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Turkmenistan: Former Official Accuses Government Of Hiding Economic Troubles

A former deputy prime minister and head of the central bank in Turkmenistan has charged that the government falsifies data to cover up an economic "collapse." The accusation echoes widespread skepticism about the country's economic reports, which have repeatedly painted a glowing picture of growth.

Boston, 22 February 2002 (RFE/RL) -- A high-level defector from Turkmenistan has charged the government with hiding the country's troubles behind false economic reports, lending weight to suspicions that have troubled analysts for years.

On 18 February, former Deputy Prime Minister Khudaiberdy Orazov said the government has been "manipulating statistical data" to "disguise the total collapse of the economy," the Interfax news agency reported.

Speaking in Moscow, Orazov called the condition of Turkmenistan's economy "critical," adding that he has joined the "open democratic opposition." President Saparmurat Niyazov fired Orazov from his post in January 2000, citing what he called "shortcomings in his work and personal immoderation."

Niyazov has also leveled accusations at other dismissed officials, including former Foreign Minister Boris Shikhmuradov and Nurmukhammed Khanamov, former ambassador to Turkey. Both are members of a growing opposition movement in Moscow, known as the People's Democratic Movement of Turkmenistan.

Niyazov has responded by seeking the extradition of the former officials on a variety of embezzlement and other charges, although none were filed before the defections. In an interview with AFP, Shikhmuradov charged that Niyazov has also cracked down inside Turkmenistan with a wave of arrests.

But Niyazov's conflict with Orazov on economic grounds dates back at least to May 1999, when the leader known as Turkmenbashi removed him as chairman of the State Bank of Turkmenistan, according to a report by the Economist Intelligence Unit in August 1999.

According to the EIU, Niyazov had been using the central bank to channel loans at giveaway rates to state-owned enterprises and printing worthless money to cover the practice. In 1995, for example, Niyazov reportedly capped interest rates for such loans at 15 percent per year when inflation was over 20 percent per month. By the end of 1996, inflation hit an annual rate of 446 percent.

After efforts to stabilize the economy, the central bank gained a measure of independence. In 1997, Orazov and his staff started pushing for an International Monetary Fund stabilization program, a move that created "a major rift" with Niyazov and led to his ouster at the central bank, the EIU said.

As with other recent defectors who have joined the opposition, Orazov may be dogged by questions about his decision to remain in a government that has been identified with repression for so long. But his economic statements may gain credence from the EIU report, which predated his dismissal from the government in January 2000.

Suspicions have surrounded Turkmenistan's economic reporting for years. Unlike other CIS nations, Turkmenistan has never had an IMF lending program, which could provide some level of auditing or verification of its claims. Ashgabat has also regularly refused to provide data to the CIS for its statistical reports. Instead, it has issued economic statements that often strain credulity.

In January, for example, Turkmenistan's National Institute for Government Statistics and Information announced that the country's gross domestic product grew by an astonishing 20.5 percent in 2001 to 31 trillion manat, or nearly $6 billion at the official rate.

But a year earlier, the government reported that GDP had risen by 17.6 percent to 22.9 trillion manat in 2000. It is hard to see how both figures could be true. An increase of 20.5 percent from the 2000 figure would have resulted in a GDP of 27.6 trillion manat last year, or 11 percent less than the government said.

A calculation of the growth that the government claimed in 2000, based on the 1999 official figures, suggests that the performance was inflated by over 12 percent in that year, as well.

There are also grounds for doubt about the rosy trade figures that Turkmenistan issued this week. According to the government statistics office, the country enjoyed a trade surplus of $271 million and a 16 percent increase in trade turnover to nearly $5 billion last year.

By its own reckoning, natural gas accounted for 57 percent of Turkmenistan's exports, while 46 percent of all exports were to Ukraine. But Ukraine pays for only half of its gas imports in cash, raising questions about whether the trade surplus has been measured in dollars or goods and services of vague value.

The country's gas figures are also hard to compute in terms of what is supposed to be record-breaking economic growth.

Last month, the government reported that state-owned Turkmengaz, which accounts for 85 percent of the country's vital gas production, had sales of 6.3 trillion manat last year. In other words, the company accounted for more than one-fifth of the total economy.

Gas extraction was supposed to be up 9 percent, and gas exports reportedly rose 11 percent. But sales at Turkmengaz were said to be down by 3 percent at a time when gas export tariffs rose. Where did the gas or the revenues go?

There may be explanations for the accounting, but in Turkmenistan's closed system there is no opportunity to provide them. Instead, Niyazov's solution has been to charge the doubters and dissenters with embezzlement.