Covid-19 – Eurasia Checkup st WatchateJuly 1 2020

Covid-19 in Eurasia Population* Coronovirus** Mln Cases Deaths Fear of a second wave is growing Armenia 2.96 25,127 433 This is a weekly update of the most important news and events in the Azerbaijan 10.11 16,968 206 Georgia 3.99 926 15 Eurasia Region with specific emphasis on the impact of the virus, and Belarus 9.45 61,790 387 any actions that governments take, on the economy and the business Kazakhstan 18.72 21,819 188 Kyrgyz Republic 6.49 5,296 57 environment. We are now ending these special reports. Going Mongolia 3.26 220 0 forward, we will comment on any relevant Covid-19 events and Russia 145.92 640,246 9,152 assess the impact on regional economies in our regular country Tajikistan 9.48 5,900 52 Turkmenistan 6.00 updates and Snapshot series. Ukraine 43.80 45,244 1,173 Uzbekistan 33.34 8,298 23 ▪ Some countries return to lockdown. Armenia has the highest Eurasia Total 293.52 831,834 11,686 rate of infection per capita in Emerging Europe and the CIS. But Source: *Worldometers, **WHO at June 30th some others are not far behind. The fear is that a second wave Currency Movement vs US Dollar, YTD* of virus will further hit economic recovery plans. Currency v US$* YTD, % ▪ Armenia. The government is facing a lot of criticism for rushing Armenia Dram 481.42 -0.5% Azerbaijan Manat 1.70 0.0% through changes that will allow the Prime Minister to remove Georgia Lari 3.06 -6.5% three Constitutional Court judges he does not like. Belarus Ruble 2.40 -12.2% Kazakhstan Tenge 404.39 -5.4% ▪ Azerbaijan. The lockdown was resumed in some cities until July Kyrgyz Republic Som 76.18 -8.4% 5th. Meantime there are concerns that the president and military Mongolia Togrog 2,813.75 -3.4% Russia Ruble 70.57 -12.2% officers are ratcheting up threats against Armenia and Karabakh. Tajikistan Somoni 10.31 -6.0% ▪ Belarus. The number of protests is increasing, although not yet Turkmenistan Manat** 22.00 -13.6% Ukraine Hryvnia 26.69 -10.8% at the stage where a Ukraine-style revolt is feared. But pressure Uzbekistan Som 10,171.7 -6.2% looks set to increase ahead of the August election. Brent, $ p/bbl 41.47 -37.2% Afghanistan Afgani 76.93 0.3% ▪ Georgia. The tourist season has effectively been cancelled for Iran Toman** 2-430 -34.7% this year after the decision to keep the borders shut to end July. Source: Bloomberg, Macro-Advisory * as at June 30th ▪ Kazakhstan. The President has severely criticized the weak ** commercial or street rate response of his government to the crisis. He has ordered Benchmark Interest Rates, % preparations to be made for a possible return to full lockdown in Current, % AdJusted bbs, +/- the coming days. Armenia 4.50% June -50 ▪ Azerbaijan 7.25% April N/C Kyrgyz Republic. Parliament is also considering a return to Georgia 8.25% June -25 lockdown as the number of infections grows and the medical Belarus 7.75% June -25 services come under pressure. Former President, Atambayev, Kazakhstan 9.50% June N/C Kyrgyz Republic 5.00% Feb -75 has, reportedly, been sentenced to 11 years in prison. Mongolia 9.00% April -100 ▪ Mongolia. The ruling MPP won 62 of the 76 parliamentary seats Russia 4.50% June -100 Tajikistan 11.75% April -100 in last week’s election. Polls show that people rewarded them for Turkmenistan effectively containing the Covid-19 virus. The country has no Ukraine 6.00% June -200 Uzbekistan 15.00% June N/C reported deaths from the virus. Source: Central Banks, Macro-Advisory ▪ Tajikistan. There is a lot of criticism that the government is * at June 30th deliberately under-reporting the number of infections and GDP, $ billion and Growth, % related deaths. GDP 2020E GDP, % Change YoY bln, $ 2020E 2021E ▪ Turkmenistan. The government has finally agreed to an official Armenia $13.0 -3.0% 3.5% inspection by officials from the WHO. Government officials have Azerbaijan $45.0 -2.7% 2.5% also been very busy holding trade talks with several countries as Georgia $50.0 -5.0% 2.5% Belarus $13.9 -5.0% 3.5% part of the effort to boost inward investment. Kazakhstan $157.0 -2.5% 4.0% ▪ Ukraine. President Zelensky’s approval rating continues to fall as Kyrgyz Republic $9.4 -3.0% 4.0% Mongolia $12.5 0.5% 4.5% economic conditions worsen and the threat of a second wave of Russia $1,568.0 -3.5% 2.5% infections threatens a new lockdown. The IMF and World Bank Tajikistan $8.2 0.5% 4.0% are also warning of a too slow pace of promised reforms. Turkmenistan $50.0 2.0% 5.5% Ukraine $136.0 -6.0% 4.5% ▪ Uzbekistan. The government has promised to pay US$3,000 to Uzbekistan $55.3 1.3% 5.0% any tourist who contracts the Covid-19 virus while visiting the Total, average $2,118.3 -3.3% 2.9% country. The president has also approved the creation of an anti- Source: Bloomberg, Macro-Advisory corruption agency in the country.

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Armenia Reported cases: 25,127 +4,121 (week-on-week) Reported deaths: 433 + 61 (week-on-week) Dram-US$ exchange rate: 481.42 + 0.7% (MTD) - 0.5% (YTD)

Armenia - Covid-19: New Cases (Bar - RHS) & Deaths (Line - LHS) June 30th

Source: World Health Organization Government actions & regulations Armenia is the worst affected in Emerging Europe. The WHO has warned of a second and more serious spike now starting in parts of Eastern Europe and the CIS. It has cited Armenia as being in the most dangerous position with the highest number of infections per capita. WorstWorst Affected Affected CountriesCountries inin theCIS CIS& Esatern and Eastern Europe, Europe, cases cases per millionper million population pop

Not yet available

Source:Source: World W.H.O. Health Organisation Additional support. This week, the twenty-second social assistance package created during the crisis period was presented. The program is aimed at those who were employed between January 1st and March 30th for at least 85 days but were fired between March 31st and June 1st and have not yet been able to find new employment. Beneficiaries will receive a one-time payment equal to the minimum wage. French support. A second group of French doctors have arrived in Armenia to assist local doctors in handling the crisis, following a group that arrived on June 14th. Increased workplace restrictions. On June 25th it was announced that the government had imposed restrictions on the number of employees that can legally be allowed in their workplaces during the quarantine period. The rules state that no more than 50 percent of the total number of employees of certain industries may be allowed into their workplaces at any given time. The designated industries include enterprises

