IMF's Turkmenistan Report Too Positive
IMF's Turkmenistan Report Too Positive
Economists in Turkmenistan say a recent report from the International Monetary Fund, IMF, on the country’s present economic position and future prospects gave too upbeat an assessment and skated over important problems.
The report says that Turkmenistan's economy has proved resilient to global financial crisis, and new pipelines to China and Iran are likely to allow higher production of natural gas, demand for which had dipped on other markets.
At the same time, the report listed areas where improvements were needed – better management of public finances by selecting and monitoring of investment projects more carefully; phasing out the use of gas revenues for extra-budgetary projects; ensuring that government spending did not stimulate inflation; developing the financial sector; removing foreign currency restrictions; and promoting private sector development.
Local commentators say they generally agree with the IMF’s assessment and recommendations, but argue that its view of economic policy lets the government off too lightly.
One economist in the capital Ashgabat said the IMF recommendations were diplomatic, the idea being to encourage reforms. Unfortunately, the overall positive language was likely to be misread by the government, he said.
A lecturer at the Institute for International Relations said the IMF report omitted to deal with high unemployment, a major economic issue. There were no accurate employment figures, and no benefits for those without work.
A bank employee in the Caspian port city of Turkmenbashi said the IMF was right to suggest that oil and gas revenues should be more open to scrutiny, and their expenditure should be included in the government budget rather than taking place outside it as at present. He said this was likely to happen once new fiscal legislation and treasury reforms were in place.
Other financial management experts both inside and outside the country agreed that government spending practices were in need of improvement.
"It's time to take the management of public finances seriously," an economist at the finance ministry said. "We should be focusing on the quality and efficiency of spending, and giving priority to production and social infrastructure."
Other analysts noted that ending exchange rate restrictions, as recommended by the IMF, would require the authorities to break long-held bad habits.
Annadurdy Khajiev, a Turkmen economist based in from Bulgaria, said it was common for the government to pay for work on major construction projects in foreign currency. This not only contravened the country’s own laws, but put pressure on the national currency, the manat.
Khajiev believes the current fixed exchange rate needs to be changed to a more flexible model.
This article was produced as part of IWPR’s News Briefing Central Asia output, funded by the National Endowment for Democracy.
