Expectations for persistently lower oil and natural gas prices imply the need for Turkmen authorities to introduce additional policy adjustment, including further efforts to reduce the external deficits, the International Monetary Fund (IMF) said on December 6 following a visit to Ashgabat.
Turkmenistan’s economic growth has slowed down due to adverse external factors such as low hydrocarbon prices and muted growth in major trading partners. As a result of the lower energy revenues, the country's current account deficit is expected to widen significantly in 2016, the IMF suggests. The country’s woes continue despite the authorities active efforts to address the issues by devaluing the manat in January 2015, cutting investment spending and subsidies, and re-doubling their efforts to boost local production.
As such, IMF urges government to “further efforts to reduce the external deficits through a combination of policies that lower aggregate demand”, as well as increase “the efficiency of public spending, further improvements in banking regulation and supervision to prevent the build-up of risks, and [take] additional steps to move to a more market-based real economy and financial sector”.
“The authorities’ intention to accelerate development of the private sector is appropriate and should be based on market-based principles as much as possible, so as to support growth and living standards in a sustainable manner,” the fund added.
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