pipeline and by rail. The rest was delivered by tankers and unloaded in Belarus.

No premium for Russian oil. Russian companies will supply oil to Belarus without a premium, which Minsk

has refused to pay in January-March, according to Prime Minister Sergei Rumas. "Since late 2019 Belarus has

been negotiating the acquisition of Russian oil for our oil refineries without a premium," he said."

Belarus Ruble - US Dollar Exchange Rate


8


Georgia

Reported cases: 593 + 96 (week-on-week)


Lari US$ exchange rate: 3.2025 0.2% (WoW) 0.0% (MTD) – 10.6% (YTD)


Help for small businesses. On May 1st, Economy Minister Turnava held a presentation outlining the GEL3.5

billion assistance programs that the government will implement in six phases. The presentation primarily

involved the government’s plans to help small- and medium-sized businesses suffering as a result of the crisis.

The government announced the extension of certain assistance programs. The credit and leasing subsidy

program will be extended from 24 months to 36 months. Co-financing will be increased by three percent, and

the minimum decreased from GEL150,000 to 40,000. In addition, the types of financing available as part of

the program will be increased from 104 to 211. This will create eligibility for about 300 small- and medium-

sized businesses. Another program to be extended is the credit guarantee program for small and medium-

sized businesses. This program will increase in amount from GEL20 million to GEL300 million. It will provide

for a total of GEL2.1 billion in loans.

The state will co-finance 90 percent of the principal amount of the loans, rather than 70 percent as previously

estimated. The limit of the loan will increase from GEL2.0 million to GEL5.0 million. In addition, the micro

grants program will increase from GEL10.0 million to GEL40.0 million.

UK support. The British Embassy in Georgia will provide GEL100,000 to the Georgian military in order to help

prevent spread of the infection within the army. The money will be used to buy gloves, face masks,

thermometers, and other medical products.

EBRD support. The European Bank for Reconstruction and Development (EBRD) has agreed to provide a US$25

million loan to LSE-listed Georgian Healthcare Group (GHG), Georgia's largest, integrated healthcare services,

pharmacy and medical insurance provider. The loan is to finance GHG's short-term working capital and

spending deemed critical amid the Covid-19 pandemic.

IMF support. The executive board of the International Monetary Fund (IMF) approved on May 1st the

disbursement of a US$200 million loan tranche to Georgia under the Extended Fund Facility (EFF) to help the

country meet urgent balance of payments and fiscal needs stemming from effects of the coronavirus

pandemic.


Georgia - Covid-19: New Cases (Bar - RHS) & Deaths (Line - LHS) May 5th


9


Interest rate cut. The central bank (NBG) on April 29th cut the refinancing rate by 0.50 ppt to 8.5%, mentioning

local and global demand-side disinflationary pressures as well as lower oil prices. In Georgia, the annual

inflation rate in March was 6.1%. The NBG predicts that due to temporary factors, inflation will remain high

for several months, then gradually decline, and in the first half of 2021 approach the 3% target level. “A sharp

decline in external and domestic demand due to pandemic will create a downward pressure on inflation over

the course of the year. Given the expected reduction in the demand, there is no need to further maintain such

a tightened policy stance”, said the NBG.

Despite the rate cut, monetary policy remains tight, ensuring a return of inflation to the target level in the

medium term. The Monetary Policy Committee will exit the tight monetary policy stance gradually and further

steps will depend on how quickly inflation expectations recede. Georgia’s central bank reiterated its forecast

for 4% GDP decline this year.

Consumer price inflation accelerated to 6.9% y/y in April from 6.1% y/y in March as prices increased on

average by 0.9% in the month, according to statistics office Geostat. Georgia’s annual inflation rate has thus

returned to a point near the highest level (7% y/y) seen in the last two years. That rate was posted in December

after pessimistic expectations weakened the country’s currency during the second half of 2019. The tough

intervention of the central bank reversed the trend during the first months of this year and low oil prices

convinced the monetary authority to ease, albeit only marginally, its hawkish policy rate.

