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Turkmenistan

Author(s):
International Monetary Fund
Published Date:
April 1995
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I. Introduction

Turkmenistan, a country of 4 million in the southernmost part of the former Soviet Union, is well endowed with natural mineral resources, primarily natural gas and oil. It is also a major producer and exporter of cotton. Prior to independence in 1991, Turkmenistan’s development was integrated with the economic goals of the Soviet Union, which emphasized specialization. Within that framework, Turkmenistan’s role was to supply energy and raw materials to other Soviet republics, with which it conducted 95 percent of its external trade. The trade flows reflected a narrow band of exports and a wide spectrum of imports. As a result, Turkmenistan developed a more trade-dependent economy than most other FSU countries.

The legacy of the Soviet era became evident in late 1993 when an earlier improvement in the country’s energy terms of trade was seriously eroded by the inability of some FSU countries to pay for their gas imports from Turkmenistan. This situation led to an increasingly acute problem of external arrears, which has dominated decision making and profoundly impacted economic developments in the country since the introduction of the national currency, the manat, in November 1993. This external constraint has substantially slowed the pace of systemic reforms and the adoption of market principles in economic policymaking.

A key policy aim has been to safeguard foreign exchange reserves, as a precautionary measure against future payment problems. The authorities’ approach, although successful, has been brought about mainly through controls and centralization. A heavy compression of imports has been achieved through restrictions on access to foreign exchange, while keeping the official exchange rate at a highly appreciated level. At the same time, the authorities have relied almost exclusively on short-term external debt to finance the widening current account cash deficit.

This approach has been necessitated by inadequate domestic macroeconomic policy adjustment. With the exception of strenuous, and largely successful, efforts to reduce budgetary spending in the face of sharply declining revenues, other policies have not been adequately supportive of the fiscal strategy. In particular, credit policy has been too expansionary—especially in regard to the agricultural sector—and state enterprises have not yet faced a hard budget constraint. In general, the authorities have followed a cautious approach in the modernization of the economy and in the move toward a market economy.

While Turkmenistan has been spared the ethnic tensions that have characterized some of the other FSU countries, its measured pace of reform has not been without costs: inflation averaged over 3,000 percent in 1993 and over 2,000 percent in 1994; the decline in GDP accelerated to 10 percent in 1993; the external debt has risen sharply in the past year; an overvalued exchange rate has led to hoarding and smuggling; and the lack of systemic reforms has created strong disincentives for the development of a private sector.

Over the medium-term, the path towards sustainable growth clearly includes the development of alternative routes for the shipment of gas outside the territory of the FSU, which will require expensive capital projects and the ability of the economy to generate resources for their financing. In the meantime, the authorities have shown willingness to participate in international efforts to support the adjustment programs of other FSU countries and to assist them in overcoming their current payments difficulties. The emphasis in this paper is on developments since November 1993, when the manat was introduced as the national currency. Developments in the real sector and systemic reforms are discussed in Chapter II. Fiscal policies, monetary and credit policies, external developments and the exchange and trade system are discussed in Chapters III-VI. A Statistical appendix and other appendices are also attached.

II. The Real Economy and Systemic Reforms

One legacy of Soviet-era planning is the highly specialized nature of Turkmenistan’s economy. Gas production alone accounts for nearly 60 percent of GDP. Three-quarters of gas produced is exported to other FSU countries and the remainder is used for local industry and household consumption. Economic performance during 1993 and 1994 was dominated by the effects of the accumulation of arrears on payments for gas by some FSU countries, which nullified the favorable terms-of-trade effect of the move to world energy prices within the FSU. Cotton is also an important commodity as 95 percent of production is exported outside the FSU thus avoiding payment difficulties.

1. Output and growth

The importance of energy exports to the Turkmen economy helped ameliorate the initial effects of the breakup of the U.S.S.R., as prices moved toward world market levels. The output decline of 4.7 percent recorded in 1991 was primarily due to a poor cotton harvest, with industrial output supported by the completion of the Chernev oil refinery and construction activity expanding.

The emergence of arrears on natural gas payments by other FSU countries led to reduction in industrial production of 16.3 percent in 1992, a further 12 percent in 1993, and by an estimated 28.7 percent in 1994. Poor harvests in 1992 and 1993 also led to declines in agricultural output. The total drop in GDP in 1992 was 5.3 percent, whereas the decline that occurred during 1993 created by the fall in gas output was mitigated by the construction boom and is estimated to have been 10.2 percent (Chart 1).

Chart 1Turkmenistan: Real Sector Indicators, 1991-94

Source: Data provided by the authorities; and staff estimates.

1/ Nominal wages deflated by consumer prices.

Although weather conditions in 1994 permitted a good harvest of fruit and vegetables, cotton production is estimated to have fallen slightly, and real growth in agriculture in 1994 was thus negligible. Construction activity in 1994 also appears to have fallen slightly after a very high growth in 1992 and 1993. Transport has declined significantly, as sharply higher real tariffs took effect, but other activity is estimated to have risen particularly in the service sector.

As construction cooled off, agriculture remained steady, and gas output continued to fall, the decline in output is estimated to have accelerated to 19.5 percent in 1994.

2. Sectoral developments

a. Energy and industry

The substantial rise in producer prices of energy that has occurred since the breakup of the U.S.S.R. has been reflected in an increase in the measured importance of the energy sector in the overall economy and export performance. Current estimates suggest that the gas industry accounts for around 60 percent of total GDP (Table 1). Employment associated with the production of gas, however, accounts for only 2 percent of total employment or 18 percent of employment in all industries (Tables 30 and 31). Turkmenistan has chiefly sought new investment in its energy industries by way of intergovernmental deals, as private foreign investors have been less forthcoming.

Table 1.Turkmenistan: Structure of National Income Produced and Utilized, 1988-94 1/(In percent of NIP)
1988198919901991199219931994
Jan. -JuneJan. -Sept.
ActualPrelim.
National Income Produced 2/100.0100.0100.0100.0100.0100.0100.0100.0
Agriculture39.043.447.946.216.312.23.624.2
Industry 3/26.122.815.720.465.162.454.240.7
Construction20.518.117.918.19.014.318.126.2
Transport and communications6.36.48.56.63.94.616.53.0
Other 4/8.19.410.18.75.76.57.65.9
National Income Utilized 5/100.0100.0100.0100.0100.0100.0
Consumption76.381.181.158.216.216.7
Personal66.871.070.751.810.911.8
Social9.510.110.46.4534.9
Accumulation25.728.222.354.442.5
Trade balance‒6.0‒14.0‒9.5‒22.6
Exports of goods55.855.149.641.5
Imports of goods61.969.059.264.2
Losses 6/3.34.14.510.01.6
Other 7/0.70.61.639.7
Source: Data provided by the Turkmen authorities.

Data for 1992,1993 and 1994 are incomplete, because they do not include the trade balance.

Also known as net material product.

Understates value-added by the natural gas sector until 1992

Includes trade and distribution, other branches, and until 1992, special earnings of foreign trade.

Turkmen authorities do not routinely calculate total national income utilized, due to problems with obtaining information on the trade balance.

Includes outright loss of livestock, losses on unfinished construction projects and losses due to total brakdown or physical loss of any asset; it does not include depreciation.

Calculated as a residual from national income produced.

Source: Data provided by the Turkmen authorities.

Data for 1992,1993 and 1994 are incomplete, because they do not include the trade balance.

Also known as net material product.

Understates value-added by the natural gas sector until 1992

Includes trade and distribution, other branches, and until 1992, special earnings of foreign trade.

Turkmen authorities do not routinely calculate total national income utilized, due to problems with obtaining information on the trade balance.

Includes outright loss of livestock, losses on unfinished construction projects and losses due to total brakdown or physical loss of any asset; it does not include depreciation.

Calculated as a residual from national income produced.

(i) Gas

In June 1994 an agreement was reached in principle on the construction of a 1,470 km gas pipeline from Turkmenistan through Iran to Turkey and Western Europe. This pipeline is intended to be capable of providing transportation for up to 15 billion m^ of gas per year after a four-and-a-half year construction phase, and to reduce the dependence on Russia and other FSU countries for export revenues. Clarification of Russia’s role in this project is being sought in order to secure private foreign investment. Initially, only 5 billion m3 will be sold, all of which is to be purchased by Turkey. The rest of the capacity is to be used to supply Western Europe when subsequent stages of the pipeline are completed.

(ii) Oil

Turkmenistan currently produces 5.2 million tons of oil per annum, and has two oil refineries to meet both domestic demand and annual average exports of 1.2 million tons. Proven extractable reserves total 698 million tons. 1/ In 1992 Iran signed contracts to assist in the construction of an oil refinery in Turkmenbashi (formerly Krasnovodsk). Plans also exist for development of offshore deposits in the Caspian Sea.

b. Agriculture

The agricultural sector accounted for 43.7 percent of total employment and for 12.2 percent of GDP in 1993 (Tables 1 and 30). 1/ Most agricultural output is driven by state orders and trade takes place at state determined procurement prices. Production and distribution of most agricultural products are still tightly controlled by the state. A portion of each year’s planned output is due to the state as payment for the use of land, the remaining planned output must be sold at state procurement prices, and only output exceeding the planned level may be directly sold by the producer.

