IMF Staff Concludes Staff Visit to Turkmenistan

IMF News, November 10, 2017

Source details

Press Release No. 17/432
Date of publication: November 10, 2017
Mission leader: Mr. Martin Sommer
Mission dates: November 1-8, 2017
Mission objectives: assess macroeconomic and financial developments; discuss economic challenges and policy priorities with senior government officials, representatives of real and financial sectors, academics, and the diplomatic community.
IMF contact listed: PRESS OFFICER: Wafa Amr; Phone: +1 202 623-7100; Email: MEDIA@IMF.org

The Turkmen economy is adjusting to the new reality of lower oil and natural gas prices.
Officially-reported growth has remained broadly stable, boosted by rising natural gas exports, import substitution, and expansionary credit policies.
The planned launch of gas-processing facilities will support economic activity going forward.
The current account deficit remains significant despite its narrowing this year.
The key near-term policy challenge is re-calibration of the policy mix to reduce external imbalances.

Desirable policies include:
- further gradual but significant cuts in public investment expenditures;
- measures to adjust the exchange rate level;
- easing foreign exchange regulations.
The pace and composition of policy adjustment should be designed to reduce the undesirable impact on economic growth and vulnerable segments of the population.
Authorities have taken measures to facilitate macroeconomic adjustment, most recently through a gradual reduction in public investment and utility price reform.

To foster further private sector development, reforms should focus on:
- significantly simplifying administrative procedures and onerous regulations;
- accelerating SOE reforms and privatization;
- prioritizing accumulation of human—rather than physical—capital.
The recently-announced policy package including the seven-year economic and social development plan presents an opportunity to broaden and deepen market-oriented reforms to foster sustainable and inclusive growth over the longer term.
The simplified framework for the free economic zones holds the promise of attracting new private investments, including from abroad, and any positive lessons should be applied across Turkmenistan more broadly.

Authorities are preparing other structural reforms such as:
- medium-term budgeting;
- transition to GFSM2001 fiscal data reporting;
- a financial regulatory overhaul which would introduce elements of Basel principles into local regulations.
Recommendation: implement these reforms as soon as feasible.
Broader dissemination and improving quality of macroeconomic and financial data would help enhance understanding of economic trends, attract foreign direct investment, and ease access to the global financial markets.

During the visit, the team discussed key themes for the 2018 Article IV Consultation mission, "which is scheduled to take place in February next year."
The IMF stands ready to support the government’s reforms through policy advice and capacity building, including on macroeconomic forecasting and fiscal and monetary policy frameworks.

IMF Communications Department, November 10, 2017 — Press Release No. 17/432