Washington, DC: An International Monetary Fund (IMF) mission led by Ms. Anna Bordon visited Ashgabat during May 21-June 3, 2025. The purpose of the visit was to review the country's economic landscape, including its financial developments, economic outlook, risks, and policies aimed at promoting diverse, inclusive, and sustainable growth. The mission met with senior government officials, representatives of the private and financial sectors, and the diplomatic community. At the end of the visit, Ms. Bordon issued the following statement:
“Economic activity moderated in 2024, and inflation softened in recent months. IMF staff estimate that growth slowed to 3.0 percent in 2024 from 4.5 percent in 2023, owing to weak hydrocarbon exports. Inflation decelerated from 3.8 percent at end 2024 to 1.1 percent in March 2025 owing to a sharp slowdown in food inflation combined with deflation in non-food items and low inflation in services. Credit growth and monetary conditions have been tighter since the second half of 2023, while the parallel market exchange rate has remained broadly stable. The current account surplus narrowed from 5.9 percent of GDP in 2023 to 4.4 percent in 2024.
“Looking ahead the economy is expected to expand at around 2.3 percent in 2025 and over the medium term. Hydrocarbon exports growth is expected to be negative in 2025, but to gradually pick up to around 2 percent over the medium term while non-hydrocarbon growth is expected to remain subdued, given the challenging business environment, investment inefficiencies, significant real exchange rate overvaluation, and protectionism. Inflation is projected to pick up gradually over the medium term due to looser monetary conditions, returning to its recent historical average of 8 percent, which is primarily fueled by the long-standing policy of increasing public sector wages and pensions by 10 percent annually. The external position is projected to gradually deteriorate, shifting from a surplus to a deficit, driven by lower hydrocarbon prices, declining oil exports, and an overvalued currency. Rising wages are also expected to fuel import demand, further weakening the trade balance. Risks to the outlook remain tilted to the downside.
“The nonhydrocarbon primary balance improved in 2024, with higher revenues more than offsetting an increase in capital spending. Looking ahead, the deficit is anticipated to narrow further over the medium term, with capital spending expected to moderate. To leverage this positive trajectory, it is crucial for Turkmenistan to focus its spending on enhancing physical and human capital. This will require improving spending efficiency and public investment management, transitioning towards performance-based public wage increases, and reforming state-owned enterprises (SOEs).
“Strengthening fiscal reporting and public financial management (PFM) should be a top priority. Turkmenistan should expedite the implementation of medium-term budgeting, establishment of a single treasury account, and the expansion of fiscal reporting coverage. Reforming SOEs is also pivotal in managing fiscal risks, enhancing fiscal transparency, and fostering private sector development by reducing the state footprint.
“The Central Bank of Turkmenistan (CBT) should focus on price and financial stability. Until recently, the CBT had typically kept monetary policy loose to support the government’s long-term development objectives. Since the second half of 2023, however, CBT net lending to banks has slowed considerably, owing to SOE repayments. Going forward, commercial bank lending for development purposes, if needed, should be supported by the state budget, and not by the CBT. The CBT should also modernize its central bank operations and accelerate its efforts to strengthen financial regulation, supervision, and crisis management.
“Unifying the exchange rates would support Turkmenistan’s diversification objectives and reduce economic distortions and governance vulnerabilities. Turkmenistan should consider a significant upfront adjustment of the official exchange rate combined with sufficiently tight macroeconomic policies, a clear communication strategy, and enhanced social benefits to protect the most vulnerable. Post-adjustment, the devalued official exchange rate can remain the monetary anchor, with the CBT ready to provide FX to meet demand. Exchange restrictions on current international transactions should also be eliminated, to create a level-playing field, improve efficiency, and alleviate FX shortages. The adjustment measures and supporting reforms need to be sequenced carefully, while recognizing inherent uncertainties.