Two main thrusts of policy are evident in agricultural production. The authorities are keen to diversify away from cotton monoculture and to increase Turkmenistan’s degree of self-sufficiency in wheat production. Additionally, attempts have been made to encourage a greater degree of downstream-processing within the food industry through the promotion of foreign investment. However, problems with the legal framework have discouraged many foreign companies from participating fully in tendering processes on recent reconstructions of flour mills, dairies and meat processors.

(i) Cotton

Although Turkmenistan is implementing a program of diversification, nearly half of all agricultural production is accounted for by cotton. 2/ The concentration of agricultural output on cotton was a result of Soviet planning and extensive irrigation provided free of charge to producers.

Until the summer of 1994, the Commercial Center in the Ministry of Agriculture was the primary exporter of cotton from Turkmenistan, but other enterprises could obtain an export license from the Presidential Commission for International Economic Affairs. All cotton sales must now be registered with the newly formed State Commodity Exchange (SCE). Any sales made in foreign currencies are arranged through the Central Bank of Turkmenistan (CBT); the foreign currency is deposited by the purchaser with the CBT, and the CBT pays the Ministry of Agriculture the manat equivalent at the commercial exchange rate. In the fourth quarter of 1994, the price to purchasers was around US$1,400 per ton. Goskomstat estimates suggest that over 90 percent of 1994 cotton exports, in volume terms, are destined for non-FSU countries, up from around 80 percent in 1993.

Although procurement prices for cotton differ greatly from the manat price received by the Ministry of Agriculture, not all of the difference is available to the Ministry for cross subsidization. In addition to provision of free inputs into cotton production, the Ministry also provides basic processing of the cotton after procurement, thus absorbing much of the difference in prices. Sales of cotton are, nonetheless, an important source of revenue for subsidization of agricultural consumer goods.

Cotton receives basic processing at local plants, but until 1993 only 5 percent of cotton received further processing. The opening of new mills in 1994 was estimated to have increased the amount processed to nearly 15 percent, and the authorities expect to see a further rise to 30 percent of total cotton production in 1995.

c. Construction, transportation and other services

Construction activity was strong as the new international air terminal in Ashgabat was completed in late 1994, and a new rail connection between Mashkhad in Iran to Sarakh’s in Turkmenistan was in progress during 1994.

The tight integration of the Soviet Union led to a transportation system geared toward links with Russia and other FSU states. Railway and highway construction in Turkmenistan is thus important not simply for replacing Soviet-built infrastructure, but also to facilitate the refocusing of Turkmenistan toward non-FSU countries, and Iran has agreed to assist in financing such improvements.

The service sector caters almost exclusively for industrial clients, with consumer services remaining very limited.

3. Aggregate demand

Disaggregation of national expenditure is highly imprecise due to methodological flaws in the procedures used by Goskomstat. Goskomstat estimates investment exceeded 50 percent of National Income Produced (NIP) since 1991, but much of what Goskomstat includes under investment is purely revaluation due to asset price inflation (Appendix I).1/

More than half of total true investment in 1993 was undertaken through the central government budget, with an additional 45 percent undertaken by state enterprises and collective farms.

4. Retail and wholesale prices and price controls

Prices of a large number of goods are either directly controlled by the authorities, or are subject to review based on markups over cost and the “current economic situation.” Reform has been piecemeal, and the continuation of the subsidization of staple items in a highly inflationary environment has created severe price distortions.

a. Price controls

Until 1992, all price and quantity decisions were taken at the producer level through a system of state orders (Goszakaz). Reforms since then have allowed around half of all retail sales to be transacted at flexible prices. 1/ Such a description may, however, overstate the relative importance of flexible-priced goods by focusing on the value of sales rather than the value of production. 2/

Goods sold in Turkmenistan now fall into four categories:

(i) Necessities

There are 24 products, primarily foodstuffs (bread, flour, dairy products and sugar) and utilities (gas and water to households), which have their prices set by Presidential Decree.

(ii) Goods under Presidential review

There are 40 items, including additional foodstuffs, petroleum products sold to households and intercity transportation, the prices of which can be altered only after a request has been presented to the President. The mechanism usually takes the form of the relevant ministry providing details of cost changes to the President.

(iii) Other consumer goods

There are 473 items, including higher quality foodstuffs, cotton fabrics and knitwear, the prices of which cannot be altered without agreement by the Ministry of Economy and Finance. An agreement must be reached with the Committee for Price Formation, which was previously known as the Anti-Monopoly Committee, and is chaired by the Minister of Economy and Finance. These goods are effectively priced at cost plus variable mark-up, where the mark-up is determined by current social and economic conditions.

(iv) Other goods

There are around 5,000 products, including televisions, refrigerators, carpets, cables and furniture produced domestically, in FSU countries and in non-FSU countries, the prices of which are freely determined by the relevant enterprises.

The imposition of fixed prices on necessities is based on the Presidential Decrees of October and November 1993. The identity of the goods concerned has not since been altered, but retail and procurement prices were raised by Presidential decrees in March and May 1994.

b. Retail prices in 1993 and 1994

Two spikes in inflation are evident in 1993. Prices increased by 141 percent in February (218 percent for the quarter) and 429 percent in November (752 percent for the quarter), with the end-period annual rate totalling 9,743 percent. The spike in inflation in November 1993 was caused by a significant adjustment in the prices of goods subject to controls coincident with the introduction of the manat. Retail prices have increased less in 1994 than in 1993, with average rises of 140 percent, 91 percent and 96 percent in the first three quarters, respectively, and increased by 852 percent by the end of the ten months to October 1994 (Table 2 and Chart 1).

Table 2.Turkmenistan: Prices and Wages, 1990-94
19901991199219931994
QIQIIQIIIQIVQIQIIQIIIQIVQIQIIQIIIQIVQIQIIQIII
Retail prices
Percent change4.295.09.66.5227.223.826.332.0165.5120.287.1554.3140.390.796.4
Index [1990= 100]1001102152352508191,0141,2811,6904,4889,88218,489120,793290,653554,0371,088,785
Producer prices
Percent change4.429.311.841.7571.170.8130.3207.4608.8169.282.1240.860.142.894.6
Index [1990= 100]1001742252523572,3984,0969,43429,002205,573553,3311,007,8023,434,9905,500,5757,852,98815,281,063
Nominal wages (in manat per month)
Minimum0.10.10.30.30.30.70.71.53.25.013.019.0106.0150.0150.0250.0
Average0.50.50.70.71.42.63.76.518.027.065.0108.0342.0545.4624.51,130.0
Ratio of average to
minimum nominal wages3.53.42.62.95.33.75.34.35.65.15.15.73.23.64.24.5
Index of real wages
[1990=100]
Minimum1009187797461498413585947363371916
Average100906665114657510421912413411958382321
Source: Data provided by the Turkmen authorities.
Source: Data provided by the Turkmen authorities.

Although food prices have previously risen faster than the Retail Price Index (RPI), 1/ in the ten months to October 1994 the opposite picture emerged (Table 23). Food prices rose by only 360 percent, while nonfood prices increased by 1,071 percent. This masks, however, considerable variation; vegetables and vegetable oil, fish products, eggs, paper products, clothing and cosmetics all recorded substantial rises, while sugar, confectionery, flour, bread, potatoes, tobacco and sporting goods recorded rises below average. The change in relative inflation rates seems to be due to the continuation of state subsidies for the basic consumption items, including meat, vegetable oil, butter, milk, tea, sugar, bread, and flour. 2/ Growth in the price of services outpaced prices rises in both food and nonfood goods in 1993, totalling more than 53,000 percent. A further increase of 345.9 percent was recorded in the first ten months of 1994 (Table 23).

Both price levels and inflation rates are geographically variant. Prices of basic items differ by up to 150 percent 1/ and the rate of increase in prices differed by up to 580 percentage points in 1993. 2/

c. Producer prices

Producer prices can diverge significantly from retail prices primarily because of subsidies, rationing, and the exclusion of some imports from the RPl. Producer price inflation, as measured by the Producer Price Index (PPI), had significantly outpaced the rise in the RPI between 1991 and 1993. At nearly 300 percent in 1991, PPI inflation was almost double RPI inflation; with the continued use of price controls on oil, gas and food processing the discrepancy grew even greater in 1992, as producer prices surged more than 8,800 percent (Table 2 and Chart 1). The rise in the PPI during 1993 was even larger than in 1992, but as RPI inflation also accelerated, the divergence between the two indices was somewhat reduced. To the extent that the gap has been caused by omission of imports and different weights associated with each type of good, the higher rise in the PPI need not imply a buildup of inflationary tensions. That part of the gap caused by subsidization and rationing of consumer goods, however, may be suggestive of increased subsidization and repressed RPI inflation.

In the ten months to October 1994, wood processing, chemicals, machine building and construction materials recorded the largest rises, with considerable jumps in chemicals and petrochemicals coming within the last month. The smallest price rises occurred in dairy products, flour, and fodder (Table 24).

