IMF Staff Concludes Staff Visit to Turkmenistan
IMF News, October 8, 2018
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- Published: October 8, 2018
Mission overview
- An IMF mission led by Ms. Natalia Tamirisa visited Ashgabat during October 1-5, 2018 to assess macroeconomic and financial developments and discuss economic challenges and 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 the 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 noted gratitude to the authorities and other stakeholders for their hospitality and discussions.
- The next mission, for the 2019 Article IV Consultation, is tentatively scheduled for March 2019.
Macroeconomic developments and outlook
- “Official indicators of economic growth remain broadly stable.”
- Composition of growth has shifted from domestic demand towards net exports, mainly reflecting policies aimed at reducing imports and moderating government investment and credit.
- “Official average inflation numbers have risen somewhat, driven by prices of selected imported goods, although their weight in the consumer basket has declined.”
- Trade and fiscal balances have improved mainly owing to higher hydrocarbon prices.
- Looking ahead, increased exports of natural gas, petrochemicals, and other products are expected to support economic growth.
- Risks to the outlook are tilted to the downside, stemming from spillovers from global trade tensions, geopolitical risks, tightening financing costs, as well as domestic factors.
Policy findings and recommendations
- External imbalances have declined owing to higher hydrocarbon prices and economic policies aimed at reducing imports and promoting exports, yet further steps to address the imbalances are needed.
- Improving efficiency of public spending, slowing directed lending, and increasing reliance on market-based incentives would improve productivity and economic prospects.
- Sharing benefits of economic growth broadly would enhance inclusiveness.
- “Continued recalibration of policies is needed to further reduce external imbalances, improve competitiveness, and realize the authorities’ vision of ensuring robust, diversified, and inclusive growth in the coming years.”
- Policy choices should mitigate adverse short-term impact on growth while protecting the vulnerable through well-targeted social support.
- Further efforts to moderate and prioritize public investment—focusing it on growth-enhancing projects in infrastructure, education and health, and avoiding a build-up of overcapacity—are needed.
- The recently announced removal of the universal free access to water, gas, electricity, and salt in 2019 would help save public resources and encourage more efficient use of energy and water; however, the social impact needs to be evaluated and vulnerable groups protected.
- Phasing out preferential credit, and continued restructuring or privatizing state-owned enterprises to incentivize them to operate on market-based principles, would boost efficiency and productivity, while reducing pressure on government finances and external balances.
- Liberalizing business regulation, creating a level playing field, and increasing reliance on market-based measures would foster private sector development and create jobs.
- Easing currency regulations is important to improve access to imports.
- Nurturing human talent and helping youth build skills needed by the private sector would strengthen medium-term economic prospects.
- Modernizing fiscal and monetary policy frameworks, supported by improved quality and availability of economic and financial statistics, would support decision-making and credibility and help attract foreign investment.
Selected economic and financial indicators, 2015–18 (key figures)
- Output and prices (Annual percentage change)
- Real GDP: 2015: 6.5; 2016: 6.2
- Real hydrocarbon GDP: 2016: 0.1; 2017: -4.8; 2018: 1.7; 2018 (Est./Proj. heading unclear): 5.7
- Real nonhydrocarbon GDP: 2015: 9.4; 2016: 11.4; 2017: 7.2; 2018: 6.4
- Consumer prices (end of period): 2015: 6.0; 2016: 10.4; 2017: 8.9; 2018: (blank in table)
- Investment and savings (In percent of GDP)
- Gross investment: 2015: 47.3; 2016: 47.0; 2017: 40.8; 2018: 37.0
- Of which: State budget: 2015: 6.6; 2016: 2.8; 2017: 2.6
- Gross savings: 2015: 31.7; 2016: 27.0; 2017: 30.0; 2018: 34.1
- Fiscal sector
- State budget balance 1/: 2015: -0.7; 2016: -2.4; 2017: -2.8; 2018: 0.4
- Revenue: 2015: 16.6; 2016: 11.7; 2017: 14.9; 2018: 13.9
- Expenditure: 2015: 17.3; 2016: 14.1; 2017: 17.7; 2018: 13.5
- Domestic government debt: 2015: 1.0; 2016: 3.7; 2017: 4.0
- Total public debt 2/: 2015: 21.8; 2016: 24.1; 2017: 28.8; 2018: 29.9
- Monetary sector (12-month percent change, unless otherwise indicated)
- Credit to the economy 3/: 2015: 39.4; 2016: 24.0; 2017: 12.0
- Credit to GDP ratio: 2015: 45.5; 2016: 55.9; 2017: 62.5; 2018: 60.1
- Broad money, incl. foreign currency deposits at CBT: 2015: 16.1; 2016: 13.3
- Real effective exchange rate: 2015: 0.5; 2016: 9.8; 2017: 7.4
- External sector (In percent of GDP, unless otherwise indicated)
- Exports of goods (In millions of US$): 2015: 12,164; 2016: 7,520; 2017: 7,788; 2018: 10,046
- Imports of goods (In millions of US$): 2015: 14,051; 2016: 13,177; 2017: 10,189; 2018: 9,314
- Current account balance: 2015: -15.6; 2016: -19.9; 2017: -10.8; 2018: -2.9
- Foreign direct investment: 2015: 8.6; 2016: 5.4; 2017: 3.4
- Total public sector external debt: 2015: 23.1; 2016: 25.1; 2017: 25.8
- Memorandum items:
- Nominal GDP (in millions of manat): 2015: 125,299; 2016: 126,630; 2017: 132,742; 2018: 154,756
- Nominal GDP (in millions of US$): 2015: 35,800; 2016: 36,180; 2017: 37,926; 2018: 44,216
IMF Staff Concludes Staff Visit to Turkmenistan, Press Release No. 18/384, October 8, 2018.