Risk outlook cut. Fitch Ratings revised its outlook for Georgia’s long-term foreign-currency issuer default

rating (IDR) to negative from stable and has affirmed the IDR at BB to reflect the evolving impact of the

coronavirus pandemic on the country. “This significant shock will lead to a sharp contraction of Georgia's small

and open economy with a high dependence on tourism, deterioration in fiscal accounts including markedly

higher public debt and increased risk stemming from Georgia's higher external debt and wider structural

current account deficit relative to the median of its BB category peers,” Fitch commented.

Economy expanded in Q1. The Georgian economy contracted 2.7% y/y in March, according to preliminary

data from the National Statistics Office of Georgia (Geostat). In the whole of Q1, GDP edged up by 1.5% y/y,

the data also indicated.

Pessimistic GDP outlook. Georgian think tank PMC Georgia Research has estimated in a report that the

country’s GDP will drop by 8% this year under a baseline (“least pessimistic”) scenario, while it would plunge

by 12.9% under the “pessimistic” scenario. Weaker tourism and remittances are two drivers hitting the

country’s economy. In March, the number of tourists coming to Georgia decreased by 56.1% YoY, while

remittance inflows dropped by 9%. Further declines in these figures are expected in the coming months. The

government, in line with the International Monetary Fund (IMF), projected a 4% GDP decline this year, which

corresponds to the “optimistic” scenario drafted by PMC Research.

Georgia Lari - US Dollar Exchange Rate


http://www.research.pmcg-i.com/slider_file/4a8d5ea7f4e41d23b.pdf

10


Kazakhstan

Reported cases: 4,121 +1,261 (week-on-week)


Tenge-US$ exchange rate: 424.1 + 1.8% (WoW) + 0.4% (MTD) – 9.8% (YTD)


Nazarbayev’s daughter ousted. Former deputy chief of the Kazakh presidential administration, Maulen

Ashimbayev, has been promoted to speaker of parliament, replacing Dariga Nazarbayeva, elder daughter of

former president Nursultan Nazarbayev. She was dismissed by current Kazakh President Kassym

Zhomart Tokayev on May 2nd, prompting Kazakhstan watchers to question whether some kind of power

struggle could be under way.

Note: given the importance of this topic, we will issue a separate analysis to consider the implications of

this move on political stability and possible changes to government policy priorities.

Start of easing. Kazakhstan allowed businesses such as non-food retailers, barber shops, dentists, foreign

exchange kiosks and real estate agents to reopen on May 4th.

Flights resume. Airlines in Kazakhstan on May 1st made their first regular domestic flights in over a month, but

ran services with empty middle seats that serve as a distancing measure. The flights took place

with Kazakhstan easing coronavirus lockdown measures and intending to gradually remove more restrictions

throughout May. Three domestic carriers, namely Air Astana, SCAT and Qazaq Air, were allowed to reopen

90-minute flights between the capital Nur-Sultan and largest city Almaty. Passengers were required to present

certificates confirming negative testing for Covid-19 and receive temperature checks at the airport. The

certificates are only valid for a week. The passengers were also told to wear protective masks.


Interest rate held. The Kazakh central bank kept its policy rate unchanged at 9.5% on April 27th and said that

it expected Kazakhstan's economy to contract by up to 1.3% in 2020, above the government’s forecast of

0.9%. The central bank, in an emergency move, cut its policy rate to 9.5% from 12% on April 3rd.

Inflation expansion. Annual consumer price index (CPI) inflation expanded to 6.8% in April, up from the 6.4%

recorded in March according to data published by the country’s statistics office. In monthly terms, inflation

came in at 0.9% in March. The regulator previously aimed to achieve a 4% inflation rate by 2020, but consumer

prices have taken an opposite turn to the upper boundary of the 4-6% inflation corridor that the central bank

has been maintaining. Inflation has officially surpassed the 6% boundary, mainly driven by a sharp acceleration

of prices in April due to increased demand caused by mobility restrictions set up in parts of the country.

