Statement at the Conclusion of the 2013 Article IV Mission to Turkmenistan

Press Release No. 13/214
June 17, 2013

An International Monetary Fund (IMF) mission led by Mrs. Veronica Bacalu visited Ashgabat during May 29–June 11, 2013 to conduct discussions for the 2013 Article IV consultation.1 The IMF team met with senior central bank and government officials, and representatives of commercial banks and international institutions. In cooperation with the Central Bank of Turkmenistan, the team organized presentations on the global and regional economic outlook, management of revenue from natural resources, development banks, and issues regarding foreign exchange market development. The mission would like to thank the authorities and other counterparts for their warm hospitality, close cooperation, and productive discussions.

At the conclusion of the mission, Mrs. Bacalu issued the following statement:

“Recent economic performance has remained strong as a result of continued high levels of public spending and increases in hydrocarbon production. In 2012, the country recorded a second straight year of double-digit real GDP growth at around 11 percent, and non-hydrocarbon growth was nearly 12 percent. The external current account was broadly in balance (down from a surplus of 2 percent of GDP in 2011) as growth in imports (of investment goods in particular) outpaced the growth in exports.

“Inflation increased to 7.8 percent year-on-year at end-2012 (from 5.6 percent at end-2011) reflecting welcome administrative price increases for some food and transportation services in the second half of 2012 aimed at achieving cost recovery. The price increases were appropriately accompanied by higher targeted social benefits.

“In 2013–14, real GDP growth and the external position are projected to remain strong and inflation is expected to decline. A sharp decline in global hydrocarbon prices is the key risk to the outlook, though the increased geographical diversification of Turkmenistan’s gas export markets and high external buffers are mitigating factors.

“The authorities should pursue a prudent fiscal policy consistent with absorptive capacity constraints and supported by improved management of the vast hydrocarbon resources. While fiscal sustainability, even in the event of much lower hydrocarbon prices, is not a concern, reining in investment spending should proceed as planned to avoid inflationary pressures. Future fiscal policy decisions need to be grounded on price-based rules and structural fiscal targets, which will help insulate public expenditure from hydrocarbon price volatility. Also, expanding public finance coverage to include the extrabudgetary activities in line with best international practice regarding sovereign wealth funds would be a positive step.

“Promoting an effective monetary policy and financial sector development by eliminating directed lending and liberalizing interest rates is key. While the exchange rate peg continues to be appropriate as an anchor for monetary policy, it limits the ability of the economy to absorb shocks. The authorities need to begin building capacity to introduce greater exchange rate flexibility in the longer term.

“Bold reforms of the state-owned financial sector are needed to further develop private financial intermediation. The recent introduction of International Financial Reporting Standards and the decision to raise bank capital are welcome first steps to strengthen the banking sector. Introducing corporate governance standards in banks, improving banking supervision, and strengthening risk management practices are also essential.

“Developing a dynamic private sector as envisaged in the National Development Program for 2011-30 will require improving governance and the business climate and increasing the role of the private sector in the economy. Gains in competitiveness could be achieved by reforms aimed at improving the regulatory environment and reducing opportunities for corruption. In addition, easing foreign exchange controls and following through with recently announced WTO accession plans would help facilitate trade.

“The ongoing efforts to adhere to international statistics standards are encouraging and should aim at the adherence of Turkmenistan to the IMF General Data Dissemination System and opening a country page in the IMF’s International Financial Statistics.

“The mission would like to underscore the strengthened relationship between Turkmenistan and the IMF that has resulted in increased technical assistance and capacity building cooperation. The mission welcomes Turkmenistan’s support of the recent reforms and initiatives by the IMF, including quota and governance reforms and the worldwide Poverty Reduction and Growth Trust financing initiatives.

Turkmenistan: Selected Economic Indicators  
  2009 2010 2011 2012 2013 2014  
        Est. Proj.  
  (Annual percentage change)      

Production and Prices


Real GDP

6.1 9.2 14.7 11.1 12.2 10.4  

Consumer price index (e.o.p.)

0.1 4.8 5.6 7.8 7.5 6.5  
  (In percent of GDP)      

Investment and Saving


Gross investment

46.6 52.9 51.9 47.2 48.6 47.7  

Gross savings

31.8 42.3 53.9 47.2 48.8 51.5  

State budget


Total revenue

20.4 16.1 18.3 21.0 17.4 17.0  

Total expenditure and net lending

13.4 14.1 14.6 14.7 15.6 15.0  

Overall balance (+ =surplus)

7.0 2.0 3.6 6.4 1.8 2.0  
  (Annual percentage change)      

Monetary indicators


Reserve money

56.7 49.3 129.8 3.6 11.3 9.0  

Manat broad money

68.6 74.2 52.1 32.8 27.0 27.0  
  (In millions of U.S. dollars, unless otherwise specified)  

External sector


Exports of goods

8,946 9,660 16,719 19,884 21,656 24,139  

Of which: Hydrocarbons

8,419 8,617 15,817 18,743 20,453 22,885  

Imports of goods

8,071 7,428 10,447 13,357 14,615 15,673  

Current account

-2,981 -2,349 582 15 97 1,787  

In percent of GDP

-14.7 -10.6 2.0 0.0 0.2 3.8  







Sources: Turkmenistan authorities; and Fund staff estimates.

1 Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.


Media Relations
Phone: 202-623-7100