IMF monitors development of private business in Turkmenistan

Business Materials 5 October 2018 15:00 (UTC +04:00)

Ashgabat, Turkmenistan, Oct. 5

By Huseyn Hasanov – Trend:

A delegation of the International Monetary Fund (IMF) has held a meeting in Ashgabat with the leadership of the Union of Industrialists and Entrepreneurs of Turkmenistan (UIET), the UIET said in a statement.

Particular emphasis was placed on international contacts of the Union, the development of import-substituting and export-oriented production facilities, the establishment of foreign trade missions and joint ventures, the message says.

As it was noted, for these purposes, the measures are being taken for introduction of know-how, the financial and banking and monetary systems are being improved, and the cooperation with international financial structures is being expanded.

The representatives of the IMF, having shown great interest in the activities of the UIET, gave high appraisal to the achievements of the non-state sector of the Turkmen economy, the message says.

It was noted that at present, the experts of the organization are preparing a report on the macroeconomic indicators of the development of the Turkmen economy. The IMF is ready to support reforms in Turkmenistan based on recommendations on economic strategy and capacity development issues, in particular in the areas of statistics and forecasting, monetary and credit operations and tax and budgetary policy, the UIET noted.

Turkmenistan occupies one of the key positions in the region for the supply of natural gas - China and Iran are importers. At the same time, Russia, the traditional buyer, stopped buying Turkmen gas in 2016.

Meanwhile, Turkmen entrepreneurs began to experience difficulties due to currency conversion restrictions. In March 2018, the IMF recommended that the government of Turkmenistan "loosen foreign exchange controls on imports and other current international payments."

The IMF staff believes, given the size of the external deficit, the need to take additional measures, in particular regarding the adjustment of the exchange rate and further tightening of tax and budgetary and monetary and credit policy, should be considered. The IMF stressed that the reforms in the real sector should focus on substantial simplification of administrative procedures and rules, acceleration of reforms and privatization of state enterprises, as well as attraction of direct foreign investment.

"The simplified basis for the functioning of free economic zones will potentially help attract new private investments, including foreign ones, and the resulting positive experience can be more widely spread throughout Turkmenistan," the IMF noted.

Turkmenistan has set a course for a gradual transition to a market economy, which is reflected in the Constitution.

To date, a number of activities have been carried out: the denomination of the national currency; in 2014, the country’s switch-over to international accounting standards. At the beginning of 2015, the Central Bank of Turkmenistan set the official exchange rate of the national currency at 3.50 manats per $ 1, which still remains.

To date, a legal and regulatory framework is being created, a commodity and raw materials exchange, a currency exchange, a labor exchange have been established, and the conditions for free wholesale trade are being created. The objectives for the creation in the country of other institutions of the market infrastructure as well, including commodity market, stock market, securities market, information, advisory and audit centers have been determined.