Kazakhstan - Covid-19: New Cases (Bar - RHS) & Deaths (Line - LHS) May 5th


11


Economic actions and impact

Creating a national commodity distribution system. Kazakhstan, in a bid to ensure food security and price

control, will create a national commodity distribution system, a government teleconference meeting heard

on April 28th. Kazakhstan will base the system on similar systems set in place in France and Spain. The project

will be carried out in three stages up to 2022 and will consist of 24 distribution centers. This will allow storage,

processing and distribution of around 4.8 million tonnes of agricultural products. The newly launched

infrastructure will ensure the complete preservation of harvested crops and minimize losses. This will in turn

motivate agricultural producers to increase their production, the Kazakh prime minister’s website said. This

year, five such centers will be launched in Pavlodar, Almaty and Turkistan regions, ensuring storage of an

additional 600,000 tonnes of agricultural products.

Chinese fruit imports resume. China’s General Administration of Customs recently announced that permission

has been granted for exports to Kazakhstan of 21 categories of fruit to resume. The approval was conditional

on consignments meeting stipulated phytosanitary requirements and took effect from April 22. The fruit

categories included apples, apricots, bananas, citrus, coconuts, dragon fruit, grapes, kiwifruit, longans,

lychees, mangos, melons, nectarines, papayas, passion fruit, peaches, pears, persimmons, pineapples, plums

and strawberries. Kazakhstan’s Ministry of Agriculture announced a temporary import ban on some types of

Chinese fruit on March 5 after detecting the presence of “harmful organisms”.

Negotiating a cut in oil production. The energy ministry said on May 1 that it is reducing production at certain

oil fields in a bid to meet the country's OPEC+ commitments to a global crude oil output reduction deal. None

of the fields concerned were specified. Reuters reported previously, citing anonymous sources,

that Kazakhstan was in talks with operating companies to reduce production at Tengiz and Kashagan by 22%.

Kazakh Tenge - US Dollar Exchange Rate


12


Kyrgyz Republic

Reported cases: 843 +148 (week-on-week)


Som - US$ exchange rate: 78.914 1.9% (WoW) 0.2% (MTD) - 11.6% (YTD)


Lockdown easing will likely follow Kazakhstan. Kyrgyzstan’s parliament has said it will debate whether to lift

the state of emergency. The parliament has not yet received orders to discuss the lifting of restrictions in the

country by the Security Council. “Most likely, we will follow the path of Kazakhstan and extend the state of

emergency until May 11th, but with some concessions, about which the commandant of Bishkek, Almazbek

Orozaliev, spoke earlier. That is, some enterprises, in particular car service stations, taxi services will be

allowed to work,” Deputy of the Parliament Dastan Bekeshev said.


Debt restructuring. Eximbank of China will restructure and extend the debt repayment period of the Kyrgyz

Republic because of coronavirus. Deputy Prime Minister Erkin Asrandiev made the announcement, adding

that last week a conversation took place between President of Kyrgyzstan Sooronbay Sharipovich Jeenbekov

and Chinese President Xi Jinping on restructuring the Eximbank loan. “As far as I know, the appeal has found

understanding. Eximbank has now contacted our specialists, work has begun. As for the external debt to other

creditors, work is underway to defer payments on bilateral loans in the framework of the Paris club,”

Asrandiev said. It is believed that Kyrgyzstan owes China US$1 billion of its total US$4 billion international

debt, which in recent years has funded massive infrastructure projects.

Kyrgyz Republic - Covid-19: New Cases (Bar - RHS) & Deaths (Line - LHS) May 5th


Kyrgyz Som - US Dollar Exchange Rate


13


Mongolia Republic



Togrog-US$ exchange rate: 2,789.1 - 0.3% (YoY) 0.13% (MTD) -2.6% (YTD)


Easing, but only slowly. Cultural and sports centers in the capital, Ulaanbaatar, have reopened in the first sign

of the relaxation of lockdown rules in the country. "Based on instructions given by the central government

and requests by citizens, the mayor of Ulaanbaatar, Sainbuyan Amarsaikhan, on Thursday issued a decree on

reopening cultural and sports centers such as sports halls, swimming pools, dance clubs and training centers

in the city from May 1st," the mayor's press office said in a statement. Social distancing measures remain in

place, however, with all people now required to wear face masks when entering buildings. Children under the

age of 12 will not be allowed to enter these types of premises for the time being.


