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Turkmenistan: IMF Sees Progress Toward Market Economy

  • Naz Nazar

Prague, 21 January 1997 (RFE/RL) -- An International Monetary Fund (IMF) official says Turkmenistan has made progress towards a market economy in recent years but needs to continue pushing forward with economic reform.

The IMF mission chief for Turkmenistan, Emine Gurgen, told an RFE/RL correspondent that while there are still many obstacles to overcome, the long-term benefits of a market economy far outweigh the short-term difficulties.

She said that in order to attract the necessary foreign investment to develop its resources and to improve its standard of living, the country must demonstrate that it has an efficiently-operating economy.

Gurgen said that over the past year, the Turkmenistan government has shown an increasing awareness that reforms are needed.

"It's possible other countries have progressed faster, but you have to look at the circumstances of each country that allowed them to do so", she said. "I would say the trend is one of reform in Turkmenistan, and hopefully the pace can be accelerated".

The IMF, which has 181 member countries, has had a presence in the Central Asian republic since September 1992. Gurgen explained that its three initial goals have been to advise on the policy and institutional changes needed to swing from a centralized economy to a market economy, to provide technical advice on such matters as fiscal reform, and to train officials.

Progress has been made in many of the necessary areas, she said. She noted that among other things, Turkemistan has adopted international banking practice by creating a two-tier banking system comprising a central bank and a number of commerical banks. Inflation has been brought down from about 60 percent early last year to about 10 or 12 percent now.

Furthermore, with the help of the IMF, the taxation system has been improved. There had also been some liberalization of price controls. She noted also the government's ongoing efforts to stabilize the new national currency, the manat. Since its introduction in 1993, the manat has suffered from huge gaps between the official rate of exchange and the unofficial and black market rates.

Asked about her views of Turkmenistan's general economic health, Gurgen noted that 1996 saw an increase of gas production. But she said this had been more than offset by a sharp decline in agriculture, in poor cotton and grain harvests. And gross domestic product (GDP) declined by four percent last year. But at least underlying that was a favorable trend, in that the decline in production the preceding year had been some 10 percent, and in 1994 had been much greater still at 19 percent.

Gurgen says Turkmenistan is progressing and will continue to do so provided economic reforms are continually implemented.