Turkmenistan needs improved competitiveness, currency convertibility — IMF

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ASHGABAT (TCA) — Reducing the footprint of the state and opening the economy to competition are important to promote economic efficiency and market development in Turkmenistan, an International Monetary Fund (IMF) mission said in a statement following its visit to Ashgabat earlier this month. The IMF mission assessed recent developments and discussed economic and financial policy priorities with senior Turkmen government officials, representatives of the business and financial sectors, and the diplomatic community.

Economic growth in Turkmenistan continues to be driven by both the hydrocarbon and nonhydrocarbon sectors, the statement said. “External balances remain in surplus, buoyed by exchange controls in line with import substitution and export promotion objectives. Under current policies, economic growth is expected to moderate over the medium term as hydrocarbon production stabilizes. Risks are tilted to the downside and include lower-than-expected hydrocarbon prices and returns on past investment, rising external financing costs, and geopolitical factors.

“Significant overvaluation and foreign currency rationing are among the factors that weigh on private investment and competitiveness of nonhydrocarbon exports. Achieving sustainable economic growth requires improving the competitiveness and convertibility of the manat. Adjustment should be carefully sequenced to ensure macro-financial stability and supported by measures to protect the vulnerable,” the statement said.

The IMF said that steps to improve the efficiency of public spending are needed to increase its impact while saving public financial resources. Higher, and better targeted, spending on health and education is crucial to foster human development and improve inclusiveness. Stronger economic policy frameworks and transparency would help ensure sound decision-making and improve access to financing.

Sergey Kwan

TCA