World Bank deal. The World Bank and Mongolia’s Ministry of Finance signed a US$52 million finance deal for

the Ulaanbaatar Heating Sector Improvement Project and Additional Financing of the Third Sustainable

Livelihoods Project. The financing was agreed by the World Bank’s Board of Executive Directors last week, as

part of efforts to help amid the ongoing strain on the country’s economy. The initial US$41 million Ulaanbaatar

Heating Sector Improvement Project will finance essential investments to expand transmission capacity and

improve the efficiency of the district heating network to meet the increasing demand for heating services and

improved air quality. The US$12 million extra financing earmarked for the Mongolia Third Sustainable

Livelihoods Project will scale up activities to improve the planning and delivery of priority local infrastructure

investments in all 330 rural regions in Mongolia.

Exports decline by 40%. Exports from Mongolia totaled US$1.3 billion (down 39.3% year-on-year) in the first

quarter of 2020, stated the Customs General Administration on April 29th. Sagging demand for minerals and

metals coupled with the decline in world trade due to the coronavirus (Covid-19) have taken a chunk out

of Mongolia’s usually busy export market. The exports includes 3.6 mln tons of coal, 2.5 mln tons of iron ore,

382,000 tons of copper concentrate, 176,000 tons of spar, 46,700 tons of zinc ore and concentrate and

395,400 tons of crude oil.

Mongolia - Covid-19: New Cases (Bar - RHS) & Deaths (Line - LHS) May 5th


14


Coal privatization delayed

Coal mine IPO delayed. Mongolia has scrapped plans to sell up to US$3 billion of shares in the country's

flagship coal mine in a Hong Kong initial public offering (IPO). Statements from officials previously indicated

that the long-planned offering for around 30% of Erdenes Tavan Tolgoi in the Gobi Desert would take place

before legislative elections scheduled for late June. But a combination of political campaign considerations

and the disruption on international financial markets caused by the coronavirus pandemic appear to have

caused the shelving of the plan.

In explaining the IPO decision, the Mongolian cabinet has pointed to turbulence caused by a legal

challenge from a Tavan Tolgoi miners' union. It is unhappy with a capital restructuring conducted in

preparation for the stock sale, saying it should have meant a full shareholder vote, not just approval

from the government, which owns 85% of the mine. The Tavan Tolgoi deposit holds estimated coking

coal reserves of 7.5 billion tons.

Eight years ago, 2.5 million Mongolians received free shares in the mine amounting to 15% of its

stock. Next month they should receive their first dividends of between MNT67,500 and MNT96,480

per shareholder.

Proceeds of the IPO were to help finance the building of a railway to carry Tavan Tolgoi's coal south

to China and the building of a power plant to support the giant Oyu Tolgoi copper and gold

underground and open mine in the Gobi Desert run by Rio Tinto. Government officials now contend

that Tavan Tolgoi is in a position to finance the railway construction from its profits. The first phase

of the railway project will be completed next year if all goes to plan. Coal from the mine is presently

trucked into China.

Delays to copper mine power plant. Meanwhile, Oyu Tolgoi and the government failed to meet an April

deadline to find agreement on the power plant plan. They are now mulling alternative electricity supplies,

according to a statement by Rio Tinto affiliate Turquoise Hill Resources.

Mongolia Togrog - US Dollar Exchange Rate


15


Tajikistan



Somoni - US$ exchange rate: 10.245 0.0% (WoW) - 0.4% (MTD) -5.4% (YTD)


First cases confirmed. Tajikistan has confirmed its first coronavirus cases, the healthcare ministry said on April

30th, saying 15 infections had been recorded. Since then the number of reported cases has risen to 128 with

two people reported as having died (May 5th). The confirmation comes after weeks of authorities claiming the

country was coronavirus-free despite sharing borders and trade with China as well as other Central Asian

nations that have been reporting coronavirus cases since March. Activists have lately questioned a sudden

spike in cases of lethal pneumonia in Tajikistan, suspecting that the government might be covering up the

presence of the virus in the country.

