{
  "title": "IMF Executive Board Concludes 2017 Article IV Consultation with Turkmenistan",
  "publication": "IMF News, June 15, 2017",
  "sourceUrl": "https://www.imf.org/en/news/articles/2017/06/16/pr17226-imf-executive-board-concludes-2017-article-iv-consultation-with-turkmenistan",
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  "summary": "On May 26, 2017, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Turkmenistan.",
  "publishDate": "2017-06-15",
  "sections": [
    {
      "heading": "Background and recent policy measures",
      "content": "- On May 26, 2017, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Turkmenistan.\n- Context:\n  - Turkmenistan is described as a major natural gas producer adjusting to persistently low hydrocarbon prices and slower economic activity in trading partners.\n  - Growth has been stable at above 6 percent over the past couple of years, supported by rising natural gas export volumes to China, expansionary credit policies, and industrial policies to substitute imports and promote exports.\n  - The state budget deficit was small at 1¼ percent of GDP last year, but the current account deficit widened to 21 percent of GDP.\n- Policy actions adopted over the past couple of years:\n  - Public investment cuts.\n  - Step devaluation of the currency.\n  - A one-time increase in utility tariffs.\n  - Intensified efforts to develop a local production base and ambitious plans to:\n    - Increase natural gas production.\n    - Build new pipelines.\n    - Develop petrochemical industries.\n    - Expand mining and processing of non-hydrocarbon natural resources.\n    - Support private sector development."
    },
    {
      "heading": "Macroeconomic outlook and projections",
      "content": "- General outlook:\n  - Macroeconomic performance is expected to remain uneven over the next several years, with continued growth, moderate inflation, and a balanced budget, but persistent external pressures.\n  - Growth is projected to accelerate slightly from last year’s 6.2 percent to 6.5 percent in 2017.\n  - Inflation is forecast to remain moderate at about 6 percent.\n  - The state budget is expected to stay close to balance.\n  - External deficits are projected to remain sizable, at about 11 percent over the medium term.\n- Selected economic indicators, 2015–18 (Est. = 2015, 2016; Proj. = 2017, 2018):\n  - Output and prices (Annual percentage change)\n    - Real GDP: 6.5, 6.2, 6.3, 6.5\n    - Real hydrocarbon GDP: 0.1, -4.8, 4.3, 7.5\n    - Real nonhydrocarbon GDP: 9.4, 11.4, 7.4, 5.8\n    - Consumer prices (period average): 3.6, 6.0, 6.0, 6.0\n  - Investment and savings (In percent of GDP)\n    - Gross investment: 47.0, 42.0, 40.0, 40.0\n    - Of which: State budget: 6.6, 2.8, 2.4, 2.5\n    - Gross savings: 32.9, 26.0, 29.2, 28.4\n  - Fiscal sector\n    - State budget balance: -0.7, -1.3, 0.2, 0.0\n    - Revenue: 16.5, 12.8, 12.4, 13.1\n    - Expenditure: 17.2, 14.1, 12.9, 13.1\n    - Nonhydrocarbon primary state budget balance (in percent of non-hydrocarbon GDP): -8.4, -5.3, -5.6, -4.7\n  - Monetary sector (12-month percent change, unless otherwise indicated)\n    - Credit to the economy: 39.4, 24.0, 19.0, 18.0\n    - Credit to GDP ratio: 45.2, 55.9, 56.8, 60.1\n    - Broad money, incl. foreign currency deposits at CBT: 16.1, 9.3, 7.0, 7.0\n    - Real effective exchange rate: 0.5, …, …, …\n  - External sector (In percent of GDP, unless otherwise indicated)\n    - Exports of goods (In millions of US$): 12,164, 7,519, 10,113, 11,227\n    - Imports of goods (In millions of US$): 14,051, 13,177, 13,022, 13,642\n    - Current account balance: -14.0, -21.0, -12.8, -11.6\n    - Foreign direct investment: 8.5, 4.5, 4.5, 4.5\n    - Total public sector external debt: 19.4, 23.9, 24.3, 27.6\n- Sources for table: Turkmen authorities; and Fund staff estimates and projections."
