Fixed currency rate in Turkmenistan reasonably sufficient - IMF

Business Materials 16 June 2017 21:10 (UTC +04:00)

Ashgabat, Turkmenistan, June 16

By Huseyn Hasanov– Trend:

At present, the fixed currency rate in Turkmenistan is reasonably sufficient, the country’s government said in a message with reference to the 2017 Consultation Press Release for Turkmenistan by the Executive Board of the International Monetary Fund (IMF).

The press release hasn’t been published on the IMF website yet.

In the midterm, the considerable flexibility of the rate in Turkmenistan could facilitate the adaptation to external shocks and changes in macroeconomic conditions and lay the foundation for upgrading the monetary policy, according to the press release.

The abolition of currency restrictions on ongoing international operations could enhance economic efficiency in the country, reads the message.

Executive directors of the IMF have positively evaluated the policies adopted by the Turkmen official authorities over the past two years to adjust to the unfavorable external conditions, particularly to the falling oil and gas prices.

Alongside with that, the directors have said that considerable external imbalances remain unchanged, having highlighted the need to additionally update the economic policy to reduce the current account deficit in parallel with the introduction of reforms aimed at encouraging steady, sustainable and all-round development.

The directors consider the current account deficit reduction to be a priority task in the short term. According to a shared opinion, a package of measures that includes cutting-back on state investments, reduced loan growth, easing of a currency exchange rate could contribute to modifying the policy.

The directors stressed the need to protect vulnerable strata of the Turkmen population, while going through the adjustment process.

The directors also highlighted that the low oil and gas prices prove the need for structural reforms to further economic diversification and the private sector growth.

They recommended improving the business and legislative environment in Turkmenistan, while advancing steadily on the road of reforms and privatization of state enterprises, cutting state investments, making them more efficient, and focusing close attention on social protection and developing human capital.

In general, they expressed belief that there is a need for Turkmenistan’s gradually diminished role in planning and coordinating economic activities. The directors expected that the planned comprehensive financial regulatory reform will bring Turkmenistan’s legislative system into conformity with the Basel Accords.

In the light of the high rates of loan growth and the practice when the state plays a leading role in directed lending of projects, the directors recognized the advisability of making the prudential regulation more rigorous, streamlining the selection of loan projects and raising awareness of currency risks, while improving corporate and bank risks management.

The directors recommended the official authorities of Turkmenistan to handle gaps in the data and to expand the country’s budgetary, financial and foreign economic statistics.

It could enable people concerned to understand better the macroeconomic trends and official bodies’ intentions for the policy, could stimulate foreign investments and provide easier access to the global financial markets, the Turkmen government noted in the message with reference to the IMF press release.