Medical equipment donated. The Organisation for Security and Co-operation in Europe (OSCE) program office

in Dushanbe said it had handed over medical and disinfection equipment to partners in the Tajik government

to help prevent the potential spread of coronavirus. The donated items included ventilators, steam

autoclaves, laboratory thermostats and a range of protective gear for frontline medical staff, emergency

response groups and volunteers, allowing them to carry out their daily duties safely.

Nationalism. Tajik lawmakers have approved a bill banning the issuance of identification documents and birth

certificates with Russified surnames for ethnic Tajiks. The move amounts to yet another attempt to revive

traditional names in the country. The bill aims to replace surnames that end with Russian “ov” for men and

“ova” for women with names that end with traditional Tajik suffixes, such as “i”, “zod”, “zoda”, “iyon”, “far”,

“dukht” and “pur”. The move comes at a strange time, as the country’s population is growing increasingly

distrustful of the government’s handling of the ongoing coronavirus (Covid-19) pandemic.

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: 19.5 + 2.6 (WoW) 0.0% (MTD) - 2.6% (YTD)


Still denying any cases. Authorities are clearing out hundreds of people held in quarantine zones ahead of a

planned visit by the World Health Organization (WHO) experts. That trip has now been cancelled. The move

is considered an attempt to hide suspected cases of coronavirus as the country persistently continues to claim

that not a single coronavirus infection has been recorded in the country. The claims contradict independent

reports by exiled opposition-run news outlets. Over 400 people placed in a quarantine area on the outskirts

of Turkmenabat, Turkmenistan’s second-largest city, located in Lebab Region, are being transferred to small

provincial hospitals and a psychiatric clinic.

Deaths due to windstorm. According to unconfirmed reports, about twenty people died as severe windstorms

hit Turkmenistan’s north-eastern province of Lebap velayat. Many more are reported missing, including

shepherds working in the sands, drivers and employees of “Turkmengaz”. Correspondents of “Chronicles of

Turkmenistan” also reported that a few herds of over 100 sheep each went missing.

In talks with Japan to increase investoment. Turkmenistan’s State Bank for Foreign Economic Affairs has held

a discussion with the Nippon Export and Investment Insurance (NEXI), Japan’s state credit export agency, over

a potential increase in investment, Business Turkmenistan reported. Japanese business plays a significant role

in the country with projects in petrochemicals and gas. Japanese companies are also building a gas turbine

power plant with a capacity of 432 MW in the Lebap Region. The Turkmen bank appealed to the Japanese

export agency to expand its investment in the country, currently on top of export-led investment agreements

already in place.

Priority investment sectors. Ashgabat said the chemical industry, oil and gas refining industry, electric power

industry, transport and communications sector, the introduction of advanced technologies and the agriculture

sector were areas of potential further investment. “Loan agreements between the Turkmen State Bank for

Foreign Economic Affairs and the Japan Bank for International Cooperation (JBIC), signed in recent years with

the aim of financing the construction of high-tech facilities in the oil and gas complex, electric power

generation and chemical industries, can be cited as an example of such co-operation,” the Turkmen report

said.

Turkmenistan Manat (Commercial Rate) -US Dollar Exchange Rate

Source: Chronicles of Turkmenistan

17


Ukraine

Reported cases: 12,697 + 3,688 (week-on-week)

Reported deaths: 316 + 96 (week-on- week)

Hryvnia-USUS$ exchange rate: 26.973 + 0.4% (WoW) + 0.0 (MTD) - 11.7% (YTD)


Ukraine's lockdown extended to May 22nd. The Ukrainian government will extend the quarantine until May

22nd, the nation's Prime Minister Denys Shmyhal said on May 4th, with a five-phase plan to exit the restrictions.

