ASHGABAT, Turkmenistan, Nov. 17
By Huseyn Hasanov– Trend:
Turkmenistan continues to pursue an investment-led growth strategy underpinned by import substitution and export promotion policies, directed concessional lending, and related broad exchange controls on international transactions and payments, Trend reports referring to the IMF report published following the November mission in Ashgabat.
Developing the private sector and diversifying the economy away from hydrocarbon exports requires stepping up reforms to ease administrative control, opening the economy to competition, and improving transparency.
Economic growth continues to be driven by both the hydrocarbon and nonhydrocarbon sectors. 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.
Reducing the footprint of the state and opening the economy to competition are important to promote economic efficiency and market development. Alongside, phasing out directed cheap credit would help steer financial resources to the most productive use and would help create a market-based, more efficient financial system. Prudential oversight should be strengthened in tandem to maintain financial
stability.
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.
The International Monetary Fund provides technical assistance to Turkmenistan. Turkmenistan occupies one of the key positions in the region in the supply of natural gas. Presently, the importers of the Turkmen gas are China and Russia.