Turkmenistan overview

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 7 May 2014

Current EBRD forecast for Turkmenistan Real GDP Growth in 2018 6.2%

Current EBRD forecast for Turkmenistan Real GDP Growth in 2019 5.6%

In Turkmenistan, officially reported GDP grew 6.5 per cent in 2017 and 6.2 per cent year-on-year in the first three quarters of 2018. While exports rose in the first half of 2018 by 43.4 per cent year-on-year, they still remain well below their peak levels in 2014. Import substitution policies and foreign exchange rationing led to a reduction of imports by 43.5 per cent in the same period. Fixed investment continued to decline in 2018 after falling by 8.8 per cent in 2017, from high levels related to ambitious government projects though.

The current account deficit is projected to narrow from IMF estimated 11.5 per cent of GDP in 2017, but has remained sizable, resulting in continued foreign exchange pressures. The parallel market exchange rate rose to 16-17 manats per US dollar in September 2018 versus the official peg of 3.5 manats to the US dollar. Barring major structural reforms, economic growth is forecasted at 6.2 per cent in 2018 and will likely slow to 5.6 per cent in 2019 reflecting persistent macroeconomic imbalances. Contributions to GDP growth from public spending will be limited in light of the fiscal consolidation efforts. Growth may be also dragged down by a further contraction of domestic consumption and the scarcity of foreign exchange that makes it difficult to conduct business.