5. Wages and employment

a. Minimum and average nominal wages

Turkmenistan imposes a minimum wage across all sectors of the economy. Although only around 10 percent of workers are paid at the minimum rate, the impact of adjustments in this rate are more widely dispersed. The link between the average and minimum money wage in Turkmenistan was formalized in January 1992, when the Unified Tariff Schedule for state enterprises, the private sector and joint ventures was adopted. This schedule set wages for positions differing by skill or danger level as particular multiples of the minimum wage.

The current situation is less clear; civil servants are still paid according to a fixed schedule, but as explained below, wages in the enterprise sector may be set by the individual enterprises themselves, subject to an excess wage tax.

Throughout 1990, the minimum wage was set at Rub 70, or manat 0.14. 1/ As shown in Table 2, the minimum wage increased by 13,614 percent in seven discrete adjustments in the period before the elimination of the ruble on November 1, 1993. 2/ The introduction of the new local currency, the manat, coincided with an increase in the minimum wage by 681 percent to manat 150. The only increase since then was to manat 250 on July 1, 1994.

The average wage across all sectors of the economy, as calculated by Goskomstat, has risen from the equivalent of manat 0.44 in the first quarter of 1990, to manat 1,979 as of December 14, 1994. The link between the minimum and average wage in the civil service is formalized through the specification of particular multiples of the minimum wage paid to different types of workers.

State enterprises are not subject to these constraints, but do face, however, an excess wage tax. Wages in state enterprises are determined by the individual enterprises, subject to an excess wage tax at a rate of 25 percent. Under this legislation, companies pay both a profits tax based on revenues less costs including a basic wage component and, in addition, they pay a 25 percent surcharge on the amount by which the wage bill exceeds a specified threshold. The basic threshold is three times the minimum wage, but is adjusted upward for particular industries favored by the authorities. 3/ As the profits tax is based on costs net of only basic wages, the share of profits paid out as bonus wages in excess of the threshold is thus taxed twice. The relationship between the minimum and average wages has, as a consequence of the limited freedom in wage setting available to enterprises, been far from constant (Table 2). The ratio increased slightly from around 3.5 to 5.6 between 1990 and 1992. The ratio rose to 5.7 by the third quarter of 1993, after which the new wage levels set simultaneously with the adoption of the new local currency led to a substantial fall to 3.2. The experience since the introduction of manat-denominated wages suggests that there is pressure for the wage gap between minimum and average wages to rise, at least when the ratio is below its current plateau of around 4.4. A priori it might be reasonable to expect that a rise in the minimum wage would not be fully reflected immediately in the average wage, thus lowering the ratio. The period after the discrete adjustment in the minimum wage might then be expected to witness general upward pressure on wages in the enterprise sector, and thus a rise in the ratio. There does not, however, appear to be any such stable relationship between adjustments in the minimum wage and the shifts in the ratio. Rather, the cash flow of state enterprises determines their ability to pay bonus wages to their workers, and thus the economy-wide average wage, somewhat independently of the minimum wage.

b. Real wage movements

Before the introduction of the manat, the real value of the minimum wage, as obtained by deflation of money wages by the Goskomstat RPI price index, fluctuated from a low of 49 percent of its end-1990 value in the second quarter of 1992, to a high of 135 percent in the fourth quarter of 1992. The maintenance of the nominal value of the minimum wage decreed on November 1, 1993 resulted in a decline in the real value to 16 percent of its end-1990 value at the end of the third quarter of 1994 (Table 2).

The average real wage more than doubled in the fourth quarter of 1992, but has slipped substantially since then. By the fourth quarter of 1993 it had fallen to 58 percent of its 1990 real value, at which time it represented 320 percent of the minimum wage. In the third quarter of 1994, even after the rise at the beginning of July, it was barely one fifth of its 1990 value (Table 2 and Chart 1).

It is important to note, however, that this measure of the real wage may overestimate the decline in living standards. Many goods are provided free of charge or at heavily subsidized prices. While the rise in prices of goods not subsidized by the state does indeed lower the real value of money wages, total remuneration clearly includes subsidized goods, and the ability of workers to consume such goods has not declined to the same degree. The rationing of some fixed-price goods, however, may imply that the exaggeration of the decline in consumption possibilities is less marked for the average wage earner than the minimum wage earner. 1/Appendix IV shows that if subsidies are ignored, the real wage in 1994 would drop to only 14 percent of its end 1993 level, whereas if per capita subsidies are added to the simple measure of the nominal wage before deflation, the estimated decline would be to only 61 percent.

c. Sectoral average wages and employment

As of the third quarter of 1994, the highest wages were paid in industry (manat 1,416), transportation (manat 1,461), communication (manat 1,408) and construction (manat 1,632), while wages in forestry (manat 806), printing (manat 809), education (manat 804) and cultural activities (manat 812) were only around half as much (Table 27).

Over three quarters of workers are employed in what the Turkmen authorities term the “material sector” (Tables 3 and 30). 2/ More than 40 percent, of all workers are employed in agriculture, ten percent in industry and a further 10 percent in construction. The only other major employers are the education, trade and health sectors.

Table 3.Turkmenistan: Population, Labor Force and Employment, 1988-93(In thousands of persons, average)
198819891990199119921993
Population3,4773,5653,6573,7503,8463,947
Working age labor force 1/1,7301,7751,8231,8721,9231,978
Males8839049279529771,005
Females847871896920946973
Nonworking age1,7471,7901,8341,8781,9231,969
Males830854876898922945
Females9179369589801,0011,024
Total employment1,4451,4921,5421,5711,5731,642
Male735745760778779
Female710747783793794
Of which:
State enterprises915918926920886883
Inactive working age population 2/3/308308317352419
Unemployed 3/38363839
Male9999
Female29282930
Source: Data provided by the Turkmen authorities.

Defined as men between the age of 16 and 59 years and women between the age of 16 and 54 years.

Includes students over the age of 16 and people of working age not officially employed.

Unemployment, inactive population and total labor force data are derived from different sources, and are not directly comparable.

Source: Data provided by the Turkmen authorities.

Defined as men between the age of 16 and 59 years and women between the age of 16 and 54 years.

Includes students over the age of 16 and people of working age not officially employed.

Unemployment, inactive population and total labor force data are derived from different sources, and are not directly comparable.

d. The minimum consumption basket

The minimum wage is intended to be sufficient for the purchase of certain prescribed basic commodities and services, which are known as the “minimum consumption basket” (MCB). 3/ After rising 2,644 percent in 1993, the cost of the MCB rose 490 percent in the ten months to October 1994, whereas the RPI rose by 852 percent (Tables 23 and 29). The expenditure share of food in the basket halved from over 40 percent in 1992 to around 20 percent by October 1994. 4/ The largest components of the basket are now furniture and clothing.

The fixity of quantities per item specified in the MCB, in an environment of changing relative prices, implies that the expenditure weights within the basket are subject to change. These changes in weights of each component seem primarily to reflect discrete adjustments in controlled prices. A comparison of real wage measures using both retail prices and the MCB as deflators is contained in Appendix V.

6. Systemic reforms and privatization

Land reform has been tentative at best. In rural areas, individuals have an option to lease or own up to 50 hectares of land, but processing of applications has been slow and many prohibitive conditions are attached to grants. In urban areas, the situation is more confused. Privatization of apartments has been suspended, pending a solution to issues of joint maintenance of infrastructure servicing all tenants.

Privatization has generally moved slowly; some smaller retail outlets and restaurants have been sold off, but sales of enterprises employing more than 100 persons are yet to be implemented. The sales are made by way of one of three processes: (i) open auctions, with a floor price set up by a dedicated commission; (ii) buy-outs, in which existing workers pay an agreed price; and (iii) contests, in which closed bids include improvement and renovation plans. Small enterprise reform has moved ahead, with privatization of around 850 consumer service enterprises primarily by way of auction, and the emergence of around 3,000 completely new small businesses since independence. In the first ten months of 1994, manat 81 million was received as payment for privatized enterprises, with a further manat 120 million expected by the end of the year. 1/ Proceeds from consumer services (e.g., shoe repair) are split equally between local and central government, and proceeds from trading enterprises (e.g., restaurants) go entirely to the Central Government. Outright ownership is granted where a well-defined property is associated with the enterprise; where the property is shared with other enterprises, a long-term lease is granted.

There has, however, been no movement on reorganization of other enterprises. The program of privatization prepared by the Turkmen authorities called for creation of a voucher scheme for large enterprises and a variety of alternatives for medium-sized enterprises, but there is no evidence of any progress toward any of the initial conditions required for such privatization.

