IMF Staff Concludes Staff Visit to Turkmenistan

IMF News, November 14, 2019

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An IMF mission led by Ms. Natalia Tamirisa visited Ashgabat during November 5-12, 2019 to assess recent developments and discuss economic and financial policy priorities with senior government officials, representatives of the business and financial sectors, and the diplomatic community.
End-of-Mission press releases convey preliminary findings after a visit to a country. The views expressed are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board. This mission will not result in a Board discussion.
The IMF team stands ready to support the authorities in their efforts to strengthen capacity, including in public finance and debt management, monetary and exchange rate operations, and national accounts, price and external statistics.
The next Article IV Consultation mission is scheduled for March 2020.

Turkmenistan continues to pursue an investment-led growth strategy underpinned by import substitution and export promotion policies, directed concessional lending, and related broad exchange controls on international transactions and payments.
Economic growth continues to be driven by both the hydrocarbon and nonhydrocarbon sectors.
External balances remain in surplus, buoyed by exchange controls in line with import substitution and export promotion objectives.
Under current policies, economic growth is expected to moderate over the medium term as hydrocarbon production stabilizes.
Risks are tilted to the downside and include lower-than-expected hydrocarbon prices and returns on past investment, rising external financing costs, and geopolitical factors.
Significant overvaluation and foreign currency rationing weigh on private investment and competitiveness of nonhydrocarbon exports.

Improve the competitiveness and convertibility of the manat; adjustment should be carefully sequenced to ensure macro-financial stability and supported by measures to protect the vulnerable.
Reduce the footprint of the state and open the economy to competition to promote economic efficiency and market development.
Phase out directed cheap credit to help steer financial resources to the most productive uses and create a market-based, more efficient financial system.
Strengthen prudential oversight in tandem to maintain financial stability.
Improve the efficiency of public spending to increase its impact while saving public financial resources.
Increase, and better target, spending on health and education to foster human development and improve inclusiveness.
Strengthen economic policy frameworks and transparency to ensure sound decision-making and improve access to financing.

Output and prices (Annual percentage change)
- Real GDP: 6.5 6.2 6.3
- Real hydrocarbon GDP: 0.1 -4.8 1.7 5.4 5.7
- Real nonhydrocarbon GDP: 9.4 11.4 7.2
- Consumer prices (end of period): 6.0 10.4
- Consumer prices (period average): 7.4 3.6 8.0 13.3 5.1
Investment and savings (In percent of GDP)
- Gross investment: 47.3 47.0 40.8 28.2 24.4
- Of which: State budget: 6.6 2.8 1.5
- Gross savings: 31.7 26.8 30.5 33.9 29.4
Fiscal sector
- Overall fiscal balance 1/: -0.7 -2.4 -2.8 -0.2
- Revenue: 16.6 11.7 14.9 13.5 12.9
- Expenditure: 17.3 14.1 17.8 13.7 13.2
- Domestic government debt: - 1.0 3.7
- Total public debt 2/: 21.8 24.1 28.8 29.1 30.7
Monetary sector (12-month percent change, unless otherwise indicated)
- Credit to the economy 3/: 39.4 24.0 14.7 12.0 10.0
- Credit to GDP ratio: 45.5 55.9 61.1 63.7 63.1
- Broad money, incl. foreign currency deposits at CBT: 16.1 8.4 15.6
External sector (In percent of GDP, unless otherwise indicated)
- Exports of goods (In millions of US$): 12,164 7,520 7,788 11,651 12,592
- Imports of goods (In millions of US$): 14,051 13,177 10,189 5,323 5,406
- Current account balance: -15.6 -20.2 -10.3 5.6 5.0
- Foreign direct investment: 8.6 4.0 3.5 3.0
- Total public sector external debt: 23.1 25.1 25.4 27.1
Memorandum items:
- Nominal GDP (in millions of manat): 125,299 126,630 132,742 142,664 158,429
- Nominal GDP (in millions of US$): 35,800 36,180 37,926 40,761 45,265

IMF Staff Concludes Staff Visit to Turkmenistan — Press Release No. 19/414, November 14, 2019.