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Turkmenistan should closely monitor bank balance sheets for asset quality risks - IMF

Finance Materials 15 April 2021 11:33 (UTC +04:00)
Turkmenistan should closely monitor bank balance sheets for asset quality risks - IMF

BAKU, Azerbaijan, April 15

By Jeila Aliyeva - Trend:

Turkmen authorities are advised to closely monitor the banks’ balance sheets against risks to asset quality, International Monetary Fund (IMF) told Trend.

A gradual move toward a market-based system would improve the efficiency of financial intermediation, improve the private sector’s access to finance, and support the financial stability of Turkmenistan.

“Furthermore, in 2020, the authorities introduced a loan moratorium through which a sizable portion of the banks’ credit portfolio was restructured,” added IMF.

Thus the message said that Turkmenistan’s financial sector is dominated by state-owned banks, and directed lending at concessional terms is prominent.

As earlier Natalia Tamirisa, International Monetary Fund (IMF) Mission Chief for Turkmenistan told Trend, the prudential framework should be strengthened to preserve financial stability and integrity in Turkmenistan.

She added that to improve Turkmenistan’s financial sector, the authorities should be encouraged to prepare specific action plans to align prudential measures with Basel standards.

“Without such plans, continued regulatory forbearance would be detrimental to the health of the banking sector,” she added.

Tamirisa noted that based on the assessment of the soundness of the banking sector, a plan needs to be made for closing non-systemic insolvent state-owned banks and privatizing or recapitalizing other state-owned banks while improving bank corporate governance.

Continued upgrading of the skills of bank regulators and supervisors is of paramount importance in the context of prudential reforms, she noted.

Also, Tamirisa said how Turkmenistan might attract more foreign investments in its financial sector.

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Follow the author on Twitter: @JeilaAliyeva

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