The country will be observing the pandemic dynamics in the world and how the disease curve fluctuates,"

Interfax reported, quoting the PM.

Setting easing conditions. May 12th was the tentative day for concluding the quarantine if two conditions are

met, specifically, daily changes in infection rates remaining within a 5% range for ten days, and Covid-19

patients occupying less than 50% of hospital beds. If these are met, non-food retail and certain service sectors

will be considered for reopening. It also involves ensuring the accessibility of medical supplies. Restrictions

will be removed for public parks and squares, forest parks and recreation zones. They will also be removed for

certain cosmetic businesses, training camps for team sports, wholesale and retail trade of non-food goods,

cafes (on a takeout basis), car washes, bicycle shops and rentals, notaries, lawyers and auditors. The cabinet

had previously identified May 12th as the start of the five phases.

The second phase will take effect once infections drop, based on a daily demonstrated decline in infection

rates for ten consecutive days, at the same time that recovery rates either remain stable or improve. It also

involves resetting Ukraine’s healthcare system. Restrictions will be removed for businesses engaged in basic

public needs, the education of graduating high school classes, the preparation for standardized testing, all

restaurants (for takeout only), outdoor movie theatres, fitness centers, hotels and sports events involving no

more than 50 participants (without viewers). Ukraine may bypass the second phase directly to the third or

fourth phases if a fast drop in coronavirus infections is recorded, chief medical officer Viktor Liashko said in

an April 26th statement.

Setting the easing agenda. On May 4th, Shmyhal also said that the government will allow the operation of

outdoor cafes, restaurants from May 11th. Other activities will also be allowed. "We will allow the operation

of takeaway catering facilities, the work of cafes and restaurants located in open air in the establishments that

are registered as food market operator's facilities," It is also planned to allow visits to the opening of parks,

squares, recreation areas, beauty salons, hairdressers with overexposure of a number of conditions of the

anti-epidemiological situation. In addition, the operation of wholesale and retail trade in non-food companies

(except for shopping and entertainment centres), museums, libraries, etc. will be allowed.

Ukraine - Covid-19: New Cases (Bar - RHS) & Deaths (Line - LHS) May 5th


18


Several hundred small and medium-sized entrepreneurs (SMEs) held a protest on April 29th at the Cabinet of

Ministers building to demand the equal relaxation of quarantine restrictions for all sectors of business as long

as sanitary conditions are upheld, according to local media.

President has lost support. Only 27.7% of Ukrainians would support the incumbent President Volodymyr

Zelenskiy in a presidential election, if it were held in April, according to a poll conducted by the Kyiv

International Institute of Sociology (KIIS) on April 17-25th. Some 9.7% of respondents said they would vote for

the leader of the European Solidarity Party, the former President Petro Poroshenko; 8% for the leader of the

Opposition Platform – For Life Party, Yuriy Boiko; and 6.3% for the leader of the Batkivschyna party, ex-PM

Yulia Tymoshenko, news agency Interfax reported on May 4th.


Resumption of bond auctions. Ukraine’s Finance Ministry raised UAH9.8 billion (US$364 mln) - UAH5.4 bln

and US$164.3million - at its weekly bond auction on April 28th after a four-week hiatus. The auction receipts

came from the placement of three-month UAH-denominated bonds, as well as six-month and nine-month

dollar-denominated bonds. The ministry satisfied four out of seven bids for three-month UAH-denominated

bonds with a weighted average interest rate of 11.24% (vs. 9.4% for three-month UAH-denominated bonds

placed two months ago). The bids ranged from 11.0% to 15.0%, while the ministry’s cutoff rate was 11.3%.

IMF loan preparations

Hope for the bank reform law on May 11th. President Zelenskiy believes that the country will adopt a bill that

includes restricting the return of failed banks to their former shareholders. "I want to thank the people's

deputies of Ukraine, and especially the Servant of the People party who [have] unlocked the adoption of

banking law. [...] 16,000 amendments will not scare us or disrupt the important co-operation of Ukraine with

the International Monetary Fund (IMF)," he said in an address to the nation on May 1st."We will certainly

receive the necessary funds for the economy, despite yesterday's attempts by some political forces to impede

this process."

