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Annual Report 2001

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Turkmenistan

Economic performance

GDP in Turkmenistan grew by 20.5% during 2001. Growth continued to be dependent on the industry sector, with production growing by 26.4% over the same period. Gas and oil production increased by 8.0% and 11.0%, respectively. The Government’s import-substituting industrialization policies also appear to have been successful, with strong growth in the textile and food industries. In January–October 2001, cotton processing rose by 15.0%, food industry production by 35.0%, and agriculture sector production by 22.0%. With the introduction of relatively tighter monetary and fiscal policies, the Central Bank of Turkmenistan managed to hold inflation to an average of 7.4% in 2000. In 2001, inflation was reduced further to an average of 6.0%. Inflation partly remained low because of extensive subsidies on basic consumer goods and utilities. The state budget recorded a deficit of 1.2% of GDP for January–October 2001. Revenue was 5.37 trillion manat (M), 14.0% below the target for the period; and expenditures at M5.66 trillion were 15.0% lower than targeted. Of total expenditures, about 80.0% were directed toward social and public services. Although the budgetary position appears to be stable, many expenditures remained off-budget, and the official figures did not give a comprehensive picture of the Government’s overall financial position. Turkmenistan maintained a positive trade balance in 2001, with a trade surplus of $275 million. However, the trade surplus was down by 62.0%, compared with 2000. Import expenditure rose by 32.0% year-on-year (mostly due to a substantial increase in capital good imports) while exports registered a year-on-year rise of about 5%. The current account recorded a small surplus equivalent to about 0.1% of GDP in 2001.

ADB operations

Turkmenistan became ADB’s 59th member in August 2000. An economic report and interim operational strategy, which define ADB’s initial development cooperation activities in the country, have been prepared and are under government consideration.

Consistent with the Government’s long-term development objectives as described in its 2000–2010 Development Program and with ADB’s objective to reduce poverty, ADB’s strategy will include three main strategic objectives: enhancing human and social development, promoting sustainable economic growth, and promoting regional economic cooperation. Human and social development will focus on improving basic services, such as clean drinking water, sanitation, and heating, especially for the rural poor; and maintaining and upgrading the human resource base. Sustainable growth will include building capacity to improve public sector management; enhancing agriculture sector production; and improving environmental management, primarily in terms of water resource management to increase efficiency and improve maintenance of irrigation systems. Turkmenistan can play a key role in restoring security, stability, and economic growth in Central Asia, due to its unique geographic, cultural, and political relations with its neighbors. Several opportunities have been identified for ADB to support Turkmenistan’s involvement in reconstructing and rehabilitating Afghanistan.

Loans and technical assistance: No loans were approved in 2001. ADB approved one technical assistance grant in 2001 worth $150,000 for seminars on ADB operational policies and procedures.

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