The Presidential Decree regarding the privatization of industrial enterprises in Turkmenistan released on May 13, 1994 provided for the opening of the privatization process for industrial enterprises on July 1, 1994. 1/ Shares in industrial enterprises with a work force of up to 100 persons may be bought by both citizens and nonstate entities of Turkmenistan and foreigners, albeit not on equal terms. Supplement No. 1 on “Privileges granted to labor collectives during privatization of state property” provides that all members of labor collectives of privatized enterprises shall receive registered and preferred shares up to 20 times the monthly minimum salary, and may purchase ordinary shares at a discount of 30 percent off face value up to 6 times the monthly minimum salary with payment due within one year. The total value of privileges granted to employees must not exceed 30 percent of the estimated value of the sale price, but it is not yet clear how this will be enforced within a highly inflationary environment. 2/

One alternative provided for medium-sized enterprises is self-privatization. Recent legislation permits a collective that declares its intention to purchase the enterprise from the relevant ministry to retain 50 percent of profits until sufficient proceeds are obtained for outright purchase. Control remains with the relevant ministry during this period, and it is not obvious why, with an excess wage tax of 25 percent, any enterprise would choose to set up a privatization fund in preference to paying out profits in the form of wages.

Enterprises employing over 100 people will become joint-stock companies, with control remaining in the hands of the state. Local authorities will be involved in the operation of privatized enterprises, and the nature of the business may not be altered after the enterprise leaves the state sector.

7. Environmental issues

The Government of Turkmenistan enacted a comprehensive environmental law in 1992, which covers land, air and water use. In addition, activities are presently under way to widen the powers of enforcement, and increase the specificity of particular aspects of this law. Detailed laws on air and fauna use are also under preparation.

Despite this broad concern, however, the Government does recognize that the alleviation of existing environmental problems and the prevention of future difficulties is still highly deficient. In part this reflects a shortage of financial resources in the relevant government agencies. It also reflects the need for technical assistance to address the needs for scientific environmental assessments and the compilation of specific regulations. Added to these constraints, there is insufficient monitoring and coordination between the Ministry of Nature Exploration and Protection, other government ministries and local authorities and development bodies. As a result, land use planning in both rural and urban areas is deficient.

A key environmental concern in Turkmenistan is water quality and usage. The shrinking of the Aral Sea is a major ecological problem, and the Government attaches great importance to solving this difficulty. An Interstate Committee was established in early 1993 to coordinate action between Uzbekistan, Kazakhstan and Turkmenistan, and a special fund established with support from the World Bank’s Environmental Facility. The problems of the Aral Sea and its associated rivers, causes water problems in the northern part of the country. The extensive use of untreated ground water for drinking causes intestinal health problems to a much higher extent than that experienced in other parts of the country. USAID is presently implementing a water purification project in the Tashauz Velayat. Untreated sewerage flows into the Amur-Darya from both Uzbekistan and Turkmenistan, creating further health dangers. There have been discussions between the two states, but little action has been taken to remedy the situation.

Turkmenistan has also experienced problems in the past from inappropriate herbicide and pesticide use, causing damage to underground and surface water. The use of DDT type pesticides is now banned and a switch has been made to more benign and safer chemical solutions. A difficulty remains, however, with the disposal of existing stocks of DDT based pesticides. Turkmenistan does not have the facilities to dispose of these chemicals, and funds have not been made available to build such a facility.

III. Budgetary Policies and Fiscal Developments

1. Overview

Fiscal developments in Turkmenistan have also been dominated by developments in the natural gas sector. In 1992 and most of 1993 this sector brought about a fundamental improvement in the Government’s fiscal position as a result of substantial amounts of hard currency from Turkmenistan’s exports to non-FSU countries. However, the gas exports arrears problem that arose late in 1993 has put serious pressure on the budget.

The main fiscal characteristic of the period under consideration is the sharp decline in both revenues and expenditures. Gas exports revenue, which accounted for slightly over 60 percent of total budgetary revenue in 1992 and 1993, fell drastically to 10 percent over the first nine months of 1994. As a result, the budget position deteriorated sharply during this period, registering a deficit of 2.5 percent of GDP (Table 4 and Chart 2).

Chart 2TURKMENISTAN FISCAL INDICATORS, 1990-94

Source: Data provided by the authorities; and staff estimates.

1/ Extrabudgetary funds, including Foreign Exchange Reserve Fund.

2/ Includes Defense and State Administration expenditures.

Table 4.Turkmenistan: Financial Operations of the General Government, 1990-94
19901991199219931994
Jan.-Sept
(In millions of manat)
Total revenue6132762,1276,771
Tax revenue246913074,587
Income taxes12325842,132
Taxes on goods and services22375222,104
Nontax revenue495429432
Pension fond1,182
Social insurance fund290
Geological prospecting fond38
Foreign Exchange Reserve Fund152791242
Total expenditure6121892,1729,480
National economy451201,0062,996
Subsidies1259461852
Capital expenditure11403991,826
Other2221146318
Expenditure on socio-cultural projects27526762,671
Defense, public order, and safety1530361
State administration3143746
Other expenditure93171,239
Pension fund1,096
Social insurance fund270
Geological prospecting fund41
Foreign Exchange Reserve Fund60
Surplus (+) /deficit (-)186-45-2,709
Financing-1-86452,709
Domestic financing-1625681,839
Foreign financing-152-523870
(In percent of GDP)
Total revenue46.238.242.219.26.3
Tax revenue14.911.610.611.84.3
Income taxes3.75.84.95.32.0
Taxes on goods and services11.15.85.74.72.0
Nontax revenue31.426.68.30.30.4
Pension fund1.1
Social insurance fund0.3
Geological prospecting fund
Foreign Exchange Reserve Fund23.37.20.2
Total expenditure44.535.729.019.78.8
National economy26.414.518.49.12.8
Subsidies4.35.69.04.20.8
Capital expenditure8.63.86.23.61.7
Other13.65.13.21.30.3
Expenditure on socio-cultural projects16.619.77.96.12.5
Defense, public order, and safety0.40.80.30.3
State administration0.50.51.30.7
Other expenditure0.51.32.91.2
Pension fund1.0
Social insurance fund0.3
Geological prospecting fund
Foreign Exchange Reserve Fund0.1
Surplus (+) / deficit (-)1.82.513.2-0.4-2.5
Financing-1.8-25-1320.425
Domestic financing-1.8-2.59.55.11.7
Foreign financing-23.3-4.70.8
Memorandum item:
Gas revenue / total revenue (in percent)3.762.859.210.0
Wages (in percent of GDP)3.74.83.5
Wages / total expenditure (in percent)13.025.048.0
Budget subsidies / total subsidies (in percent)58.532.5
Source: Ministry of Economy and Finance; and staff calculations.
Source: Ministry of Economy and Finance; and staff calculations.

Due to the increasing payment arrears for natural gas exports, in 1994 the fiscal authorities began to implement quarterly “emergency” budgets aiming to limit expenditure to a minimum sustainable level, as close as possible to realized budget revenues. Although the quarterly budgets have been more realistic than the annual budget, the overestimation of revenues and underestimation of expenditures remained an issue throughout 1994.

2. Structure of the public sector

a. Budget coverage

The present budget coverage of the General Government does not give a clear picture of public sector activities in the economy. 1/ The two weakest areas are: (i) the exclusion of some subsidies from the budget; and (ii) the lack of a clear delineation between the budgetary and commercial activities of the branch ministries.

Appendix VI shows the government agencies and ministries that are either supported by the budget or are mainly self-supporting. The present organization of the budget of the General Government does not permit a clear distinction between budgetary organizations (dealing with budgetary and governmental activities, mainly public goods) and state enterprises (dealing with commercial and/or market-oriented activities). For example, transactions of entire ministries, such as the Ministry of Agriculture and Food, are not covered by the budget, although they continue to receive transfers from it.

The fiscal authorities have not yet succeeded in bringing the activities of these agencies and ministries into the budget. However, according to the 1995 Budget Law, all self-supported institutions must report their revenue and expenditure to the MEF. Although this requirement will increase the information available on government activities, it does not compel all government agencies to follow the budgetary procedures, which would allow for more control on budget execution.

The FERF has not yet been transferred to the Central Bank and its expenditures for imports and amortization still do not appear in the budget. Similarly, import expenditures paid for with foreign credits are not classified as budgetary transactions as they are not covered by the central or local budgets.

In 1994 the majority of subsidies were covered by ministries whose transactions are not included in the budget. This has been the case as regards price subsidies on gas, electricity, meat, dairy products, baby food, and sugar. The 1994 budget covered price subsidies on bread, flour, medicines, rent and utilities, and transportation.

b. Local budgets

The local government structure in Turkmenistan consists of three levels: regional budgets, or “velayat”; subregional budget, or “etrap”; and rural budgets. Each level of government prepares and approves its own budget.

The local authorities are allowed to levy their own revenues in terms of taxes and fees. The legislation specifies the areas where the taxes and fees can be levied and imposes upper limits on rates or amounts. The main local taxes and fees are: a tax on the construction of resorts, an advertising tax paid by legal entities and individuals, a tax on the resale of automobiles and equipment, resort fees, business operation fees, licensing fees for the sale of wine and vodka products, special fees to support the police, licensing fees for the right to hold local auctions and lotteries, and fees for parking motor vehicles.

c. Development of the Treasury

The most important institutional development in 1994 was the preparatory work done for the establishment of a Treasury within the MEF, which was introduced on January 1, 1995. The Treasury is to be in charge of expenditure control, including accounting for government operations, as well as of cash management.

