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Turkmenistan needs to ease foreign exchange regulations on imports and other current international payments, according to the press release of the International Monetary Fund (IMF) following the visit of the IMF mission to Ashgabat during February- March, 2018.

“The pace and composition of policy adjustment should be designed to reduce the adverse impact on economic growth and vulnerable segments of the population,” the IMF said.

“In the IMF staff’s view, the main near-term policy challenge remains taking action to reduce external imbalances,” the press release noted. “The recent reduction in public investments as a share of the economy is welcomed. However, given the size of the external deficit, additional measures should be considered, including exchange rate correction and further fiscal and monetary tightening.”

Real sector reforms should focus on significantly simplifying administrative procedures and regulations, accelerating reforms and privatization of the state-owned enterprises, and attracting foreign direct investment, according to the IMF.

“The simplified framework for the free economic zones holds the promise of attracting new private investments, including from abroad, and any positive lessons should be applied across Turkmenistan more broadly,” said the press release.

Fiscal deficit reduction should be supported by continued streamlining of public investments, greater spending efficiency, and further subsidy reforms, while protecting the vulnerable, the IMF noted.

It is recommended that the Central Bank of Turkmenistan reorients its participation in the government securities market from the primary auctions to secondary markets, while supporting monetary stability, according to the IMF.

Moving away from directed lending, broader use of risk-based loan pricing, and a stronger framework for financial regulation would help maintain financial stability over the medium term, the IMF said.

Turkmenistan seeks a gradual transition to a market economy, which is reflected in the Constitution. Presently, a relevant regulatory and legal framework is being created, while the commodity and raw materials exchange and the labor exchange are formed, and conditions are created for free wholesale trade.

The goals were set for creation of a commodity market, a stock market, a securities market, information, advisory and audit centers in the country.

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