TURKMENISTAN - The Economic Base.
In 1997, Turkmenistan suffered a 25.9% drop in its real GDP as Russia closed off its gas pipeline network, Turkmenistan's sole gas export option at the time. Since the resolution of the dispute with Russia, Turkmenistan's gas exports have increased dramatically, spurring the country's economy to five straight years of double-digit real GDP growth.
The GDP in 2003 rose 23.1% from 2002. On Dec. 30, 2003, President Niyazov at a cabinet meeting said: "We increased the GDP to 82 trillion manta". (The official exchange rate on Dec. 30 was 5,200 manat to the US dollar). He said "The annual economic growth in Turkmenistan has not been lower than 20% since 2000. Growth in industry in 2003 amounted to 12.2%, in agriculture - 11.8%, construction - 11.7%, transport and communications - 11.6%, trade - 13.5% and services - 13.1%".
Niyazov said that, while capital investment in the economy in 2002 amounted to 12.5 trillion manat, in 2003 this investment amounted to 16 trillion manat. Niyazov is particularly keen on himself making the announcements when economic performance figures are impressive.
The GDP expanded 20.1% year-on-year in the first quarter of this year to around 18 trillion manat, according to the National Statistics Institute (The official exchange rate on April 9 was 5,200 manat/US$1.
The state budget for 2004, approved by Niyazov in January, is balanced. It has put revenue and spending at 63.44 trillion manat, including "first level budget" revenue and spending of 13.79 trillion manat. The two-level budget includes tax revenue and public sector spending in the first and the revenue and spending of industrial complexes and state fund sectors in the second. Under a related law issued by Niyazov, spending was to be financed partly through interest-free loans from the Central Bank of up to 5% of "first level" budget spending. (The official exchange rate on Jan. 5 stood at 5,200 manat/US$1).
A session of the Turkmen cabinet under the chairmanship of Niyazov held on Aug. 26 discussed the 2005 budget. The presidential press office said Niyazov "noted its [the 2005 budget] decisive role in Turkmenistan's further economic growth and the exploitation of its gigantic potential, which is serving the interests of the Turkmen people".
Niyazov noted that the pace of the country's economic growth has to increase by no less than 20% by 2005. In 2005, the same announcement said, theaters will be constructed in all five regions of the country. In addition, four water purifying facilities will be built in the Dashoguzsky region, the northernmost and the most ecologically disadvantaged region, Niyazov said.
Turkmenistan's industrial output increased by 22% in 2003, according to the National Institute of State Statistics and Information, quoting an adjusted figure on Jan. 13.
Industry accounted for 38.5% of the GDP, agriculture 18%, construction 8.1%, social services 13.8%, trade 5.8% and transport and communications 5%. In general, manufacturing fell and the services sector increased as a share of GDP. In 2002, Turkmenistan's industrial output grew 21.7% and the GDP was up 21.2% to 63.8 trillion manat.
In the first half of 2004, the volume of industrial output in Turkmenistan increased 22% year-on-year to 15.9 trillion manat (5,200 manat/$1). The processing and pulp and paper industries posted the most growth (170%), followed by light industry (43%) and the plastics industry (35%).
Turkmenistan has had trade surpluses since 2000. The trade surplus in 2003 increased by 52% from $736m in 2002 to $1.12 bn, according to the National Institute for State Statistics and Information. The country's foreign trade last year increased 23.5% to $6.144 bn. Exports amounted to $3.632 bn, with imports of $2.512 bn.
Trade with the CIS increased 29% to $2.9 bn in 2003. The surplus in trade with the CIS amounted to $324m. Trade with countries outside the CIS increased 19% to $3.2 bn, with a surplus of $686m.
Turkmenistan traded with 85 countries around the world in 2003. The statistics show that share of countries outside the CIS in the republic's exports increased from 48% in 2002 to 54% in 2003 and the share of the CIS in imports increased from 36% to 49%.
Despite the boom, however, President Niyazov is not really popular as he does not favour political or economic reform and is opposed to privatisation of the oil and gas industry until at least 2015. His erratic behaviour has angered Western aid donors and caused major oil companies to abandon Afghanistan.
In April 2000 the European Bank for Reconstruction and Development (EBRD), the multilateral project financier for the former Soviet bloc, suspended public sector loans to Turkmenistan in protest at Niyazov's anti-democracy policies. The move increased the international political and economic pressures on Niyazov.
The EBRD acted after Niyazov refused to meet its delegation, headed by the bank's first vice president Charles Frank. Frank later said Turkmenistan's foreign exchange and trade regimes were highly distorted, its economic reforms very hesitant and there was no progress towards a democratic political system.
It was the first time the EBRD took such a tough action against any of its 26 aid recipients since 1991, when it briefly stopped public sector loans to Russia following a coup against Mikhail Gorbachev.
A partial exception is Belarus, where the bank in practice has no public sector programme, although it has never taken a formal decision to avoid such lending (see the background in Vol. 59, DT No. 15).
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|Publication:||APS Review Downstream Trends|
|Date:||Sep 20, 2004|
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