(i) Structure of the treasury system

A three-tier treasury system structure was established: The central office, six regional offices (RTOs) at the “velayat” level, including Ashgabat City, and 55 subregional offices (STOs) at the “etrap” level. The three-tier treasury system offices have five main functions. First, all payment orders issued by the spending units shall be submitted to the RTOs. The RTOs check that (a) funds have been authorized, (b) documentation on goods and services received is correct, (c) payment requests have been authorized, and (d) funds are available in the treasury account. Second, they enter the approved payment orders in the treasury books of account, post them in the treasury ledger, and send the payment orders to the Central Bank for payment. Third, they reconcile all payments made by the Central Bank against payment orders issued each month by the RTOs. Fourth, they monitor the central bank treasury subaccounts to ensure that balances are sufficient to meet anticipated payments, reconcile payments and receipts with the treasury ledgers, and transfer revenues recorded by the State Tax Inspectorate daily to the treasury subaccount. Fifth, they prepare detailed reports on budget execution to the Central Treasury.

(ii) Computer system

A PC-based computer system has been developed for treasury operations and an instruction manual has been issued by the Treasury. All RTOs have been provided with PCs, which they are now using to record warrants and payment orders. The system automatically updates the balance available under each article of expenditure whenever changes are entered. To facilitate the rapid transmission of data from the RTOs to the central office, modems have been provided to all the RTOs and a few telephone lines have been earmarked for this purpose. The RTOs send budget execution reports every five days to the central office, which generates a consolidated report on budget execution for government as a whole.

(iii) Coverage and unified treasury account

Since October 1, 1994, local budgets of various velayats and etraps have been brought under the treasury system. The procedures used are those used by budgetary organizations. The treasury offices maintain separate books of accounts for central and local budgets. From January 1, 1995 onward, all the bank accounts of spending units under the centralized budget have been closed and a unified treasury account has been established with the Central Bank. These spending-unit bank accounts have been replaced by ledger accounts with the treasury system.

3. Fiscal developments in late 1993 and 1994

In 1992 the overall budget surplus was 13.2 percent of GDP. This outcome reflected a substantial increase in the price of gas exports to hard-currency areas and was accounted for in the budget as an increase in the deposits of the FERF. 1/ In 1993, however, the budgetary revenues fell drastically and resulted in a consolidated budget deficit of 0.4 percent of GDP. This trend continued and worsened in 1994; during the first nine months of the year the deficit amounted to manat 2.7 billion, or 2.5 percent of GDP (Table 4 and Chart 2).

a. Revenue

Revenues declined abruptly in 1993 from their level in 1992; for the year as a whole, revenues were 19.2 percent of GDP in 1993, compared to 42.2 percent of GDP in 1992. As the payment arrears situation for gas exports to the FSU countries became more extreme in 1994, revenues continued to decline in the course of the year, and dropped to 6.3 percent of GDP in the first nine months of 1994. Total taxes from gas declined from about 59 percent of total revenue in 1993 to 10 percent in the first nine months of 1994 (Table 4).

b. Expenditure

In 1993 total expenditure fell sharply to about 20 percent of GDP, or almost 10 percentage points lower than in 1992. As the authorities nearly succeeded in limiting expenditures to available revenues, the path of both revenues and expenditures in the first nine months of 1994 was similar. Expenditures declined to 8.8 percent of GDP in the first nine months of 1994.

Payments were authorized only for essential expenditures, such as salaries, pensions, medicine, food, and allowances for low-income families. Significant cuts in expenditure were targeted in items such as equipment purchases, major infrastructure repairs, and building maintenance (Table 4).

(i) Subsidies

Since 1993, budgetary subsidies have dropped sharply as a share of GDP; they declined successively from 9 percent of GDP in 1992 to 4.2 of GDP in 1993 and 0.8 percent of GDP in 1994 (Table 4).

As a proportion of expenditures, budgetary subsidies declined to around 9 percent during the first nine months of 1994 (manat 852 million), down from around 21 percent in 1993. The final budgetary subsidies in 1994 could be slightly higher due to a major increase in grain subsidies expected in the fourth quarter of 1994, as most grain procurement transactions are made in the latter part of the year (Table 32).

During the first nine months of 1994, the grain subsidy accounted for more than 90 percent of budgetary subsidies (manat 585 million). Prior to April 1994, subsidies were incurred only on the differential between the retail and wholesale prices of the finished product (various baked goods, flour), while the wholesale prices were set roughly in line with the state purchasing prices. In April, however, the state purchasing price of imported grain rose five times in conjunction with the devaluation of the official exchange rate; wholesale prices, on the other hand, remained at their pre-April level. Thus, in addition to the retail-level subsidies, the difference between wholesale prices and the state purchasing price also required subsidization.

While the authorities have reduced budget subsidies in 1994, an evaluation of total subsidies in the economy is not yet available because some subsidies are also provided from the budgets of self-financed ministries. The authorities’ estimates for total subsidies (budgetary and nonbudgetary) in 1993 amounted to manat 788 million, or 7.1 percent of GDP, of which manat 461 million, or 59 percent of total subsidies, was covered by the budget. In the first nine months of 1994 total subsidies amounted to manat 2,594 million, or 2.4 percent of GDP. However, the subsidies paid outside the budget have increased from 41 percent of the total in 1993 to 67 percent of the total in 1994 (Table 4).

Although a Presidential decree dated November 2, 1994 transferred the meat subsidy of manat 450 million from the Ministry of Agriculture to the budget, the MEF had not decided by mid-November whether to include it in the budget. This indecision was based in part on complications in the financing of these expenditures. Specifically, the authorities initially planned to draw down balances of the FERF, but later reconsidered on grounds that this means of financing would increase the measured deficit. This is an example of the complications arising from the ease of moving subsidies in and out of the budget depending on the relative fiscal strength of the agency concerned.

(ii) Capital expenditure

Significant cuts in expenditure were targeted for items such as equipment purchases, major infrastructure repairs, and building maintenance. Budgeted capital expenditure dropped from 3.6 percent of GDP in 1993 (it was 6.2 percent in 1992) to 1.7 percent in the first nine months of 1994 (Table 4).

(iii) Wages and salaries

In relation to GDP, the budgetary wage bill is estimated to have fallen to 3.5 percent in 1994, down from 4.8 percent in 1993 (Table 4). Except for the increase in wages decreed in July 1994, the budgetary wage bill has remained unchanged in the face of high inflation. As a proportion of total budgetary expenditures, however, wages increased from 25 percent in 1993 to 48 percent in the first nine months of 1994. This result was mainly due to a stable nominal wage bill in the presence of sharp cuts in other expenditures.

c. Local budgets

The local budgets’ tax share increased to 31 percent of total revenue in the first nine months of 1994, from around 20 percent in 1993 and slightly below 24 percent in 1992 (Table 5). Local budgets have two main sources of revenue. First, the local budgets share the taxes which are collected by the central government budget. This share increased in 1993 and 1994 due to the implementation of new taxes and the redistribution of revenue among the spheres of government. In the second half of 1994, the local budgets’ tax share was the following: 50 percent of the profit tax, 75 percent of VAT, and 100 percent of the mineral resources tax. Second, local authorities are allowed to levy their own taxes and fees.

Table 5.Summary of Public Finances, Central and Local Governments, 1990-94(In millions of manat)
19901991199219931994: January-September
CentralLocalGeneralCentralLocalGeneralCentralLocalGeneralCentralLocolGeneralCentralLocalGeneral
Govt.Govt.Govt.Govt.Govt.Govt.Govt.Govt.Govt.Govt.Govt.Govt.Govt.Govt.Govt.
Revenue33694132106627616964312127465421176771
Tax revenue1122243336698954121307267819094587
Income taxes111214183231327158479713352132
Individual11668686560560
Corporate1111413263131854987977751572
Taxes on goods and services1122220173739412852215545502104
Turnover tax11211
Sales tax1
Value added tax17173538612851413955501945
Excises2288159159
Taxes on natural resources1881320132724351
Nontax224639243054101929224208432
State duties and bonds11
Funds from social security
Profit transfers of enterprises1
Union transfers1133
Fixed payments333737
Other revenue22123-122917101929224208432
Pension fund11821182
Social insurance fund290290
Geological prospecting fund3838
Foreign exchange reserve fund152791791242242
Expenditure33684121315918914347382172630531759480
Financing of national economy22441510417120746260100621478492996
Of which:
Development expenditure11401401352758443951239
Social and cultural11243721305223644067647521962671
Education and science111229202914829444234014651805
Health care111210124314318666716782
Other social and cultural expe33101145348691584
Administration1231192414366482746
Other4101464147863548683
Imports under foreign credits269269917917
Pension fund10961096
Social insurance fund270270
Geological prospecting fund4141
Foreign exchange reserve fund6060
Surplus (+)/deficit (-)1179786262-307-45-1651-1058-2709
(in percent of GDP)0.71.01.82.52.512.11.113.22.4-2.8-0.4-1.5-1.0-2.5
Memorandum items:(In Percent)
Share of total revenue50.949.1100.068.032.0100.076.123.9100.079.720.3100.068.731.3100.0
Share of total expenditure51.348.7100.064.835.2100.069.031.0100.066.034.0100.066.533.5100.0
Source: Data provided by the Turkmen authorities; and staff calculations.
Source: Data provided by the Turkmen authorities; and staff calculations.

