In the challenging external environment, maintaining strong, sustainable, and inclusive growth for Turkmenistan will require improvements in the business and regulatory environment to support further private sector development, the IMF (International Monetary Fund) mission said in a message following the visit to Ashgabat.
Effective implementation of reforms of state-owned enterprises and privatization, greater efficiency of public spending, and continued focus on social protection and human development outcomes will be also required for Turkmenistan, according to the message.
“The authorities are aware of these priorities, and plan to embed them in the upcoming 7-year development plan for 2017-2023,” said the message.
The IMF team led by Martin Sommer visited Ashgabat on March 6-17, to hold discussions for the 2017 Article IV consultation.
During the visit, the team held meetings to assess macroeconomic and financial developments and discuss economic challenges and policy priorities with senior government officials, members of the Turkmen parliament, representatives of real and financial sectors, academics, and the diplomatic community of the country.
“The Turkmen economy continues to adjust to a challenging external environment, including persistently low natural gas prices and slower growth in trading partners,” Sommer said at the end of the visit. “Growth has been broadly stable recently, supported by natural gas exports and industrial policies. However, the external current account deficit remains.”
The authorities have been adjusting their strategy to the new reality of lower hydrocarbon prices, according to the IMF mission.
“In the near term, the key policy challenge is to re-calibrate the policy mix to reduce the sizable external imbalances,” said the message. “Options include gradual but significant cuts in public investment expenditures that remain among the highest in the world, combined with other policy measures which would help adjust domestic demand to a more sustainable level. The pace and composition of policy adjustment should be designed to reduce the adverse impact on economic growth and vulnerable segments of the population.”
“Broader dissemination and improving the 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,” reads the message.
“The IMF stands ready to support the government’s reforms through policy advice and capacity building, including on macroeconomic statistics and forecasting, monetary policy operations, and fiscal policy,” the message said.
Turkmenistan ranks fourth in the world in terms of the volume of natural gas reserves, according to BP. Currently, the country is able to export natural gas to China and Iran with the possibility of increasing the supply volume. This is while Russia has suspended the purchase of Turkmen gas. (Trend/Business World Magazine)