How are Tajikistan, Kyrgyzstan coping with the crisis? Ben Slay Senior economist UNDP Bureau for Europe and CIS 20 July 2009.

How are Tajikistan, How are Tajikistan, Kyrgyzstan coping Kyrgyzstan coping

with the crisis?with the crisis?

Ben SlayBen Slay

Senior economistSenior economistUNDP Bureau for Europe and CISUNDP Bureau for Europe and CIS

20 July 200920 July 2009

Presentation outlinePresentation outline

Focus on:Focus on:– Tajikistan, KyrgyzstanTajikistan, Kyrgyzstan– Interactions of water, energy, food Interactions of water, energy, food

insecurities; impact of global crisisinsecurities; impact of global crisis Why this focus?Why this focus?

– TAJ, KYR: Focus of international attention in TAJ, KYR: Focus of international attention in Central AsiaCentral Asia

– KAZ not so affected by water, energy, food KAZ not so affected by water, energy, food insecuritiesinsecurities

– Inadequate data for UZB, TUKInadequate data for UZB, TUK Key questions: What’s gotten better, Key questions: What’s gotten better,

worse?worse?

Best news: Drought may Best news: Drought may be over in Amu-Darya be over in Amu-Darya

basin . . .basin . . .

-13%

-32%

-9%

-34%

-1%

-43%

-2%

-38%

2%

-11%

8%

25%

-50%

0%

50%

Jan. Feb. March April May June

Nurek (TAJ) Tuyamuyun (UZB)

2009 monthly water volume averages, compared to averages for same 2009 monthly water volume averages, compared to averages for same month during 1991-2008. Source: ICWC-SIC, UNDP calculations.month during 1991-2008. Source: ICWC-SIC, UNDP calculations.

““Dead level”Dead level”

. . . And for much of the . . . And for much of the Syr-Darya as wellSyr-Darya as well

-15%

-7%

-21% -19%

1%

-14%

-2%

2%

-10%

7%5%

29%

8%

14%

26%

18%

30%

14%

-30%

0%

30%

Jan. Feb. March April May June

Kayrakkum (TAJ)

Chardara (KAZ)

Charvak (UZB)

2009 monthly water volume averages, compared to averages for same 2009 monthly water volume averages, compared to averages for same month during 1991-2008. Source: ICWC-SIC, UNDP calculations.month during 1991-2008. Source: ICWC-SIC, UNDP calculations.

Helping power production, Helping power production, consumption to recover consumption to recover

(TAJ)(TAJ)

-5%

3%

-9%

4%

-7%

12% 14%

18%

5%

9%

-20%

0%

20%

Jan. Feb. March April May

Generation Consumption

Change relative to the same month in 2008. Source: Change relative to the same month in 2008. Source: State Statistical Committee, UNDP calculations.State Statistical Committee, UNDP calculations.

BUT: Toktogul, other Syr-BUT: Toktogul, other Syr-Darya reservoirs—still Darya reservoirs—still

“dry”“dry”

-40%-37%

-40%

-32%

-39%

-31%

-40%

-32%

-42%

-27%

-34%

-4%

-55%

0%

Jan. Feb. March April May June

Toktogul (KYR) Andijan (KYR)

2009 monthly water volume averages, compared to averages for same 2009 monthly water volume averages, compared to averages for same month during 1991-2008. Source: ICWC-SIC, UNDP calculations.month during 1991-2008. Source: ICWC-SIC, UNDP calculations.

. . . So improvements in . . . So improvements in Kyrgyzstan are less Kyrgyzstan are less

robustrobust

-42%

-5%

-43%

-7% -9%-2%

7%1%

18%

-8%

-50%

0%

50%

Jan. Feb. March April May

Electricity generated Water treated

Change relative to the same month in 2008. Source: Change relative to the same month in 2008. Source: State Statistical Committee, UNDP calculations.State Statistical Committee, UNDP calculations.

What hasn’t changed? What hasn’t changed? Industrial recessionIndustrial recession

Decline in industrial Decline in industrial production has production has accelerated in 2009accelerated in 2009

““Electric shock” Electric shock” “collapsing demand”“collapsing demand”

Two key questions:Two key questions:– Whither GDP, living Whither GDP, living

standards in 2009?standards in 2009?– What happens to What happens to

electricity supplies electricity supplies when industry picks when industry picks up?up?

10%

-4%

-13%

12%

-2%

-22%-25%

0%

25%

TAJ KYR*

2007 2008 2009

* Kumtor production not included* Kumtor production not includedNational statistical office data. 2009 National statistical office data. 2009 figures are through April (KYR), May figures are through April (KYR), May

(TAJ).(TAJ).

Food prices have Food prices have likewise stayed high . . .likewise stayed high . . .

Food security Food security remains an issueremains an issue

Will domestic Will domestic food prices fall food prices fall before rising before rising world food prices world food prices remove “window remove “window of opportunity”?of opportunity”?

Why haven’t Why haven’t food prices food prices fallen?fallen?– Weaker currenciesWeaker currencies– Rigidities in food, Rigidities in food,

domestic trade domestic trade sectors?sectors?

January 2007 = 100

100

120

140

160

180

Jan

Mar

May Jul

Sep Nov Jan

Mar

May Jul

Sep Nov Jan

Mar

May

Global

Tajikistan

Kyrgyzstan

2008 2009

FAO data, UNDP calculations

. . . While remittances . . . While remittances have collapsedhave collapsed

48%

62%

43%

1%

10%

25%

-30%

-47%-37%

-70%

0%

70%

2008:Q3 2008:Q4 2009:Q1 2009:Q2

RussiaTajikistanKyrgyzstan

Sources: National Banks of Russia, Tajikistan, Kyrgyzstan; IMF. UNDP calculations.

Quarterly growth in Quarterly growth in remittances (year-on-year)remittances (year-on-year)

Conclusions (I): Conclusions (I): “Vulnerability “Vulnerability

scorecard”scorecard”

Water Water securitysecurity

Energy Energy securitysecurity

Food Food securitysecurity

Remit-Remit-tancestances

OtherOther

TajikistanTajikistan ++++ ++ No real No real change?change?

--

Industrial Industrial recession, recession,

weak weak exchange exchange rate ( - )rate ( - )

KyrgyzstaKyrgyzstann

+?+? +?+? No real No real change?change?

--

Industrial Industrial recession, recession,

weak weak exchange exchange rate ( - )rate ( - )

Conclusions (II): Causes Conclusions (II): Causes for concern continuefor concern continue

Favorable economic growth trends Favorable economic growth trends coming to an endcoming to an end– Most obvious in remittance flowsMost obvious in remittance flows– GDP is falling in Russia, KazakhstanGDP is falling in Russia, Kazakhstan

Food security remains a major concernFood security remains a major concern– Will domestic food prices fall before rising Will domestic food prices fall before rising

world food prices remove “window of world food prices remove “window of opportunity”?opportunity”?

Difficult reforms are still required to Difficult reforms are still required to address longer-term water, energy issuesaddress longer-term water, energy issues

Needed:Needed:– Focus on immediate, short-term solutionsFocus on immediate, short-term solutions– Better links between development, Better links between development,

humanitarian responseshumanitarian responses

Best hopes for short-term Best hopes for short-term int’l community response int’l community response

1)1) Expanding early Expanding early recovery recovery programming (to programming (to better address better address vulnerabilities)vulnerabilities)

2)2) Early warning Early warning (risk monitoring), (risk monitoring), for better risk for better risk managementmanagement

3)3) Better Better coordinationcoordination

Thank you very much!Thank you very much!

ББooльшльшoe oe

CCппacacибибo!o!