During the first nine months of 1994, the total revenue of local government amounted to manat 2,117 million, or 31.3 percent of general government total revenue. In the same period, local governments’ own revenue—that is, other revenue and taxes on natural resources—amounted to manat 232 million, or around 11 percent of the total local government revenues (Table 5).

The budget execution of local governments showed a deficit in 1993—manat 307 million, or 2.8 percent of GDP—and during the first nine months of 1994—manat 1,058 million, or 1 percent of GDP. Although there is no legal prohibition of the local government borrowing from the banking system or issuing securities, this procedure has not yet been used, and the deficit is financed by the central government.

d. Extrabudgetary funds

In 1994 the Pension Fund, the Social Insurance Fund, and the Geological Prospecting Fund were consolidated into the general government budget. Although their revenues and expenditures are shown in the budget, they are separated from general revenues and expenditures.

During the first nine months of 1994, the extrabudgetary funds revenue (taking into account only those funds that have been consolidated and reported into the budget) amounted to manat 1,510 million, or 22.3 percent of total revenue; the Pension Fund revenue amounted to manat 1,182 million, or 78 percent of the total extrabudgetary funds revenue. In the same period, the Pension Fund and the Social Insurance Fund have generated a small surplus of manat 106 million. Employers and employees’ contributions to these funds have increased as the wage bill has grown as a result of increasing nominal economy-wide salaries. On the other hand, on the expenditure side, the pension payments, which represent the main item of expenditure in the Pension Fund and the Social Security Fund, have increased more slowly than revenues because the amount paid for individual pensions has been kept constant since July 1994. During the first nine months of 1994, pension payments amounted to manat 997 million, or 73 percent of total expenditure of the Pension Fund and the Social Insurance Fund (Table 33).

e. Budgetary arrears

The drop in expenditures without a corresponding downward revision of the commitment figures in the budget has led to an emergence of budgetary arrears. As quarterly budget revenues have been consistently overestimated, expenditure commitments based on these budgets were in excess of the cash payments that were subsequently approved as part of the emergency expenditure control process. As a result, the Government incurred a substantial amount of arrears in late 1993 and throughout 1994.

While figures are imprecise because of the absence of a formal commitment stage under the budget execution process (where budgetary appropriations are authorized, contracts are signed, and procurement begins), arrears as of the second quarter of 1994 were estimated at manat 550 million, or 15 percent of total expenditures for the second quarter. By the time the arrears were acknowledged, that is, in the second quarter of 1994, the Central Bank provided a credit line to clear them in full. According to the authorities, by the end of 1994, the outstanding budgetary arrears would amount to manat 322 million.

f. Deficit financing

The consolidated budget deficit, on a cash basis, amounted to 0.4 percent of GDP in 1993, and to 2.5 percent in the first nine months of 1994 (Table 4). Domestic banking financing amounted to manat 1.8 billion, or 1.7 percent of GDP in the first nine months of 1994. The remainder was covered by foreign loans net of the accumulation of deposits in the FERF. In the second and third quarters of 1994, the Government began to sell three-month securities, amounting to manat 142 million at a rate of 150 percent, to commercial (state-owned) banks. The authorities planned to sell an additional manat 310 million worth of securities in the fourth quarter of 1994.

g. Tax changes

The main changes in the fiscal legislation that were implemented in 1993 took effect in 1994. A major development was the elimination of export taxes and their replacement with VAT and profit taxes’ based on the domestic currency value of the proceeds. In 1993 the VAT rate was unified at 20 percent, and a preferential rate of 10 percent was introduced on food and children’s clothing. As a consequence, profit taxes as a proportion of direct and indirect taxes have risen from 8 percent in 1992 to around 17 percent in 1993 and 1994. Similarly, VAT has risen from 11 percent of direct and indirect taxes in 1992 to roughly 19 percent in 1993 and 1994.

During 1994 there was no significant structural change in the tax system; minor modifications took effect in rates, brackets and exemptions. Appendix III presents a summary of major taxes as of December 1, 1994. VAT exemptions for the agricultural sector were removed in the third quarter. In July 1994, the excise tax became more comprehensive since new goods were added to the list of existing taxes, such as on dessert wines, and rates in some goods, such as vodka, were increased from 20 percent, to 60 percent. The personal income tax was simplified in June 1994; its brackets were reduced to three, down from eight, while rates range from 3 percent to 10 percent of personal income. Royalty proceeds are now taxed at marginal rates ranging from 60 to 90 percent. The profit tax deduction for the cost of re-equipment, enlargement construction, and reconstruction of facilities has been canceled. On the other hand, exemptions have been established for new agro-product enterprises and for consumer goods and building materials production. Enterprises in free economic areas are exempt from profit tax (a) during the first three years of activity, (b) if the enterprise has foreign investment, which makes up more than 30 percent of share, and (c) the profits are reinvested in export projects or other activities. The bank profit tax and insurance tax were canceled and have been replaced by the enterprise profit tax which is common for the legal entities engaged in production and other commercial operations in the territory of Turkmenistan. The land tax on ownership and use of both urban and rural areas has been suspended temporarily. A new law on land taxation is under consideration, awaiting decision of the Cabinet of Ministers. A new decree on custom duties is under consideration; according to the existing provision on tariffs, a custom duty for cargo inspection—0.3 percent of contractual value of goods—should be paid on cargo entering or exiting the country.

4. The 1995 budget

The budgetary outlook in 1995 will continue to be extremely sensitive to: (i) the ability of some FSU countries to pay for Turkmenistan’s gas exports; (ii) the prospects of price reform and the level of transfers and subsidies that would need to be financed by the budget; and (iii) the wage policy, which is still geared toward across-the-board wage increases, instead of a targeted social safety net recommended by the staff.

The authorities have prepared a preliminary budget for 1995, the basic approach of which has been similar to the quarterly budgets during 1994: expenditures are basically determined on the basis of projected revenues, with wages and entitlements highly inelastic, and purchases of goods and services serving as the residual for a given deficit objective.

Revenues for the 1995 budget are projected at 9.5 percent of GDP while expenditures are projected at 9.4 percent of GDP; therefore, the 1995 budget calls for a surplus of manat 670 million, or 0.1 percent of GDP. These projections were prepared on the basis of the volumes of production envisaged in the three-year plan for economic and social development. Furthermore, projections for gas tax revenues for the 1995 budget are based on the expectation of significantly higher revenue payments for natural gas exports to FSU countries, especially from Ukraine and Georgia. The 1995 budget projects that total sales of gas will amount to manat 84,696 million, of which manat 84,600 million are on exports. This total sale should generate manat 12,777 million in VAT revenue, manat 5,909 million in profit tax revenue, and manat 15,210 million in natural resource tax revenue.

The budget projections for 1995 expenditures are also higher than in 1994, in reflection of a higher revenue path. Some items were dramatically increased compared to the 1994 outcome; for example, domestic purchases of goods and services are projected to be manat 16,119 million, compared with only manat 52 million during the first nine months of 1994.

Regarding subsidies, it is not yet clear which items will be included in the 1995 budget. The budget has allocated only manat 10.1 billion for all subsidies, although the bread and flour subsidy alone will amount to roughly manat 9 billion.

IV. Monetary and Credit Policy Developments

1. Overview

Prior to the introduction of the manat, the monetary authorities introduced a number of policy measures directed at eliminating what was perceived as excess liquidity in the economy. A substantial portion of the balances in enterprise settlement accounts was converted into negotiable bonds, a number of administrative measures were taken to stem the flow of the “old” rubles into Turkmenistan, a new Central Bank Law was enacted, and a bank licensing moratorium was put in effect until January 1, 1994. With these moves, the Central Bank intended to assume a prominent role in the conduct of monetary and credit policy and to develop a set of instruments for effective monetary control. However, and perhaps related to developments in the external payments arrears, monetary policy has been less autonomous than envisaged. Policy developments in 1994 also suggest that the Central Bank continues to be subject to extensive and powerful political constraints- that undermine its authority over the conduct of monetary policy.

2. Central bank policy instruments

a. Reserve requirements

As of October 1993, the Central Bank of Turkmenistan was following a system of differentiated reserve requirements. The rates were 15 percent on demand deposits and 10 percent on long term deposits (deposits with maturity of 1 year or longer); also, a 20 percent rate was assessed on deposits of those banks whose resources came primarily from central bank credit (40 percent or more of total credit issued). The Savings Bank (Sberbank) and the Foreign Economic Affairs Bank (Vneshekonombank), which were not subject to reserve requirements prior to August 1993, were at that time subject to a uniform rate of 5 percent on all deposit liabilities. On October 19, 1993, in preparation for the introduction of the manat, and in order to control total liquidity in the economy, reserve requirements were raised to 35 percent on demand deposits, to 20 percent on long-term deposits, to 30 percent for all deposits at the Vneshekonombank, and to 20 percent for deposits at the Sberbank. However, on November 1, 1993, and under pressure from commercial banks, the CBT changed reserve requirement regulations and introduced a uniform rate of 20 percent for all banks.