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involved in daily care and hygiene products, packaging products, construction, and engineering equipment; pet stores, repair shops and car washes; and animal shelters. The rule applies to all major cities in Azerbaijan and will be in effect until July 5th. New security chief raises eyebrows. The appointment of a 29-year-old with no previous experience in the security services to the highest security post in Armenia has raised eyebrows. But it appears to be a transition step towards a reorganised security structure under greater civilian control. Argishti Kyaramyan was appointed head of the National Security Service (NSS) following a shakeup of several of Armenia’s top security officials in which the head of the NSS, the chief of the country’s police, and the chief of staff of its armed forces were all let go. “It’s high-ranking state officials who must first and foremost lead by example, demonstrating the importance of following the anti-epidemic regulations. Unfortunately, we see cases where that does not happen,” the prime Minister said in announcing the firings. New property tax. The government now plans to levy an increased property tax with the aim of bolstering local budgets but critics warn that this increased tax could become a social burden for people on low incomes and that the gentrification of the Armenian capital Yerevan might accelerate as poorer residents could move away. Prime Minister Nikol Pashinian has characterised the introduction of a progressive property tax as one of the most important economic reforms in Armenia. Much of the criticism about the planned amendments, however, looks at how people on low incomes who live in downtown Yerevan and other expensive neighbourhoods will pay increased property tax, an annual tax on property owners. Many of these people either inherited their apartments or received them through state programs during the Soviet era, and some fear the new property tax will result in severe gentrification of the Armenian capital. Parliament approves Constitutional Court amendment. Armenia’s parliament on approved constitutional amendments allowing for the suspension of three Constitutional Court judges and the election of a new head of the court. A plan to ask voters to approve the changes in an April 5 referendum was scrapped because of the coronavirus outbreak. The three judges set to be suspended were appointed prior to the velvet revolution two years ago. The court’s other six judges will remain in place. The opposition parties have complained that the moves aimed at shaking up the court were politically motivated. An Armenian court rejected a petition by investigators to arrest Gagik Tsarukian, leader of the country’s main opposition party, on election bribes and vote buying charges. Six days earlier Armenia’s parliament stripped Tsarukian of his immunity, enabling his prosecution and arrest. Tsarukian heads the Prosperous Armenia Party, the largest opposition faction in the National Assembly. It holds 25 of the chamber's 132 seats. The case against Tsarukian emerged after claims of vote buying in the 2017 general election. Tsarukian and members of his political team have called the allegations politically motivated. The prosecutor-general's office said it would appeal the court's decision. Monetary response and impact EBRD loan. The European Bank for Reconstruction and Development (EBRD) said on June 25th it had awarded a US$20 million loan to Armenia’s ACBA-Credit Agricole Bank so that it can provide financial support to companies hit by the economic impact of the coronavirus pandemic. ACBA-Credit Agricole finances agriculture and micro, small and medium sized enterprises (MSMEs) in Armenia, with an emphasis on rural areas. Armenia Dram - US Dollar Exchange Rate

Source: Trading Economics

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Azerbaijan

Reported cases: 16,968 + 3,761 (week-on-week) Reported Deaths: 206 + 45 (week-on-week) Manat-US$ exchange rate: 1.70 0.3% (MTD) 0.0% (YTD)

Azerbaijan - Covid-19: New Cases (Bar - RHS) & Deaths (Line - LHS) June 30th

Source: World Health Organization

Government actions & regulations Roy Keane to manage Azerbaijan. It is widely reported that Azerbaijan has targeted former Manchester United and Republic of Ireland legend, Roy Keane, to be the next manager of the national football team. Return of lockdown. The government announced that the strict quarantine regime that was in place during April and May and had been briefly lifted would once again be put in place from June 21st to July 5th in all of Azerbaijan’s major cities. SMS notification system also imposed. In addition to the closing of restaurants, most shops and services, residents will once again be forced to notify authorities before leaving their homes. The controversial SMS system received a great deal of criticism as it was both considered technically faulty and abused by both authorities and citizens for various purposes. Azerbaijanis are now only permitted to leave home "once a day for a maximum of two hours after receiving permission via text message" from the authorities, Prime Minister Ali Asadov said in a June 21st statement on Azerbaijan’s reinstatement of a tight lockdown to battle Covid-19. Borders remain closed. The government has extended the closure of the border until August 1st. Anger at media blocking. Adding to a list of grievances that the public has towards the government, it became clear that during the month of June the government blocked the social media of five major independent media platforms. Meydan TV, Azadliq Radio, Ruan TV, Azerbaycan Saadi, and the newspaper Azadliq have all had their social media blocked by internet providers on orders of the Ministry of Communication. The groups had exposed several of the problems that have arisen since the crisis began and what many see as an excessive crackdown by the government for its own personal gain. More reported arrests. Three more opposition activists were detained this week. The chair of the Zardob district organization of the Musavat party, Ceyhun Mammadli, was detained on June 27th for “insubordination to the police.” A representative of the party said that the police simply went to Mammadli’s home and took him to the police station without explanation. In addition, another activist from the Popular Front party, was arrested for ten days on the same charges. The party stated that Mammadli had been critical of the authorities on social networks and this was the real reason for the arrest. In addition, public activist Javid Mammadzade received the same sentence for the same reason as Mammadli.

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Azerbaijan Manat - US Dollar Exchange Rate

Source: Trading Economics Direct threats made to Armenia. The leadership of occupant Armenia should know that not a single provocation will remain unanswered, Leyla Abdullayeva, spokesperson for Azerbaijan’s Ministry of Foreign Affairs, said. “During her speech at the opening of a military unit of the Défense Ministry on June 25th, Azerbaijani President Ilham Aliyev clearly explained the real situation in Armenia, citing specific facts that a deep crisis in this “independent” country. Thus, the head of state conveyed the bitter truth to the Armenian leadership,” the spokesperson said. Abdullayeva stressed that the ongoing policy by the Armenian leadership, which came to power under the guise of a “democratic revolution”, made big promises to the people, established a dictatorship regime by violating the division of power in the country, failed to fulfil promises and strengthened the occupation policy initiated by the previous criminal regime, reveals the true face of this country’s prime minister. “The leadership of occupying Armenia should know that not a single provocation will remain unanswered, said Abdullayeva, noting that “the Azerbaijan people, under the leadership of their president, will ensure the territorial integrity of Azerbaijan within its internationally recognized borders, following the norms and principles of international law. Boosting military power. Azerbaijan’s defence minister Zakir Hasanov said that Baku plans to purchase armed drones from Turkey. Turkey’s state-owned news service Anadolu Agency cited Hasanov as saying of Azerbaijan’s move to source combat drones from Turkey: "Efforts in this direction continue. Now, we have results." He added that "brotherly" Turkey had provided financial assistance to Azerbaijan in the military field, with the Azerbaijani parliament having already approved an agreement for this. Raising the rhetoric at home. President Aliyev accused the government of Abulfaz Elchibey – president of Azerbaijan from 1992-93 – of surrendering areas of Azerbaijan’s rightful territory to Armenia. Without saying so directly, Aliev accused the current speaker of parliament and secretary of state of having betrayed the country. In response to the accusations, opposition leader Arif Hajili retorted that Aliyev has himself failed to act in terms of “freeing the occupied territories.” As with the other South Caucasus countries, internal tensions have been flaring among political groups amidst the coronavirus crisis as economies have plunged and societies have spun out of control. GDP contracted 1.7% in 5M20. President Aliyev said on June 9th that Azerbaijan’s GDP fell by 1.7% in the first five months of this year as the coronavirus outbreak hit its economy, Interfax news agency reported. January- May inflation was below 3%, Aliyev was also cited as saying.