    },
    {
      "heading": "Executive Board assessment — findings and near-term priorities",
      "content": "- Commendations and concerns:\n  - Directors commended the authorities for policy measures implemented over the past two years to facilitate steady growth and adjustment to lower oil and natural gas prices.\n  - Directors noted that external imbalances remain sizeable and stressed the need for additional policy adjustment to reduce the current account deficit while implementing reforms for strong, sustainable, and inclusive growth.\n- Near-term priority:\n  - Reduction in the current account deficit."
    },
    {
      "heading": "Executive Board recommended policy package and structural reforms",
      "content": "- Near-term policy package that Directors concurred would facilitate adjustment:\n  - Cuts in public investment spending.\n  - Slower credit growth.\n  - Exchange rate devaluation.\n- Social protection:\n  - Directors stressed that vulnerable segments of the population should be protected as the policy adjustment proceeds.\n- Exchange rate and monetary framework:\n  - While the fixed exchange rate regime remains appropriate for the time being, over the medium term greater exchange rate flexibility would:\n    - Support adjustment to external shocks and changes in the macroeconomic environment.\n    - Pave the way for modernizing the monetary policy framework.\n  - Eliminating the exchange rate restrictions on current international transactions would help increase economic efficiency.\n- Structural reforms to address low hydrocarbon prices and support diversification:\n  - Improvements in the business and regulatory environment.\n  - A decisive push for reform and privatization of state-owned enterprises.\n  - Downsizing and greater efficiency of public investment.\n  - Continued focus on social protection and human capital development.\n  - Gradual scaling down of the state's role in planning and coordinating economic activity.\n- Financial sector and prudential measures:\n  - Directors looked forward to the planned financial regulatory overhaul to align Turkmenistan’s regulatory framework with the Basel standards.\n  - Given strong loan growth and directed credit for state-led projects, Directors saw merit in:\n    - Tightening prudential requirements.\n    - Rationalizing the process of loan selection.\n    - Raising awareness of the exchange rate risk.\n    - Enhancing bank governance and risk management.\n- Data and transparency:\n  - Directors encouraged the authorities to address data gaps and broaden dissemination of fiscal, financial, and external sector statistics to:\n    - Improve understanding of macroeconomic trends and policy intentions among stakeholders.\n    - Boost foreign investment.\n    - Ease access to global financial markets.\n\nIMF Executive Board Concludes 2017 Article IV Consultation with Turkmenistan — Press Release No. 17/226\n\n---\n\n\n References\n\n- People's Republic of China and the IMF\n- Turkmenistan and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- http://www.imf.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2017/06/16/pr17226-imf-executive-board-concludes-2017-article-iv-consultation-with-turkmenistan"
    }
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    "Published: June 15, 2017",
    "On May 26, 2017, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Turkmenistan.",
    "Context:",
    "Policy actions adopted over the past couple of years:",
    "General outlook:",
    "Selected economic indicators, 2015–18 (Est. = 2015, 2016; Proj. = 2017, 2018):",
    "Sources for table: Turkmen authorities; and Fund staff estimates and projections.",
    "Commendations and concerns:",
    "Near-term priority:",
    "Near-term policy package that Directors concurred would facilitate adjustment:",
    "Social protection:",
    "Exchange rate and monetary framework:",
    "Structural reforms to address low hydrocarbon prices and support diversification:",
    "Financial sector and prudential measures:",
    "Data and transparency:",
    "[People's Republic of China and the IMF](http://www.imf.org/external/country/CHN/index.htm)",
    "[Turkmenistan and the IMF](http://www.imf.org/external/country/TKM/index.htm)",
    "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[http://www.imf.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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