Page 6 - bne_May 2021_20210601

6 I Companies & Markets bne June 2021
Hungary sold some HUF2.3 trillion in FX bonds last year
and is set to take out a further HUF4.5 trillion in loans in the coming years on projects like the Russian expansion of the Paks nuclear power plant, the construction of the Budapest- Belgrade railway line and the establishment of the campus of China's Fudan University. State debt surged to HUF38.4 trillion last year to 80% of the GDP with a 15pp spike.
Orban’s U-turn means that the country's entire recovery
plan has to be rewritten and universities could be the biggest victims of the cutback, analysts commented, particularly now that many of them have been put under an opaque foundation structure. Legislation on the transfer of the vast majority of
higher education institutions to private foundations headed by political appointees is raising concerns in Brussels. The government planned to use some HUF1.5 trillion of the HUF5.9 trillion on university developments.
The EU recovery plan's focus has drawn fire from goverment- controlled media. The EU set guidelines for using the funds, including promoting the green transition, smart, sustainable and inclusive growth and fostering social and economic cohesion among others. It also made social consultation
a prerequisite but representatives of local governments, of which many are led by opposition parties, say there was no meaningful discussion about the use of EU funds.
Centerra files arbitration suit as Kyrgyzstan moves to seize Kumtor gold mine
Kanat Shaku in Almaty
Canada's Centerra Gold on May 16 filed an international arbitration suit in an attempt at stopping the Kyrgyz government from taking further steps to nationalise the Kumtor gold mine.
The move came in response to Kyrgyzstan’s President Sadyr Japarov signing into law a bill opening the way to a state takeover of Kumtor and a $3bn fine for environmental damage issued by a Kyrgyz court. It is expected that Kyrgyzstan’s parliament will on May 17 appoint independent managers
to run Kumtor for three months. The weekend saw Centerra Gold’s offices in the country raided, with documents seized.
It is not uncommon for new Kyrgyz governments to harass Kumtor's operator, while ignoring any agreements reached by the previous regime, but the current regime – consolidating around nationalist firebrand Japarov, who last year took the helm from toppled ex-president Sooranbai Jeenbekov after his supporters busted him out of prison – has moved swiftly and heavily against Centerra.
The Kumtor open pit mine, which produces over 500,000 ounces of gold per annum, is Kyrgyzstan’s single largest contributor to GDP. It accounts for approximately 5-7% of national output. The enterprise behind the mine, located at an altitude of 4,000 metres in the vicinity of glaciers in the Tian Shan mountains, also amounts to Kyrgyzstan's largest employer and taxpayer.
“Astonishing speed”
“The leadership of the Kyrgyz Republic has acted with astonishing speed since the beginning of this year to undermine the basis on which the Kumtor Mine has been operated and has refused to engage with us on any matters it considers to be the subject of dispute,” Scott Perry, chief
www.bne.eu
executive of Toronto Stock Exchange and NYSE listed Centerra, said in a statement.
Bishkek has also hit Centerra’s subsidiary Kumtor Gold Company with a $170mn tax claim, a claim the company is disputing.
The government’s actions have sent ripples of alarm, unsettling international financial institutions working in Kyrgyzstan.
In a joint statement, Canada and the UK warned last week that measures that “negatively impact trade and foreign direct investment will further undermine already fragile economic livelihoods of the Kyrgyz people”.
Hit hard by the coronavirus pandemic, Kyrgyzstan became one of the first countries to apply for emergency funding from both the World Bank and the IMF.
The mine is located at an altitude of 4,000 metres in the vicinity of glaciers in the Tian Shan mountains.