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Belarus

Reported cases: 61,790 +2,767 (week-on-week) Reported deaths: 389 +36 (week-on-week) Ruble US$ exchange rate: 2.40 +0.3% (MTD) -12.3% (YTD)

Belarus - Covid-19: New Cases (Bar - RHS) & Deaths (Line - LHS) June 30th

Source: World Health Organization

Growing number of protests. There were demonstrations against the government’s crackdown on opposition candidates in the August presidential race last weekend as Amnesty International slammed Lukashenko’s "full-scale purge". Demonstrations were held outside Belarusian embassies across Europe over the weekend in a show of solidarity for protests against the jailing of opposition leaders in Minsk. Belarus is now holding 17 people that are deemed to be political prisoners by human rights NGOs, up by 14 since the start of the crackdown on the opposition in recent weeks. Responding to the news that at least three more prominent Belarusian bloggers – Igor Losik, Sergei Pyatrukhin and Sergei Sparish – were arrested on June 25th, as part of a crackdown ahead of the presidential election on August 9th, Aisha Jung, Amnesty International’s Senior Campaigner on Belarus, said: “The Belarusian authorities are carrying out a full-scale purge of dissenting voices, using repressive laws to stifle criticism ahead of the elections”. People are more defiant. Belarusians have been queuing up for hours to sign the petitions by leading opposition figures that want to stand in the August presidential election against Lukashenko, who is competing for his sixth term in office and who has been in power for 26 years. The turnout to support these independent candidates has been unprecedented and dubbed the “signature revolution.” Others have carried slippers, a reference to opposition leader Sergey Tsikhanovski likening of Lukashenko to a cockroach that needs to be squashed. Fresh water system in Minsk collapses. With no fresh water coming out of the taps, residents of Minsk have been forced to queue up to get water from trucks that bring it in from outside the capital. Supplies of fresh drinking water in Minsk were turned off in some districts, or were simply unusable after it was found to be contaminated. The city responded relatively quickly and started trucking water into the capital in tankers, leading to long queues of people waiting to fill up bottles and buckets over the last two days. The authorities were silent about the problems with the water on Wednesday, but the chief medical office issued a short statement to the press on June 25th. “Following laboratory tests, it was established that the drinking water was not compatible with the sanitary rules and norms, hence it was it was necessary to notify the population as soon as possible not to use water from the drinking water supply for consumption purposes in the Frunzensky and Moscow districts of Minsk”

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Monetary response and impact Fitch places rating of Belgazprombank to Negative Watch. Fitch Ratings has placed Belgazprombank, the Belarusian unit of Russia's state-controlled Gazprombank, on Rating Watch Negative (RWN), including its Long-Term Issuer Default Rating (IDR) of 'B', Support Rating (SR) of '4' and Viability Rating (VR) of 'b'. The rating actions follow the National Bank of Belarus (NBB) placing the bank under temporary administration on June 15th (for a maximum six months) and the subsequent suspension of the bank's management board. Fitch expects to resolve the RWN once there is more clarity about the outcome of the investigations into the bank's management and the results of the temporary administration, and the negative impact these may have on the bank's credit profile.

EBRD provides US$130 million syndicated loan for Belarus units of Sodrugestvo Group. The European Bank for Reconstruction and Development (EBRD) is arranging a US$130 million on to Sodrugestvo Group (SG), an international agro-industrial conglomerate incorporated in Luxembourg and active throughout the EBRD regions, including Belarus, to boost cross-border co-operation and benefit local farmers with the sourcing, transportation, processing and distribution of animal feed products. Up to US$25 million will be channelled to Sodrugestvo Trans-Agro, the largest private owner of grain-hopper rail wagons in Belarus, for the acquisition of 216 hoppers.

Belarus Ruble - US Dollar Exchange Rate

Source: Trading Economics MTZ looking for investors. Belarusian government on the hunt for foreign investors to modernize the Minsk Tractor Factory. The Minsk Tractor Factory is famous throughout the CIS and is one of the biggest producers in the world. Prime Minister Golovchenko called for the raising of foreign investment during a visit to the factory on June 26th. “The enterprise should continue to grow. The most important thing now is to determine the maximum configuration, how much investment is needed, and what the return on investment will be.” The public joint-stock company (OAO) MTZ is one of the world's top-ten tractor manufacturers. It exports about 90% of the tractors it makes. MTZ employs over 15,000 people. Another 7,500 people are employed by the holding company MTZ.

Reports of Belarus switching to US oil are incorrect. Belarus will buy 1.58 million tons of Russian oil in July, BelTA reports, citing Aleksandr Tishchenko, Press Secretary of the Belarusian state petrochemical concern Belneftekhim, on June 23rd . The spokesman said: “In line with this year's indicative oil trade balance sheet, Belarusian oil refineries will acquire 1.58 million tons of oil from Russian oil companies in July. Of that, 1.495 million tons will be delivered by pipeline and 85,000 tons will be delivered by rail.” BelTA reported earlier that the sides have agreed a schedule for delivering 5.75 million tons

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Georgia Reported cases: 926 + 15 (week-on-week) Reported deaths: 15 1 (week-on-week) Lari US$ exchange rate: 3.06 .3% (MTD) – 6.5% (YTD)

Georgia - Covid-19: New Cases (Bar - RHS) & Deaths (Line - LHS) June 30th

Source: World Health Organization Government actions & regulations Regular international flights to Georgia will not resume before July 31st, the Georgian Civil Aviation Agency announced on June 25th. Georgia was planning to once more to accept international flights and reopen to foreign tourism on July 1st, but such hopes have been dashed with the spread of the coronavirus pandemic failing to ease globally. The decision to delay regular international flights for a month will wipe out most of Georgia’s potential for the receipt of international tourists this season. This is no small matter as foreign tourism usually directly and indirectly accounts for one-fifth of its economy. Election bill passes 2nd reading. The Georgian parliament passed its election bill in the second reading on June 23rd, with 115 votes in the 150-member legislative, only two more votes than needed. A third vote will be necessary for the bill to be declared approved by lawmakers. Under the bill, 120 seats in parliament will be distributed based on the votes received on lists, while only 30 MPs will be elected based on a majority vote. Full list-based elections will be enforced by 2024, under the new Constitution. No support from opposition party. The leader of Georgian opposition party European Georgia, Davit Bakradze, has said that unless “political prisoner” Giorgi Rurua is released, his party will not take part in the second and third readings of the constitutional amendments. Bakradze referred to the so-called March 8th agreement between the opposition parties and ruling Georgian Dream party, which includes the constitutional amendments that would mean some MPs being voted into the legislature under a proportional voting system—and the settlement of controversial charges against opposition leaders. Two of the three key opposition leaders involved in such cases have been released already. Parliament has approved an anti-crisis budget for 2020, which includes an additional GEL3.4 billion beyond previous amounts due to the crisis. The anti-crisis measures include: ▪ GEL450 million for people who have lost their jobs due to the pandemic ▪ GEL170 million for utility bills ▪ GEL285 million for treatment and prevention of the coronavirus ▪ GEL600 million for VAT returns ▪ 600 million to create lari liquidity for commercial banks ▪ GEL 330 million to finance a credit guarantee program

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The government has identified a list of priority individuals for mandatory PCR testing. The list includes staff of medical institutions, people who have been quarantined, drivers of freight vehicles, military service personnel, prisoners and employees of prisons, and public transport workers.