Against renewed pressure from commercial banks that were still unable to meet reserve requirements, in February of 1994 the CBT decided to revert to the old system of differentiated reserve requirements and effectively reduce the rates. The new regulations called for reserve requirements of: 10 percent on household and enterprise deposits with up to one year maturity, 5 percent on deposits with more than one year of maturity, and 15 percent on all other liabilities subject to reserve requirements. On July 1, 1994, reserve requirements were again lowered and compliance on new deposits was temporarily suspended. Reserve requirements on household deposits were set to zero, while the rate on all enterprise deposits was set at 10 percent.

b. Interest rate policy

With the exception of the Sberbank, and excluding lending extended to State-Owned Enterprises (SOEs) based on Central Bank refinance credit, interest rates for all commercial bank transactions are freely determined. In the case of refinance credit, banks are allowed to charge a margin of only 0.3 percent over the respective refinance credit rate. There is a wide number of interest rates on deposits depending both on maturity and the type of depositor (Tables 6 and 36). Lending rates at commercial banks have been reported in the 300 percent range. However, with inflation running at close to 20 percent a month, interest rates continue to be negative in real terms.

Table 6.Turkmenistan: Interest Rates on Bank Deposits and Loans, 1989-94(In percent per annum, end-period)
198919901991199219931994
Deposit rates
Deposits in commercial banks0.5–2.00.5–8.00.5–8.00.5–20.02.0–50.03.0–206.0
Deposits in Savings Bank0.5–2.00.5–8.02.0–9.04.0–20.020.0–50.020.0–160.0
Interbank deposits0.5–10.06.0–25.06.0–25.02.0–45.072.0–92.0175.0
Credits for socialized economy
Credits to enterprises1.0–10.06.0–25.06.0–25.02.0–45.050.0–108.03.3–300.0
Credits to housing cooperatives0.5–3.00.5–3.00.5–3.09.0–20.030.030.0
Credits to Kolhozes and Sovhozes1.0–5.06.0–25.06.0–25.01.7–2.713.03.3–75.0
Credits for non–socialized economy
Credits for housing0.8–8.06.0–25.06.0–25.09.0–15.025.0–30.050.0–75.0
Credits for consumer purchases3.06.0–25.06.0–25.015.0–35.060.090.0
Other consumer purchases2.0–5.03.0–6.03.0–6.055.0
Credits for infrastructure (enterprises)15.0–108.010.5–300.0
Central Bank refinance credit3.0–5.06.0–12.01.5,15.010.0,50.010.0,50.0
Source: Central Bank of Turkmenistan.
Source: Central Bank of Turkmenistan.

Deposit rates at the Sberbank are set administratively in consultation with the Government since the latter is the guarantor of all deposits at this institution. Therefore, although not explicitly fixed, adjustments in deposit rates at the Sberbank are sporadic and tend to lag behind changes in rates offered by other commercial banks.

Refinance credit interest rates are set at 50 and 10 percent per annum. The former had been 70 percent and was lowered to 50 percent on December 1, 1993. The latter “concessionary” rate is applied to directed credit authorized by the Cabinet of Ministers or the President. 1/

Most of the refinance credit is extended to four banks: Agroprombank, Turkmenistan Bank, Cooperatorbank, and Investbank. As of November 1, 1994, the total stock of refinance credit amounted to manat 2.2 billion, of which around manat 1.0 billion was issued at the concessionary rates (Table 36). The rest of the debt stock bears an interest rate of 50 percent per annum. The refinance credit issued at concessionary rates is long-term in nature since most of it has a maturity of 1-4 years. On the other hand, the credit issued at 50 percent rate should be paid before the end of the year.

Both the penalty rate on overdue refinance credit from the above-mentioned four banks and the overdraft penalty rate for commercial banks are 0.5 percent per day (simple interest). During the period from November 1993 through January 1994, when most banks were running overdrafts at the CBT, the overdraft penalty was not enforced because of what was perceived as a severe shortage of liquidity. However, penalties were enforced during September 1994, a period during which commercial banks were again running overdrafts at the CBT (Table 7).

Table 7.Turkmenistan: Central Bank Summary Accounts, 1992-94(End-of-period stocks, in millions of manat)
199219931994
Dec.MarchJuneSept.Dec.Jan.Feb.MarchAprilMayJuneJulyAug.Sept.
Assets2491698378711,1851,5562,1283,2552,9502,6184,1114,2904,5595,352
Net foreign assets-249-470-4271,1511,4851,4951,5138,1138,2228,2257,9418,1228,1078,189
Convertible currencies-1-131,7661,5761,5771,5978,2018,2028,2117,9078,0908,0738,159
Non-convertible currencies-248-468-430-615-92-82-84-88211434323430
of which: Debt assumption 1/286286286286286286286286286286286286
Net domestic assets4986391,264-280-30061615-4,858-5,273-5,608-3,830-3,832-3,548-2,837
Net credit to Government397409-35-1,651-1,002-1,015-788-7,230-7,023-6,860-5,123-5,434-5,212-4,736
General Government operations 2/3994102574068958621,1171,1771,3971,6043,0152,9303,0833,693
Central Government balances 3/6414-12610413306-137-563-384-117-156-74538
Long-term government debt 4/3384033934359054958551,3472,0352,0753,2813,2813,2813,281
Local government balances-1
Pension fund-4-7-9-39-10-47-38-18-45-56-95-124-53-49
Social insurance fund-5-15-30-31-54-71-70-77
Foreign exchange reserve fund 5/-1,763-1,577-1,575-1,597-8,098-8,110-8,096-7,797-7,976-7,967-7,996
Debt assumption-286-286-286-286-286-286-286-286-286-286-286-286
Other net credit-1-2-5-7-34-15-22-23-24-82-54-102-42-147
Credit to economy1225091922513778913131211
Credit to banks961909081,3521,7521,9552,5183,0942,4991,9941,5631,8421,9812,045
Other items net5-82-118-174-1,076-893-1,122-729-757-750-282-253-329-157
Liabilities2491698378711,1851,5562,1283,2552,9202,6184,1114,2904,5575,352
Currency issued37651182981,1221,3961,7622,0851,9372,2433,0803,4844,2185,148
Required reserves132767191158235266275304317354340302299
Excess reserves19877652381-95-751008967095767746637-95
Memorandum item:
Gross credit to General Government (flow)6555975674422,3762,376
Source: Central Bank of Turkmenistan.

CBT debt to Russia assumed by the Government of Turkmenistan on June 2, 1993.

Financing of budget deficit as reflected in fiscal accounts.

A positive magnitude implies an overdraft.

Credit to the Central Government to clear overdrafts, finance projected budget deficits, finance special projects and debt assumption operations.

Government foreign -currency deposits at the CBT since June 1993 valued at official exchange rate.

Source: Central Bank of Turkmenistan.

CBT debt to Russia assumed by the Government of Turkmenistan on June 2, 1993.

Financing of budget deficit as reflected in fiscal accounts.

A positive magnitude implies an overdraft.

Credit to the Central Government to clear overdrafts, finance projected budget deficits, finance special projects and debt assumption operations.

Government foreign -currency deposits at the CBT since June 1993 valued at official exchange rate.

In short, refinance credit remains a major source of resources for the commercial banking sector’s lending activity, and in particular for the four banks dealing exclusively with the state sector (Table 36). In the last quarter of 1993, and the first quarter of 1994, the share of CBT refinance credit in the system’s total credit to the economy was around 50 percent. 1/ Although this share fell substantially after May 1994, availability of CBT refinance credit at negative real interest rates lowers the incentive for commercial banks to organize an economically viable interest rate structure that would help mobilize deposits. 2/

3. Credit auctions

Based on information provided by the CBT, interbank credit auctions were held on an almost weekly basis between August 1993 and September 1994. Rates have fluctuated widely from a low of 73 percent to a high of 290 percent. The maturity of these interbank loans is between 2 and 5 months (mostly five months). Volumes sold are very small, ranging between manat 2 million and 12 million (less than 1 percent of total credit to the economy as of October 1, 1994). The lack of activity, and the resulting low real interest rates, seems to emanate from the existence of low penalty rates for commercial banks overdrafts at the CBT, lack of compliance with reserve requirement obligations, and availability of central bank credit at concessionary rates. Except for a very small amount, all of the resources sold through this facility have come from the Savings Bank. Banks which are able to obtain refinance credit from the CBT are not eligible for participation in these interbank credit auctions.