“Turkmenistan is adequately prioritizing economic diversification. A pre-requisite for diversification is macroeconomic stability, including as a core element the unification of the exchange rates and elimination of exchange restrictions. Moving away from a centrally planned economy will require continued efforts to liberalize prices and reduce the state footprint to allocate resources more efficiently. A more market-oriented economy will also require improving governance, skills, infrastructure, digitalization, and logistics while accelerating the efforts toward WTO accession.
“Further improvements in the availability, quality, and reliability of economic statistics would help inform policy makers and increase transparency and credibility.
“The IMF team is grateful to the authorities and other stakeholders for their warm hospitality and insightful and candid discussions.”
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Turkmenistan: Selected Economic and Financial Indicators, 2022–26 |
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Est. |
Est. |
Est. |
Proj. |
Proj. |
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2022 |
2023 |
2024 |
2025 |
2026 |
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Output and prices |
(Annual percentage change) |
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Real GDP 1/ |
3.0 |
4.5 |
3.0 |
2.3 |
2.3 |
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Real hydrocarbon GDP |
-6.4 |
-0.6 |
-10.6 |
-2.6 |
1.8 |
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Real nonhydrocarbon GDP |
5.2 |
5.6 |
5.7 |
3.0 |
2.3 |
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Consumer prices (end of period) |
3.0 |
1.4 |
3.8 |
4.0 |
6.0 |
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Consumer prices (period average) |
11.2 |
-1.6 |
4.6 |
3.9 |
5.0 |
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Investment and savings |
(In percent of GDP) |
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Gross investment |
18.2 |
17.0 |
16.0 |
13.0 |
12.9 |
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Of which: State budget |
0.5 |
0.9 |
1.6 |
0.7 |
0.7 |
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Gross savings |
27.9 |
22.9 |
20.4 |
15.1 |
13.3 |
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Fiscal sector |
(In percent of GDP) |
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Overall fiscal balance 2/ |
3.4 |
0.1 |
-0.1 |
0.3 |
-0.3 |
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Revenue |
16.4 |
13.8 |
14.4 |
14.1 |
13.7 |
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Expenditure |
13.0 |
13.7 |
14.5 |
13.8 |
14.1 |
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Total public debt 3/ |
7.9 |
5.8 |
3.6 |
3.3 |
3.1 |
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Monetary sector |
(12-month percent change, unless otherwise indicated) |
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Credit to the economy 4/ |
8.2 |
0.3 |
2.2 |
5.4 |
5.9 |
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Credit to GDP ratio |
58.6 |
53.1 |
49.6 |
49.9 |
49.6 |
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Broad money, incl. foreign currency deposits at CBT |
-2.6 |
-2.5 |
10.1 |
5.3 |
6.7 |
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External sector |
(In percent of GDP, unless otherwise indicated) |
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Exports of goods (In millions of US$) |
14,727 |
12,963 |
12,168 |
11,218 |
11,068 |
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Imports of goods (In millions of US$) |
7,188 |
7,401 |
7,665 |
8,407 |
9,085 |
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Current account balance |
9.7 |
5.9 |
4.4 |
2.1 |
0.4 |
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Foreign direct investment |
2.0 |
0.9 |
0.4 |
0.0 |
0.0 |
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Total public sector external debt |
7.9 |
5.8 |
3.6 |
3.3 |
3.1 |
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Memorandum items: |
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Nominal GDP (in millions of manat) |
198,371 |
219,848 |
240,363 |
251,884 |
268,110 |
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Nominal GDP (in millions of US$) |
56,677 |
62,814 |
68,675 |
71,967 |
76,603 |
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Sources: Turkmen authorities; and Fund staff estimates and projections. |
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1/ Staff uses its own GDP estimates given that the narrative underlying the official GDP growth estimates is hard to reconcile with other available data. In particular, official GDP growth is extremely stable, despite shocks, including the pandemic. |
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2/ Excluding receipts from government bond issuance and privatization proceeds. |
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3/ Includes domestic state government debt and external public and publicly guaranteed debt. |
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4/ Including credit to SOEs. |
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