Monetary response and impact Georgia’s central bank cut the base rate by 25bp to 8.25%. The National Bank of Georgia (NBG) cut its refinancing rate by 25bp to 8.25% in a visible attempt at balancing the deterioration in Georgia’s current account outlook, which has worsened because of delays in resuming tourism activity caused by the situation with the coronavirus pandemic, and support provided amid the economic slowdown. The central bank said that in May that annual inflation stood at 6.5%, and that according to its forecast it would continue to gradually decline over the rest of the year, reaching the 3% target level in the first half of 2021. NBG communique: “The inflation dynamics will be determined by the interaction of both demand and supply side factors. On one hand, the Covid-19 prevention measures led to an increase in the cost of the supply of some goods and services. However, the increase in costs has only a short-term effect on inflation rate. On the other hand, the impact of significantly weaker external and domestic demand on inflation will last longer, leading to a reduction in inflation forecasts," said the NBG. The national lender noted that above-target inflation in the long term created the risk of rising inflationary expectations. “Taking these factors into account, the monetary policy committee continued the gradual exit from the tightened monetary policy stance and reduced the rate by 0.25 percentage points. Despite the decline, monetary policy remains tight, ensuring a return of inflation to its target level in the medium term. The pace of further policy normalization will depend on how quickly inflation expectations recede," the NBG stated. Georgia Lari - US Dollar Exchange Rate

Source: Trading Economics Georgia's economy is set to shrink by 4.8% in 2020, according to the World Bank’s recently updated Global Economic Prospects report. The direct and indirect contribution of tourism to Georgia’s GDP is estimated by the World Bank at around 26%, of which 14pp is indirect. Besides the expected drop in remittances, the hit from the loss of tourism is set to result in the current account deficit of Georgia doubling from 5% of GDP last year to 10% of GDP in 2020. The local currency of the country has come under pressure during the coronavirus crisis with investors anticipating a much wider current account gap, but the central bank intervened and the government secured significant inflows from international financial institutions that went towards stabilizing the balance of payments. EBRD loan to TBC Bank. The European Bank for Reconstruction and Development (EBRD) approved a US$100 million senior unsecured loan for Georgia’s TBC Bank. “The proceeds will be used for on-lending to eligible sub-borrowers, preferably small and medium-sized enterprises,” EBRD said in a press release. The loan will be provided this year in two equal tranches.

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Kazakhstan Reported cases: 21,819 +3,588 (week-on-week) Reported deaths: 188 + 61 (week-on-week) Tenge-US$ exchange rate: 404.39 + 1.8% (MTD) – 5.4% (YTD)

Kazakhstan - Covid-19: Daily New Cases - June 30th

Source: John Hopkins Government actions & regulations

New lockdown threat. President Tokayev on June 29th gave his cabinet two days to draft new measures to curb the spread of the coronavirus and scolded senior officials and formally reprimanded a few for failing to prevent a resurgence of the virus in Kazakhstan. He also noted that the government was considering several new lockdown options and ways to support the economy. Tokayev blamed the government for failing to persuade the population of 19 million to stick to safety guidelines, leading people to behave “carelessly”. Many of the cases have been traced to social events such as weddings, which tend to involve hundreds of participants in the Central Asian nation. “In foreign observers’ opinion, the situation in Kazakhstan is critical, on the brink of spiraling out of control,” he said. Tokayev ordered authorities to deploy mobile laboratories to make tests more widely available, boost the number of available hospital beds by 50% within a month and prepare for a long-term pandemic. Kazakhstan imposed a two-day lockdown in the northern city of Kostanay and four towns that surround it on June 27-28th following a jump in fresh coronavirus cases. Similar restrictions have been announced in the commercial capital Almaty, where malls, markets, restaurants, and parks were barred from operating on 20- 21st June. Kazakhstan has extended the list of countries to which flights are restarted. Countries of the first category are Hungary, India, Germany, Czech Republic, and Malaysia. Passengers who arrive from these countries do not have quarantine requirements. Sadvakas Baigabulov said China, South Korea, Japan, Georgia, and Thailand were earlier included in this category. Countries of the second category include Egypt, Ukraine, Poland, Uzbekistan, Kyrgyzstan, Tajikistan. Passengers who arrive from these countries need to have the medical certificate of negative results for coronavirus test. If the certificate is not available, the passenger must be tested for Covid-19 during next 48 hours or 14-days quarantine at home. Yelzhan Birtanov stepped down as Health Minister of Kazakhstan. "Today I submitted a letter of resignation to the head of state. Unfortunately, after I contracted coronavirus infection and developed pneumonia, I will need additional medical treatment," Birtanov said on Facebook. Alexey Tsoi, head of the President's Medical Center, was appointed in replacement of Yelzhan Birtanov.

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WHO says Covid-19 risk is rising. The WHO has identified Kazakhstan as one of eleven countries which are seeing a "significant resurgence" in Covid-19 cases. "In 11 of the countries, accelerated transmissions has led to a very significant resurgence that if left unchecked will push health systems to the brink once again," the WHO statement said. These countries are Albania, Armenia, Azerbaijan, Bosnia-Herzegovina, Kazakhstan, Kosovo, Kyrgyzstan, Moldova, North Macedonia, Sweden, and Ukraine. Monetary response and impact

ADB approves US$1 billion assistance package. The Asian Development Bank (ADB) has approved a US$1 billion assistance package to help the Government of Kazakhstan to mitigate the health, social, and economic impacts of the coronavirus disease pandemic. ADB’s assistance is provided under its Covid-19 Active Response and Expenditure Support (CARES) Program.

EBRD agrees US$25 million loan to Borusan Makina. The European Bank for Reconstruction and Development (EBRD) has approved the provision of a senior loan of up to US$25 million to Borusan Makina Kazakhstan (BMK), a limited liability company incorporated in Kazakhstan, to finance its working capital needs, the development bank said. The company’s operations cover a diverse range of activities including logistics, energy and manufacturing.

EBRD agrees a US$40 million loan to MSME. The European Bank for Reconstruction and Development (EBRD) is providing a senior loan in Kazakh tenge, equivalent to up to US$40 million, to Kazakhstan’s leading microfinance lender, KMF, to help local firms continue their business activities and preserve jobs.

USAID. The US, via its US Agency for International Development (USAID) in Kazakhstan, has announced the procurement of essential laboratory equipment and supplies to support the Kazakh government’s response to the coronavirus pandemic, the US embassy in Kazakhstan said. Additional laboratory supplies valued at over US$2 million are expected to arrive throughout July–September. USAID is collaborating with Kazakh health officials to identify the specific commodities needed for immediate epidemic prevention, detection, and response by Kazakhstan in accordance with the country’s National Strategic Preparedness and Response Plan. The US government has provided over US$5.7 million to assist with the Covid-19 response in Kazakhstan.

Kazakh Tenge - US Dollar Exchange Rate

Source: Trading Economics KazMunaiGaz (KMG) announced the discovery of a fountain oil inflow, which erupts at a rate of up to 100 cubic meters per day. It appeared during geological exploration at the Bekturly Vostochny exploration block in Kazakhstan’s Mangistau Region. The project operator in the Vostochny Bekturly section is Becturly Energy Operating, a joint venture between KMG (50%) and Kokel Munai (50%).

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Kyrgyz Republic

Reported cases: 5,296 + 1,777 (week-on-week)

Reported deaths: 57 + 16 (week-on-week)

Som - US$ exchange rate: 76.18 -3.1% (MTD) - 8.4% (YTD)

