IMF mission visits Turkmenistan, assesses country’s macroeconomic developments

ASHGABAT (TCA) — An International Monetary Fund (IMF) mission led by Ms. Natalia Tamirisa visited Ashgabat during October 1-5 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 in Turkmenistan.

“Official indicators of economic growth [in Turkmenistan] remain broadly stable,” Ms. Tamirisa said in a statement issued at the end of the visit. “The composition of growth appears to have 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.

“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 options for how to achieve these goals need to be chosen so as to mitigate any adverse short-term impact on growth while protecting the vulnerable through well-targeted social support.

“Going forward, 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 also help save public resources and encourage more efficient use of energy and water. However, the social impact of these reforms 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 in this regard, 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,” the statement concludes.