Turkmenistan overview

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In Turkmenistan we focus on:

Supporting private sector development. Turkmenistan’s economy continues to be characterised by pervasive state intervention and state ownership. Although the number of private entrepreneurs and companies is growing, the private sector remains small and closely regulated by the state. In response to these broad reform challenges, during the next Strategy period the Bank will continue to focus its activities in Turkmenistan on supporting private sector development, both directly and indirectly via local partner banks. The EBRD will provide financing to privately-owned companies outside the oil and gas sectors, focusing on food processing and distribution, logistics, transport services, packaging, furniture, and hospitality. To support the development of effective and sustainable financial intermediation to the private sector, the EBRD will prioritise strengthening the financial sector to enable it to fund the economy by introducing market-oriented principles, and will launch a new banking framework agreement with existing and potentially new partner banks to channel funds to private sector MSME clients.

Promoting international integration. To support enhanced integration of Turkmenistan’s economy into the global economy, the EBRD will seek opportunities to attract much-needed FDI by investing alongside foreign strategic investors, and will promote cross-border trade through the Trade Facilitation Programme with eligible partner banks. The EBRD may consider supporting regional transport operations, particularly for projects with a sound business rationale and which are integrated into the CAREC transport corridors or the EU-TRACECA programme.

Laying the foundations for future reforms. In some sectors, particularly energy efficiency, power and municipal services, reforms have been insufficient to enable the EBRD to engage fully. The EBRD will therefore limit its activities in these areas to selective and targeted policy dialogue, as requested by the authorities, to promote the adoption of reforms leading to market-based solutions to the challenges in these sectors.

The EBRD’s latest Turkmenistan strategy was adopted on 10 July 2019

Current EBRD forecast for Turkmenistan Real GDP Growth in 2019 6.3%

Current EBRD forecast for Turkmenistan Real GDP Growth in 2020 6.0%

Officially reported GDP expanded by 6.3 per cent year on year in the first three quarters of 2019, following the 6.2 per cent growth reported in 2018. This was enabled by an acceleration of growth in industry (6.9 per cent versus 4.6 per cent a year earlier).

Exports are reported to have risen by 7.5 per cent year on year in the first three quarters of 2019, helped by a resumption of gas exports to Russia. Imports continued to contract (5 per cent year on year) in the same period due to import substitution policies and foreign currency restrictions. The parallel market exchange rate stayed at around 17 to 19 manat per US dollar in the first three quarters of 2019 (well above the official rate of 3.5 manat), with pressures easing since the beginning of the year. Inflation remains elevated due to high import prices and the termination of social transfers for electricity, gas and water in January 2019.

GDP growth is projected at 6.3 per cent in 2019, slightly decelerating to 6.0 per cent in 2020, but external imbalances are likely to continue in the absence of exchange rate adjustment. Turkmenistan is particularly vulnerable to any slowdown in China and Russia, effectively its only export markets.

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