Kyrgyz Republic - Covid-19: New Cases (Bar) June 30th

Source: World Health Organization Government actions & regulations

WHO says Covid-19 risk is rising. The WHO has identified Kyrgyzstan as one of eleven countries which are seeing a "significant resurgence" in Covid-19 cases. "In 11 of the countries, accelerated transmissions has led to a very significant resurgence that if left unchecked will push health systems to the brink once again," the WHO statement said. These countries are Albania, Armenia, Azerbaijan, Bosnia-Herzegovina, Kazakhstan, Kosovo, Kyrgyzstan, Moldova, North Macedonia, Sweden, and Ukraine. Hospitals filled beyond capacity. The hospitals in Bishkek and Osh are filled beyond capacity, Deputy Health Minister Madamin Karataev confirmed. "We have 335 beds that are nearing full capacity, as we see daily growth in new cases. The places are arranged for patients with pneumonia at the Spa Medicine Institute in Vorontsovka village (20 km to the south of Bishkek) and 92 beds are prepared at the Bishkek City Clinical Hospital No. 1," Karataev said. The ambulance service cannot cope with the huge number of calls, he said. Deputy Minister of Finance Abdybaly Tegin Suerkul tested positive for coronavirus, Finance Ministry confirmed. Former President reportedly sentenced to 11 years in jail. Former President Almazbek Atambayev was reportedly sentenced to 11 years in jail on June 23rd after a court found him guilty over the release of a crime boss. According to an international media report, Atambayev was sentenced 11 years and two months in prison the court also stripped him of all-state honors as well as his homes and businesses. While the 63-year- old ex-leader did not attend the sentencing due to ‘ill health', Atambayev’s lawyer Sergei Slesarev reportedly said that the prosecution had not prove his client’s guilt. Slesarev also argued that in sentencing of Atambayev, the judicial system had just fulfilled the task put before it by authorities. The early release ordered by Atambayev of a convicted criminal was also what caused a violent power struggle with his successor, President Sooronbai Jeenbekov. As per reports, Chechen crime boss Aziz Batukayev was released back in 2013 and his conviction also caused a scandal in Central Asian Kyrgyzstan. The investigators had found that the medical documents that provided the basis of Batukayev’s release and subsequent travel to Russia had been forged and Atambayev, who was the President at that time, denied knowledge of the falsification. According to reports Atambayev faces a series of other changes ... According to reports, Atambayev also faced a series of other changes, including murder and corruption, in a separate court case which led to violent clashes between his supporters and the security forces. The clashes occurred after the former president ignored a police summons for questioning over the crime boss case. Amid the operation to detain the former leader, a special forces officer was also reportedly killed.

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… but denies any wrongdoing. While Atambayev denied any wrongdoing, the court-ordered confiscation of property belonging to him and his family. As per reports, the property to be taken from the former leader included five vehicles, houses in the northern region of Chui and Issyk-Kul, ten parcels of land and several companies, including a TV channel. Furthermore, Atambayev’s co-defendants, former Prosecutor-General Indira Joldubaeva, former chief of the Hematology Center, Abdukhalim Raimjanov, and Kalybek Kachkynaliev, a former adviser to the State Penitentiary Service chief, were also found guilty in the case.

Kyrgyz Som - US Dollar Exchange Rate

Source: Trading Economics Proposal to raise taxes for e-commerce imports. The Economy Ministry of the Kyrgyz Republic is proposing draft amendments to establish the cost, weight, or quantity criteria for personal purchases via online stores. According to the Ministry's estimates, global e-commerce has reached over US$2.5 trillion and shows steady growth. “Despite the fact that the EAEU agreement on duty-free import of goods for personal use, the legislation of each EAEU member establishes stricter standards for the import of goods for personal use with exemption from customs duties. The norm for inter-mail operations sent within a calendar month to one recipient is 1,000 euros or 31 kilograms. In this regard, we consider it necessary to establish the cost, weight or quantitative criteria for goods imported for personal use," the Ministry said.

The draft amendments also aim to tax e-commerce participants. "When the threshold value of sales in the territory of the Kyrgyz Republic is reached, a foreign Internet seller must register in the territory of the Kyrgyz Republic as a legal entity that will pay taxes in accordance with the Tax Code of the Kyrgyz Republic," the Ministry says.

Proposal to raise taxes in the mining sector. The parliament passed draft amendments to the Tax Code of the Kyrgyz Republic proposing to increase the rate on income tax of mining and processing enterprises by 7% in the case of sale of gold-containing ores and concentrates. The chairman of the Committee on Economic and Fiscal Policy said that the government had initially proposed to set the rate at 3%, but during the second reading discussion the MPs proposed to set the income tax rate at 7%. As a result of consideration of the bill in the second reading by the parliament on June 11th, the tax rate on income from mining and processing enterprises from gold ore and gold-containing concentrate was set at 7% and 10% starting from 2023. Additionally, a single royalty rate of 5% was set for gold, silver and platinum, metal-containing ores and concentrates.

Trade turnover with countries outside the Eurasian Economic Union amounted to US$989 millon in the first 4 months of 2020 or 71.2% of the level of January-April 2019, the Eurasian Economic Commission data showed. Trade turnover with the European Union countries amounted to US$88.6 million or 78.7%. Trade turnover with Bulgaria, Cyprus, Lithuania, Luxembourg, the Netherlands and Romania decreased by more than half.

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Mongolia Republic

Reported cases: 220 + 5 (week-on-week)

Reported deaths: 0 0 (week-on-week)

Togrog-US$ exchange rate: 2,813.75 - 0.1% (MTD) -3.4% (YTD)

Mongolia - Covid-19: New Cases (Bar - RHS) & Deaths (Line - LHS) June 30th

Source: World Health Organization

Government actions & regulations

Formally ending the election process. Mongolia's General Election Commission (GEC) handed out all 76 parliamentary identity cards to the newly elected legislators, thus formally completing the election process. This was after a recount in 12 disputed elections found there were no violations. The ruling Mongolian People's Party won a landslide victory, taking 62 out of the 76 seats. The Democratic Party won 11 seats, while two coalitions -- the Right Person Electorate Coalition and Your and Our Coalition -- won one seat each. Former Mongolian Prime Minister Altankhuyag, who ran as an independent candidate, got one seat. A survey published by a Mongolian polling group found that most people voted for the MPP because of its successful handling of the Covid-19 crisis. The country has reported 220 cases and zero deaths.

Poverty is a big concern for people. The same poll showed that the biggest concerns for people going forward are unemployment and widening income disparities. The pre-crisis poverty rate in Mongolia was 28.4%. A significant share of Mongolians who are technically non-poor live precariously close to the poverty line.

Mining sector may come under scrutiny. Mongolia’s biggest mining project, the Oyu Tolgoi project, went through some rough patches as the pandemic encroached, but in the end, it appears that production was not infringed. But the mine operators are likely to be hoping that Sumiyabazar Dolgorsuren keeps his position as the mining and heavy industry minister as he has been relatively favorably disposed towards the project. But there is strong pressure in the MPP to exert pressure on the Rio Tinto mine investors for a better deal, with the existing agreement on the venture, struck in 2012, deemed unfavourable for the country.

World Bank support for workers. The World Bank approved a US$20 million IDA credit for the Mongolia Emergency Support and Employment Support Project. The project will provide temporary relief to eligible workers and employers in response to the Covid-19 crisis and help provide temporary social insurance contribution relief for eligible employers and their workers under the mandatory social insurance scheme. It will also support upgrading of selected labor and social welfare institutions to help jobseekers find jobs more efficiently.

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Activities will include modernization of physical infrastructure, streamlined work organizations, improvements to information systems, and better use of labour market information in decision making. In addition, it will finance activities to improve the scope, quality, and availability of labor market information for all users.

ADB provides support for poor and vulnerable groups. The Asian Development Bank (ADB) has approved a US$26.4 million loan to lessen the socioeconomic impacts of the coronavirus pandemic on poor and vulnerable groups in Mongolia, especially women and children. “The loss of jobs and income in the wake of COVID-19 coupled with rising food prices will particularly affect poor and vulnerable people,” says ADB Principal Social Sector Specialist Karin Schelzig. “The Shock-Responsive Social Protection Project will expand food support and cash transfers on a temporary basis, utilizing the targeting and delivery systems of two established social assistance programs.