But Land Reform Law may be challenged. President Zelenskiy has signed the law on the sale of land, which is

a part of the legislation required by the IMF for providing a new support package. But, immediately, the

Batkivschyna Party parliamentary faction, headed by ex-PM Yulia Tymoshenko, said it is going to challenge the

law in the nation's constitutional court "No miracle has happened - the president has signed the scandalous

law on putting Ukrainian land up for sale," Tymoshenko wrote on her Facebook page the same day. "In

choosing between Ukrainian interests and obligations to international fraudsters, Volodymyr Zelenskiy has

sided with global profiteers. The fight is going on. We will challenge this criminal decision with the

Constitutional Court in the near future."

Ukraine Hyrvnia-US Dollar Exchange Rate


19


Uzbekistan



Som US$ exchange rate: 10,139.4 0.0% (WoW) - 0.1% (MTD) - 5.9% (YTD)


Observer status in EaEU. The legislative chamber of parliament has approved the government's

recommendation that the country participate in the Eurasian Economic Union (EEU) as an observer. A vote

saw 32 lawmakers support the move and 14 abstain. Another former Soviet republic, Moldova, is already an

observer. President Mirziyoyev has so far not shown any willingness to join the trade bloc, however. On the

other hand, Uzbek-Russian ties have strengthened under Mirziyoyev.

EBRD advances trade finance. The European Bank for Reconstruction and Development (EBRD) is to provide

additional trade finance of up to US$70 million to Uzbekistan’s NBU bank under its Trade Facilitation Program

(TFP). The increase is set to help mitigate the disruptions that severe market conditions have caused in trade

and supply chains - an increasingly relevant type of support amid the economic impacts of the pandemic.

The granting of the support comes with the availability of commercial trade finance credit lines likely to remain

constrained.

Suspending some imports and exports for “protection” Uzbekistan will temporarily suspend exports of “raw

materials” for production of medical goods and imports of cement in a period between May 1st and December

31st. The foreign trade restrictions come amid ongoing economic consequences of the coronavirus (Covid-19)

pandemic. Over 1,900 people have officially been infected with the coronavirus in the country. Uzbekistan is

seeing a sharp drop in cement demand due to many construction sites halting work. Nevertheless, Uzbek

authorities believe the restrictions may be lifted earlier than currently advised. The government is also looking

to prevent an increase in domestic prices for cement products and “raw materials for medical products”.

Uzbekistan - Covid-19: New Cases (Bar - RHS) & Deaths (Line - LHS) May 5th


20



Real income up 7 .6%. The total income of the Uzbek population reached UZS78.9tn (€7.17bn) in the first

quarter of 2020, up by 22.5% y/y in nominal terms, according to figures from the Uzbek State Statistics

Committee. In real terms, however, the combined income grew by 7.6% due to double-digit consumer price

inflation. The figure is likely to decline this year due to the effects of the ongoing coronavirus (COVID-19)

pandemic. Total income per capita reached UZS2.3mn, up by 20.1% y/y in nominal terms and 5.6% y/y in real

terms, the figures show. The average monthly nominal accrued salary in Uzbekistan stood at UZS2.58mn in

January-March, up by 26.5% compared to the same period of 2019.

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% -2.5% 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 -2.0% -0.2% 0.2% 1.0% 1.8% 2.4% 15% 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 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

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 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

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

Source: Macro-Advisory, from media sources

Date Action

4-Feb Ukraine International Airlines stops fl ights to China

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

2-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

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

25


Appendix 6: Uzbekistan government actions

Date Action

21-Feb March investment summit cancelled

04-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

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

London: + 44 208 798 0742

Tokyo: +81 3 5219 1520

Washington: +1 914 494 3344

Email: [email protected]

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

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.

© Copyright Macro-Advisory Limited 2020

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