Bank cash crunch sees Turkmenistan restrict withdrawals

By bne IntelliNews September 3, 2013

bne -

Turkmenistan has introduced new restrictions limiting the amount of cash businesses can withdraw in an attempt to tackle a growing cash shortage.

Entrepreneurs can withdraw no more than TMT8,800 ($3,090) each month from their bank accounts, a restriction that came into force on August 26. The new rules have been introduced in response to a cash shortage at Turkmen banks, and a reported shortfall in the 2013 budget.

According to the opposition Chronicles of Turkmenistan website, the restrictions have already sparked an upturn in corruption. The website quotes a market trader as saying that, "To obtain cash in larger amounts, one has to grease the palm of a bank employee."

Ashgabat has also introduced compulsory retirement contribution payments for self-employed entrepreneurs of TMT188.6 ($65) a month. Several entrepreneurs have already been prosecuted for attempting to avoid the charge.

Tentative moves towards opening the economy have been made since President Gurbanguly Berdymukhamedov came to power in 2007. However, authoritarian Turkmenistan remains largely isolated from the international economy, and with a high state presence in the domestic economy.

In the financial sector, Ashgabat adopted new legislation on banking and microfinance in 2011, as well as launching a mid-term banking sector development programme for 2010-2013. According to the European Bank for Reconstruction and Development, the Turkmen government is planning to privatise state owned banks between 2016 and 2020.

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