Mongolia Togrog - US Dollar Exchange Rate

Source: Trading Economics

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Tajikistan

Reported cases: 5,900 +387 (week-on-week)

Reported deaths: 52 + 0 (week-on-week)

Somoni - US$ exchange rate: 10.308 0.4% (MTD) -6.0% (YTD)

Government actions & regulations

Accusations of under-reporting. Tajikistan's official death toll from its coronavirus outbreak fails to reflect the reality and is significantly lower than the total gleaned from data published by local activists, an RFE/RL investigation has claimed. The official number of infections stands at 5,691, with the death toll at 52. However, a regularly updated online list from local activists put the death toll at 437 as of June 26. The data provides the name, age, last place of residence, and date of death for each person on the list who – according to the activists – has died from Covid-19. The sources providing the information to the Tajik activists include the family, friends, and neighbors of the deceased, along with hospitals and social-media information. The table also indicates whether the information has been "verified" or is "in the process of verification." RFE/RL said its journalists have been able to verify that at least 152 people included on the activists' list have died from the coronavirus. US$50 mln ADB loan. The Asian Development Bank (ADB) has approved a US$50 million grant to help the Tajikistan mitigate the adverse economic and social impacts of the coronavirus disease pandemic. To mitigate the adverse impacts of Covid-19, the government approved the Covid-19 Country Preparedness and Response Plan and countercyclical measures. This includes a health sector and social protection package to assist the poor and vulnerable, and economic measures to ensure food security and safeguard small businesses most at risk. ADB’s financing will also support the government in extending its targeted social assistance program to at least 207,000 poor households, including an additional one-time cash transfer. Food security will be ensured through food price monitoring and controls, and provision of agricultural inputs for farmers to increase production. Subsidized lending and tax relief will be extended to affected micro, small, and medium- sized enterprises, of which at least 24% are women-led.

Tajikistan Somoni - US Dollar Exchange Rate

Source: Trading Economics Tajikistan's agricultural exports 35.8% up in H1. The volume of export of agricultural products of Tajikistan grew by 35.8% or for 22,400 tons in January-June 2020, reports the Ministry of Agriculture. Tajikistan exported 85,100 tons of agricultural products as of June 16, which is by 35.8% more in volume and by 44.8% more in cost compared to the previous year. According to the Ministry, 68,600 tons of vegetables, 62 tons of melons, 9 tons of dried fruits, 41 tons of other agricultural products were exported during this period.

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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% (MTD) - 13.6% (YTD)

Government actions & regulations

WHO visit is finally approved. Turkmenistan has approved a World Health Organization (WHO) mission to the country set take place in early July. The WHO has been attempting to secure an invitation to visit Turkmenistan to assess the situation in the tightly controlled country. It had to cancel a visit to the Central Asian nation in May due to the lack of response to a request for an invitation from Turkmen authorities. Reports demonstrate that Turkmenistan has been attempting to combat coronavirus infections, despite the Turkmen government officially claiming no such infections exist. Doctors in Turkmenistan are not allowed to discuss the coronavirus, nor are Turkmen citizens at large. The authorities have also banned face masks and have held public events, despite attempting to enforce some measures to curb the spread of the virus. These include quarantine zones that were set up around the country to prevent the spread of “infectious diseases”. Still stuck at the border. A Mashhad Chamber of Commerce official has said that some 2,000 lorries are stuck at the border of Turkmenistan, despite claims the country has opened its border to Iranian shipments, Quds Online reported on June 24th."It has been about four months since the borders of Turkmenistan were blocked and it is practically impossible to operate in Central Asia," an official stated. Sporadic Iranian food exports have made their way to Turkmenistan’s empty supermarkets in recent months; however, Ashgabat and Tehran have struggled to come to an agreement on transit and entry, with huge truck lines at the Sarakhs border, local media reported. Critical of the US statement. Turkmenistan criticized the US embassy for a statement that cast doubt on official reports of zero coronavirus cases in the country. “While there are no official reports of positive Covid- 19 cases in Turkmenistan, the U.S. Embassy has received reports of local citizens with symptoms consistent with the virus are undergoing Covid-19 testing and being placed in quarantine in infectious disease hospitals for up to fourteen days,” the embassy said in an alert message posted on its website. The Turkmen foreign ministry said the US embassy’s health alert was distorting information about measures taken by the Central Asian nation against the virus.

Turkmenistan Manat (Commercial Rate) -US Dollar Exchange Rate

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Step up in talks to boost trade and investment. Over the past few weeks there has been a steady stream of reports of meetings and engagement between Turkmenistan officials and those of other countries. The aim is to try and attract more investment commitment and to diversify trade and investment partnerships.

▪ Talks with Egypt. The Minister of Foreign Affairs of Turkmenistan Rashid Meredov held a telephone conversation with Minister of Foreign Affairs of Egypt Sameh Shoukry. According to the Turkmen Foreign Ministry’s statement, diplomats discussed a number of key issues regarding the Turkmen- Egyptian relations and emphasized the high level of political-diplomatic dialogue and the positive experience of cooperation within the international organizations, in particular within the UN.

▪ Officials of the countries, representing fields of trade, finance and foreign economic relations, oil and gas sectors, had held a virtual meeting on June 11, where they considered possibilities of expanding cooperation between the business circles of the two countries.

▪ Talks with Korea. The meeting between the two nations examined the current state of affairs and prospects in bilateral relations between Turkmenistan and the Republic of Korea. The sides exchanged views and identified concrete measures for cooperation in a wide range of areas, particularly in the fields of economy and investments. Considering the growth indicators of trade and economic ties, the parties examined the current areas of cooperation in the fields of energy, textile industry, shipbuilding, and digital technologies, according to the statement. During the talks, the officials also discussed the possibilities for further cooperation with Korean companies in Turkmenistan, which are actively involved in projects for the construction and modernization of the petrochemical complexes in the country.

▪ Talks with China. Chinese State Councillor and Foreign Minister Wang Yi held a phone conversation with Deputy Prime Minister and Foreign Minister of Turkmenistan Rashid Meredov, with both sides calling for solidarity and cooperation in global efforts to stop the politicizing the pandemic. Stressing that Chinese President Xi Jinping attaches importance to establishing trust and friendship with his Turkmen counterpart Gurbanguly Berdimuhamedov, Wang said the two heads of state have kept close contact and provided strategic guidance to the development of the bilateral ties.

▪ Talks with United Kingdom. The bilateral meeting discussed promising areas of cooperation, including the introduction of modern European technologies and equipment in the activities of Turkmen entrepreneurs, and the implementation of joint projects in various fields. The sides emphasized the importance of further cooperation within the framework of the Turkmen-British Trade and Industrial Council, and the organization of direct talks between the companies of the two countries interested in the cooperation.

Two new cement plants approved. Turkmen firms are set to carry out the construction of two new cement plants with an annual production capacity of 1 million tons each, the State News Agency of Turkmenistan (TDH) reports. President Berdimuhamedov signed resolutions last week authorizing the Ministry of Industry and Construction Production to conclude contracts for the second phases of plants’ construction. The ministry will conclude a contract with the Beýik-Bina Individual Enterprise for the design and construction of the second stage of one cement plant in Ahal Region. A similar contract will be reached with the Türkmen Enjam Economic Society for a cement plant in Lebap Region. The companies have been instructed to launch construction works in July 2020 and to commission the cement plants for operation in December 2022.

