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Turkmenistan’s economy continues to adjust to a challenging external environment, says the International Monetary Fund (IMF).

An International Monetary Fund (IMF) team led by Martin Sommer visited Ashgabat during March 6-17, to hold discussions for the 2017 Article IV consultation, said IMF in a message posted on its website.

During the visit, the team held meetings to assess macroeconomic and financial developments and discuss economic challenges and policy priorities with senior government officials, members of the Parliament, representatives of real and financial sectors, academics, and the diplomatic community.

“The Turkmen economy continues to adjust to a challenging external environment, including persistently low natural gas prices and slower growth in trading partners,” said Sommer in his statement issued after the Ashgabat visit. “Growth has been broadly stable recently, supported by natural gas exports and industrial policies.”

“The authorities have been adjusting their strategy to the new reality of lower hydrocarbon prices. In the near term, the key policy challenge is to re-calibrate the policy mix to reduce the sizable external imbalances,” added Sommer.

“Options include gradual but significant cuts in public investment expenditures that remain among the highest in the world, combined with other policy measures which would help adjust domestic demand to a more sustainable level. The pace and composition of policy adjustment should be designed to reduce the adverse impact on economic growth and vulnerable segments of the population.”

“In this challenging external environment, maintaining strong, sustainable, and inclusive growth will require improvements in the business and regulatory environment to support further private sector development, effective implementation of reforms of state-owned enterprises and privatization, greater efficiency of public spending, and continued focus on social protection and human development outcomes,” noted Sommer. “The authorities are aware of these priorities, and plan to embed them in the upcoming 7-year development plan for 2017-23.”

“Broader dissemination and improving the quality of macroeconomic and financial data would help enhance understanding of economic trends, attract foreign direct investment, and ease access to the global financial markets,” according to the statement.

Sommer said the IMF stands ready to support the government’s reforms through policy advice and capacity building, including on macroeconomic statistics and forecasting, monetary policy operations, and fiscal policy.

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