Finance / Small and medium enterprise finance and leasing

During 2000-2015 Turkmenistan experienced very high growth in gross domestic product (GDP)annual average of 8.5%, benefitting from high prices for oil and natural gas and strong hydrocarbon revenues. Per capita gross national income grew more than ten times reaching $7,510 in 2015 (Atlas Method). During 20052012 investment reached an average of 36.4% of GDP and was mainly funded by the government; while private investment was only 15.2% of GDP. Turkmenistan's economy remains vulnerable to external shocks due to its limited economic diversification and high reliance on hydrocarbon revenues, which in 2015 represented 91.4% of total exports. Turkmenistan non-hydrocarbon exports include cotton (5.2%), sulphur (0.9%), plastics (0.9%), and linen products (0.4%). The external shocks arising from the strong decline of hydrocarbon prices observed since mid2014 and the slowdown in demand by Turkmenistan's major trading partners have placed pressures on its current account and reserves. On 1 January 2015, the Central Bank of Turkmenistan (CBT) devalued the Turkmen manat by 18.6%. Since 2015, the CBT has tightened capital controls and importers' access to foreign currency; reserves have reduced from 30 months of import cover in October 2015 to 24 months of import cover in April 2016. Turkmenistan is in an early stage of transformation from a centrally planned to a market economy. State-owned enterprises (SOEs) still dominate most economic sectors. But private businesses have grown substantially in the last few years, increasing competition in many sectors. Businesses in tradable sectors in Turkmenistan have the potential to be cost competitive if they are able to access low-priced public resourcesparticularly land, energy, and capital. SMEs also have limited access to sustainable long-term finance (para. 5) and since the devaluation of Manat in early 2015 access to foreign currency for critical imports has been increasingly constrained. In 2015 bank loans were estimated at 35% of GDP, which is in line with the profile of the banking systems in the region but substantially below that of more advanced transition economies in Eastern Europe. Banks' capital stood at 8.2% of bank assets and overdue loans were reportedly at 0.9% of total loans. Credit to the private sector has been growing slowly (4.0% of GDP in 2015 from 2.4% of GDP in 2010). An estimated 86.1% of bank credit goes to SOEs. The banks' lending model is predominantly based on relationships and collateral, and not on relevant business cash flows. Government-funded programs provide loans to businesses in selected sectors of the economyparticularly businesses oriented to exports and import substitutionat highly subsidized interest rates.

Increase private ownership (National Program for Social and Economic Development of Turkmenistan 20112030)

Economic diversification (National Program for Social and Economic Development of Turkmenistan 20112030)

Private businesses have increased availability of financial services

Financing for private businesses provided through PFIs

Training provided to staff of CBT and PFIs