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Ukraine Reported cases: 45,244 + 6,343 (week-on-week) Reported deaths: 1,173 + 128 (week-on- week) Hryvnia-US$ exchange rate: 26.69 +0.6% (MTD) - 10.8% (YTD) Ukraine - Covid-19: New Cases (Bar - RHS) & Deaths (Line - LHS) June 30th

Source: World Health Organization Government actions & regulations Second wave of crisis. Ukraine has entered “a serious wave” of the coronavirus pandemic, Prime Minister Denys Shmyhal told a June 25th cabinet meeting, the same day that Covid-19 cases surged to their highest daily record. “The occupancy of hospitals has significantly increased," he said. "There are regions where it exceeds 50%. Unfortunately, this is an exceptionally negative signal. This means that we have entered a serious illness phase of the coronavirus;” According to the government spokesperson, the central government will do everything possible to avoid a return to a severe lockdown. Zelenskiy trust rating falls below 50%. The number of Ukrainians that fully trust their president, or rather trust Ukrainian President Zelenskiy, has fallen below 50% of the population, according to a recent poll by the Ukrainian Institute for Social Research. Zelenskiy is fully trusted by 13% of the respondents to the survey, with another 28.3% saying they “rather trust” the president. However, 25.4% of respondents said they “rather do not trust” Zelenskiy and 24.8% don't trust him at all. "Thus, 50% of the population today does not trust President Zelenskiy," Olha Balakireva, the head of the institute, said in comments cited by Interfax. Kolomoisky wins very favorable state tender. Ukrtatnafta, which is controlled by oligarch Ihor Kolomoisky, has won a tender to supply the Ministry of Defense with 3,500 tons of aviation fuel despite asking a price that was 30% more than the lowest bid. According to the Ukrainian industry publication Enkorr, this deal was the first contract signed between the Ministry of Defense and the Privat group, which belongs to Kolomoisky and holds Ukrnafta’s shares, in the last 5 years, when the online ProZorro system was launched in 2015. Question over commitment from international donors. The World Bank’s Board of Executive Directors approved a US$350 million First Economic Recovery Development Policy Loan (DPL) on June 26th for Ukraine “in support of reforms that are critical to economic recovery and to help mitigate the impact of the COVID-19 pandemic,” the WB said. However, that sum is considerably less than the US$1 billion that was initially penciled in as support. Ukraine’s biggest donor, the International Monetary Fund (IMF), has also scaled back its support of the country this year. The IMF immediately wired US$2.1 billion to Ukraine after the new deal was signed in early June, and the rest will be phased over four reviews. The EU has been a little less reticent and wired US$500 million in June as part of its macro-stabilization aid to Ukraine.

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Made clear the terms. The World Bank also spelt out its terms in its announcement of the release of the US$350 million tranche. “The key reforms supported by the DPL include: (i) strengthening land and credit markets by creating a transparent and efficient market for agricultural land and resolving non-performing loans in state owned banks; (ii) fostering de-monopolization and anti-corruption institutions including by restructuring the gas sector; and (iii) bolstering the social safety net for the vulnerable elderly population to cushion the impact of the COVID-19 pandemic,” the World Bank said in its memo. The World Bank listed the tasks that remain on Kyiv’s to-do list: ▪ Restructuring the gas sector by creating an independent gas transmission system operator is already helping safeguard Ukraine’s gas transit revenues. ▪ Strengthening Ukraine’s anti-corruption institutions is intended to help establish a level playing field in the private sector and bolster investor confidence. ▪ Resolving non-performing loans in state-owned banks will help increase the efficiency and flow of credit to Ukrainian firms. Ukraine Hyrvnia-US Dollar Exchange Rate

Source: Trading Economics Aggregate state debt increases 0.8% in May. Ukraine’s state and state-guaranteed debt rose 0.8% month on month to US$82.1 billion as of May 31st, the Finance Ministry reported on June 25th. State domestic debt jumped 4.7% MoM to US$33.1 billion, while the state foreign debt slid 2.1% MoM to US$39.3 billion. State- guaranteed debt inched up 0.3% MoM to US$9.7 billion. In UAH terms, overall state debt increased 0.6% MoM in May to UAH2.2 trillion (US$82 billion), or 55.6% of Ukraine’s GDP in 2019. According to the Finance Minister, aggregate debt (state and state-guaranteed debt) will increase to US$91.5 billion by end-2020 (vs. US$84.4 billion in 2019). Decline of industrial production in Ukraine slows to 12.2%. In May 2020, industrial production in Ukraine decreased by 12.2% compared to May 2019, while in April the decline was 16.2%, in March it was 7.7%, and in February 1.5%, the state statistics service said on June 23rd. The agency said that with the adjustment to the effect of calendar days, the decline of industrial production in May was even slightly less – 11.7% compared to 16.7% in April. In the processing industry, from May 2020 to May 2019, the decline was 15.6%; in the mining industry and quarrying it was 8.9%; in the supply of electricity, gas, heat and air conditioning, 1.9%. In general, in January-May, industrial production in Ukraine decreased by 8.7% compared to the same period last year, including in the mining industry and quarrying, by 6.6%; in the processing industry, by 10%; in the supply of electricity, gas, steam and air conditioning, by 6.9%. Ukraine retail sales stay at 3% YoY growth in January-May. Ukraine’s retail sales advanced 3.1% year on year in real terms in January-May, slowing slightly from 3.2% YoY growth in 4M20, Ukraine’s State Statistics Service reported on June 22nd. In May, retail sales dropped 3.1% YoY (vs. a 14.9% YoY drop in April), but advanced 15.0% month on month in real terms. The drop in investment dragged on Ukrainian GDP growth in 1Q20. Ukraine's State Statistics Service has published its second estimate of GDP growth in 1Q20, along with a more detailed breakdown. The headline figure showed a 1.3% year-on-year contraction compared with 1.5% growth in 4Q19. In seasonally adjusted terms, GDP was down 0.7% quarter on quarter. The weaker dynamics were mostly attributable to a drop in fixed capital investment (down 21.4% y/y in 1Q20 compared with 18.6% growth in 4Q19).

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Uzbekistan

Reported cases: 8298 + 1,798 (week-on-week) Reported deaths: 23 4 (week-on-week) Som US$ exchange rate: 10,171.66 - 0.3% (MTD) - 6.2% (YTD) Uzbekistan - Covid-19: Daily new cases June 30th

Source: WHO Government actions & regulations Safe Travel Guaranteed campaign. Uzbekistan is offering US$3,000 to tourists who contract a coronavirus infection during a visit to the country. The move forms part of its “Safe Travel Guaranteed” campaign. The country expressed confidence that tourists will not contract the virus comes amid attempts to mitigate the impact of the global pandemic on Uzbekistan’s tourism industry. In order to receive the US$3,000 payment, a traveler must show they explored the country with a local tour guide, while the tour guide, accommodation and tourist sites visited must be government-certificated, meaning they are committed to following official safety and sanitary guidelines. The US$3,000 amount is the estimated cost of medical care to receive treatment for a coronavirus infection in the country. Uzbekistan to temporarily cut off Tashkent’s Covid-19 "red zones" from rest of capital. Tashkent’s “red zones”, where high numbers of new coronavirus infections have been reported, will be temporarily cut off from the rest of the city. Uzbekistan has been gradually lifting coronavirus-related restrictions since May. The country divided its territory into “red”, “yellow” and “green” zones depending on the level of confirmed infection rates in each area. Exit and entry into Tashkent’s red zones will be regulated via checkpoints. Possibility of resumption of more flights. The Ministry of Transport is considering the possibility of relaunch of regular flights to several countries, the Ministry's press secretary Navruz Ashurmatov told a briefing. The nation-wide commission for COVID-19 containment received suggestions on restart of the regular flights to Turkey, Russia, UAE, South Korea, China and Kazakhstan in July-August, he said. The nation-wide commission will make a decision on timing and the order of resumption of international flights, the press secretary stated. Air service to Japan, China, South Korea and Israel was restarted since June 15. People arriving from Malaysia, Thailand, Singapore, EU countries are currently quarantined for 14 days. Uzbek government to sell off its stake in Coca-Cola joint venture. The Uzbek government is to sell a stake in its local joint venture with Coca-Cola via open bidding, Uzbekistan’s State Asset Management Agency (SAMA) said on June 22nd. The authorities plan to hire foreign investment banks to arrange the deal. Uzbekistan holds a 57.1% stake in Coca-Cola Bottlers Uzbekistan, which has access to the largest soft drinks market in Central Asia, given that the country has a population of 34 million. SAMA provided no other details of the potential deal.

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Uzbekistan Som-US Dollar Exchange Rate

Source: Trading Economics AIIB loan for road schemes. The Asian Infrastructure Investment Bank (AIIB) has approved a loan of US$165.5 million to Uzbekistan to improve the road efficiency, safety, and climate resilience of major cross-border roads in Bukhara Region, it said. The Bukhara Road Network Improvement Project Phase 1 aims to support the rehabilitation and maintenance of a 78-kilometre section of the international A380 road in Bukhara Region. “This project is of regional importance and well-aligned with AIIB’s strategic priority of promoting cross-border connectivity to unlock greater productivity and higher economic growth,” said AIIB vice president, investment operations, Konstantin Limitovsky. The funding was also expected to pave the way for the next phase of the project that would cover the rehabilitation and maintenance of international road M37 sections in and around Bukhara Region alongside regional and local road networks in the autonomous Karakalpakstan Region and Khorezm Region. ADB US$500 mln loan. The Asian Development Bank (ADB) approved a US$500 million loan to help the Government of Uzbekistan mitigate the adverse health and economic impacts of the coronavirus disease pandemic. “This loan will provide critical budget support as the government works to contain the spread of the virus, support businesses, and expand social safety nets.” According to the ADB. ADB’s Covid-19 Active Response and Expenditure Support (CARES) Program will help to fund the government’s comprehensive pandemic response plan. The loan will support initiatives to help businesses affected by the downturn and minimize job losses. Additional capital for the State Fund for Support of Entrepreneurship will enable it to provide loan guarantees to SMEs. Small-scale public works will be funded in the regions to help create temporary jobs, 75% of which will employ members of low-income households. US$1.8 bln power project agreed. The Ministry of Energy of Uzbekistan and Russia’s Altmax Holding Ltd signed a memorandum on construction of a 1,500 MW combined heat and power plant in the south of Uzbekistan. The project is estimated at US$1.8 billion, TASS reported. The project will not only meet the local needs of the region, but also exports of surplus electricity to the neighboring regions and countries (Tajikistan, Turkmenistan and Afghanistan). EBRD provides US$40 mln loan. The European Bank for Reconstruction and Development (EBRD) is providing a US$40 million loan to UzPromstroybank (UzPSB) for on-lending to Uzbekistan’s private sector. UzPSB is the country’s oldest lender. The EBRD credit line will help the bank to grow and diversify its client base and target firms in regions outside the capital. The funds are part of the EBRD’s response to the coronavirus pandemic and its economic impact. Production of Volkswagen and Škoda vehicles to start from 2022 in Uzbekistan. President Mirziyoyev has signed the order to establish the production of Volkswagen light commercial vehicles. Uzbekistan's car maker Uzautosanoat and Volkswagen Group Rus reached an agreement to establishment a production plant in March. The cooperation agreement envisions the participation of Volkswagen Group Rus in the investment project in Uzbekistan. Cars will be produced at the Jizzakh car factory. The project will be carried out in two stages. In the first stage during 2020-2021, Volkswagen and Škoda vehicles will be imported to study the market and make marketing analysis. During the second stage from 2022, a full cycle of production of commercial light vehicles is scheduled to start.

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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

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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 Indicators Population 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% -3.0% 3.5% 4.5% Azerbaijan 10.1 $45.0 $4,447 $16,011 260% -2.7% 2.5% 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 Republic 6.5 $9.4 $1,446 $3,447 138% -3.0% 4.0% 4.5% Mongolia 3.3 $12.5 $3,823 $12,209 219% 0.5% 4.5% 4.5% Russia 145.9 $1,568.0 $10,746 $27,147 153% -3.5% 2.5% 2.5% Tajikistan 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% Uzbekistan 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 Inflation, eop % YoY Policy Rate, eop % YoY FX Rate v US Dollar, eop 2020E 2021E 2022E 2020E 2021E 2022E 2020E 2021E 2022E

Armenia 1.7% 3.0% 4.0% 4.0% 3.5% 3.5% 480 470 470 Azerbaijan 3.0% 3.3% 3.0% 7.25% 7.0% 6.8% 1.70 1.90 1.90 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 7.0% 6.0% 5.0% 9.00% 8.00% 7.50% 420 400 380 Kyrgyz Republic 9.0% 7.0% 5.0% 5.00% 5.00% 4.25% 80.0 77.0 73.0 Mongolia 8.0% 7.0% 6.0% 9.0% 9.0% 8.0% 2,800 2,750 2,725 Russia 4.5% 3.7% 3.5% 4.50% 4.50% 4.00% 70.0 68.0 65.0 Tajikistan 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 Uzbekistan 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

Government Finances Budget Balance, % GDP CA Balance, % of GDP 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% Azerbaijan -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 Republic -6.5% -4.5% -2.5% -14.0% -11.0% -9.5% 65% 65% 62% Mongolia -4.0% -4.5% -4.0% -15.5% -12.9% -10.3% 85% 86% 90% Russia -3.5% -0.2% 0.2% 0.5% 1.0% 2.0% 17% 16% 16% Tajikistan -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% Uzbekistan -4.0% -3.0% -2.0% -8.5% -6.0% -5.0% 28% 25% 26% Source: Respective National Statistics Services, Macro-Advisory Ltd estimates

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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 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 flights 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 Border with Belarus closed Russia limits 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 facilities must register qualified personnel in a centralized database 25-Mar President Putin visits Moscow's main isolation hospital at Kommunarka 26-Mar President Putin addresses nation, announces non-working week Government announces cessation of all international flights 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 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 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 illegal 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 limited re-opening, self-isolation in place till 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 19-Jun Eastern Economic Forum (normally in September) cancelled Source: Macro-Advisory, from Russian media sources

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Appendix 4: Kazakhstan 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 flights 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 14-Jun Health Minister announces coronavirus infection, Prime Minister enters self-isolation Source: Macro-Advisory, from media sources

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Appendix 5: Ukraine government actions

Date Action 4-Feb Ukraine International Airlines stops flights 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 till 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 4-May Quarantine extended to May 22nd 11-May Limited re-opening of shops, parks and restaurants 15-May President orders mass testing 18-May Government announces that beaches will open this year 23-May Above ground public transport and shops smaller than 1000 square meters re-open in Kiev 25-May Kiev metro to open 5-Jun Army draft for school and college leavers cancelled 15-Jun International flights resume Source: Kiev Post, Macro-Advisory, from media sources

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Appendix 6: Uzbekistan government actions

Date Action 21-Feb March investment summit cancelled 4-Mar Block on entry by citizens of 40 countries with coronavirus infections 15-Mar Bar on entry for all foreigners All universities and schools closed for 3 weeks 16-Mar Suspends international air and road connections All citizens arriving from abroad must observe 14 day quarantine Spiritual Board of Muslims cancel Friday prayers 19-Mar President orders US$1 billion 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 million medical masks to Russia 20-Apr Private medical institutions allowed to carry out coronavirus tests 25-Apr Some retailers and businesses allowed to re-open 8-May Government divides territories into red, yellow, and green zones for different quarantine levels 9-May Ban on mass events and visiting veterans for Victory Day holiday 14-May Government extends lockdown until June 1st, some businesses allowed to re-open 3 regions declared coronavirus-free: Dzhizakskaya, Kashkarinskaya and Ferganskaya 24-May Minister of Health warns restrictions may be tightened 14-Jun Government says it will allow flights from countries with good epidemiological situations Quarantine extended to August 1st Source: Macro-Advisory, from media sources

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