4. Monetary and credit policy developments

a. Measures prior to the introduction of the manat

In order to minimize pressures on the new national currency, the monetary authorities introduced a number of policy measures in late 1993 directed at eliminating a perceived level of excess liquidity in the economy. Besides the already discussed increase in reserve requirements that took place in early October 1993, and the “forced” debiting of commercial banks’ correspondent accounts that occurred in November 1993, on October 27, 1993 the CBT established a procedure intended to reduce the purchasing power of enterprise deposits (settlement accounts). This procedure required that 75 percent of the portion of deposits exceeding manat 100,000 (Rub 50 million) was to be converted into negotiable bonds (to be used to settle outstanding loans due for repayment at the end of the year) and the remaining was converted into manat at the conversion rate of Rub 500 per manat.

The bond conversion procedure yielded approximately manat 447 million. Although the CBT expected that the whole amount was to be used to extinguish a large part of existing stock of concessionary loans (manat 1.3 billion as of November 1, 1993), only manat 108 million were used for this purpose. On December 1, 1993, the Cabinet of Ministers authorized the use of these bonds for the payment of tax liabilities, the clearing of interenterprise payments, and the value of those owned by agricultural enterprises was remitted back to their deposit accounts. As a result, by February 12, 1994 almost all of the proceeds from this conversion had been used up.

By Presidential Decree No. 1526 of October 19, 1993 the first Rub 10,000 (manat 20) of household deposit balances at the Sberbank were to be increased eight-fold. The transaction is estimated to have yielded a “compensation” of manat 70 million, whose counterpart funds are to be allocated from the budget during a two-year period. Currently, all amounts involved are off the Sberbank’s balance sheet pending the allocation of counterpart funds by the budget.

b. Developments in late 1993 and first nine months of 1994

The conduct of monetary policy since late 1993 has been primarily influenced by developments related to external payments arrears and has been characterized by a serious loss of policy autonomy on the part of the Central Bank of Turkmenistan. Lack of revenue for the gas company, and thus the budget, has been compensated by increased financing from the Central Bank to cover the Government’s operating deficit and, ex-post, its accumulation of domestic arrears. At the same time, and at least during the early part of 1994, there was also a rapid growth in refinance credit. Most of the credit issued was granted by means of presidential decrees and at highly concessionary interest rates. Despite the lowering of the nominal reserve requirement rate, as of end-November 1993 commercial banks’ correspondent accounts at the CBT turned negative (overdrafts). These overdrafts seem to have been the result not only of the increase in reserve requirements, but also of a change in policy stance whereby the CBT stepped up its policy of “forcing” the repayment of refinance credit falling due in November and December 1993. Commercial banks’ correspondent accounts were debited accordingly, and these banks were, in turn, expected to demand the repayment of funds onlent to their clients.

During the first nine months of 1994, gross central bank credit to the General Government amounted to manat 2.4 billion, or 45 percent of the monetary base as of end-September 1994 (Table 7). 1/ This amount of financing was granted to cover the budgetary deficit of the Government, and the repayment of a significant amount of domestic arrears that had accumulated during the last two months of 1993 and the first quarter of 1994. 1/

Net credit from the banking system to the General Government during the first nine months of 1994 amounted to manat 2.5 billion. An accumulation of deposits on the part of local governments and social security funds at commercial banks was not sufficient to offset the buildup of government overdrafts at the Central Bank (Table 8).

Table 8.Turkmenistan: Monetary Survey, Summary Accounts, 1992-94(End of period stocks; in millions of manats)
199219931994
Dec.MarchJuneSept.Dec.Jan.Feb.MarchAprilMayJuneJulyAug.Sept.
Assets2126031,1021,9441,9682,3833,2724,0224,2895,1046,6187,7758,5929,685
Net foreign assets1012728401,2091,2321,1509955,1055,2985,2294,6654,5124,4484,261
Convertible currency3467311,3031,8371,3171,2221,0745,1845,2495,1524,4854,3114,3114,240
Non-convertible currency-245-459-463-628-86-72-79-79497718020113721
of which: Debt assumption 1/286286286286286286286286286286286286
Net domestic assets1113312627357361,2332,277-1,083-1,009-1261,9533,2634,1445,424
Net credit to Government40-395-1,319-1,675-1,106-1,125-939-7,400-7,396-7,228-5,656-6,071-5,766-5,231
General Government operations 2/3903452854308138101,0301,1161,1541,4152,7622,5782,8183,331
Central government balances 3/64-53-6386426312-93-587-380-125-161-87390
Long-term government debt 4/3384213934359054958551,3472,0352,0753,2813,2813,2813,281
Local government balances-5-9-19-27-57-39-67-61-162-135-170-272-209-138
Pension fund-6-10-18-54-28-64-58-53-91-104-163-191-90-109
Social insurance fund-2-4-8-10-6-8-12-24-41-41-62-79-77-93
Foreign exchange reserve fund 5/-346-732-1,298-1,763-1,577-1,575-1,597-8,098-8,110-8,096-7,797-7,976-7,967-7,996
Debt assumption 1/-286-286-286-286-286-286-286-286-286-286-286-286
Other net credit-4-8-20-55-56-74-86-132-154-260-334-387-331-280
Credit to the economy1738191,9572,9223,3093,8505,0327,3877,7958,5348,81610,43311,14612,111
Other items net-102-93-376-513-1,467-1,492-1,816-1,070-1,407-1,431-1,208-1,099-1,236-1,456
Broad money2126031,1021,9441,9672,3833,2714,0214,2895,1036,6187,7758,5929,685
Currency outside banks26491042459251,0841,5011,8791,8522,1432,7883,2703,8854,840
Deposits1865549981,6991,0431,2991,7702,1422,4372,9613,8294,5054,7074,845
Memorandum items:
Net credit to General Government (flow) 2/6/-45-105404233031,9482,518
(In percent change relative to broad money at the beginning of the year)
Net domestic assets103.871.5294.1294.9-92.561.8238.3
Credit to General Government 2/-21.1-49.518.6199.715.499.0128.0
Credit to the economy304.7841.71296.61479.0207.3280.0447.4
Broad money184.5419.8816.7827.9104.4236.4392.3
(In percent change in real terms relative to the beginning of the year)
Currency outside banks-40.6-43.2-18.3-63.72.8-12.8-27.7
Broad money-10.6-26.7-20.6-90.63.4-2.7-32.0
Source: Central Bank of Turkmenistan.

CBT debt to Russia assumed by the Government of Turkmenistan on June 2, 1993.

Financing of budget deficit as reflected in fiscal accounts.

A positive magnitude implies an overdraft.

Credit to the Central Government to clear overdrafts, finance projected budget deficits, and debt assumption operations.

Government foreign-currency deposits at the CBT since June 1993 valued at official exchange rate.

Differs from the financing reflected in the fiscal accounts for reasons of timing and the absence of debt assumption operations in the budget.

Source: Central Bank of Turkmenistan.

CBT debt to Russia assumed by the Government of Turkmenistan on June 2, 1993.

Financing of budget deficit as reflected in fiscal accounts.

A positive magnitude implies an overdraft.

Credit to the Central Government to clear overdrafts, finance projected budget deficits, and debt assumption operations.

Government foreign-currency deposits at the CBT since June 1993 valued at official exchange rate.

Differs from the financing reflected in the fiscal accounts for reasons of timing and the absence of debt assumption operations in the budget.

Refinance credit granted to commercial banks for onlending operations with SOEs expanded substantially in the first three quarters of 1994. The stock of refinance credit increased from manat 1.8 billion at end-1993 to manat 3.1 billion by end-March 1994, a cumulative increase of 72 percent during the first quarter of 1994. The causes of this expansion seem to have been: (i) overdue payments by the budget to enterprises and the resulting lack of domestic resources to conduct their current operations; and, (ii) that certain enterprises preferred to obtain credit on concessionary terms than to sell their foreign exchange proceeds to the Central Bank at an overvalued exchange rate. The considerable expansion in central bank credit that took place during the first quarter of 1994 translated into a marked expansion in broad money, a 100 percent increase during the period (Table 8 and Chart 3). Beginning in April 1994, however, the CBT attempted to limit monetary expansion by exerting tighter control over the amount of refinance credit, and by end-June it had managed to reduce the stock of refinance credit outstanding to below the end-1993 level (Table 7). 2/ Although refinance credit once again increased during the third quarter of 1994, the rate of growth has been considerably more moderate than in the first few months of the year.

Chart 3TURKMENISTAN MONETARY INDICATORS, 1993-94

Source: Central Bank of Turkmenistan; and staff estimates.

Some recent developments in certain unclassified assets of the CBT need further discussion. After remaining relatively stable during the first five months of 1994, the category “other items; net” in the summary accounts of the CBT has shown a significant shift into a less negative net position (Table 7). Although a plausible explanation for this change is the crediting of the FERF discussed in Section 5 below, the significant shift that occurred in June of 1994, in particular, cannot be traced back to these transactions. Rather, it is possible that the CBT has credited the accounts of exporters whose barter goods receipts have been allocated to government entities that lack the domestic currency to compensate the exporters for the value of their goods, without recording such transactions as credit in the accounts of the CBT.

5. Institutional issues

a. The Foreign Exchange Reserve Fund

The Government’s FERF was transferred from Vneshekonombank to the CBT on July 7, 1993. However, the Government still retains control of the foreign exchange reserves and the CBT is not in a position to use them for policy purposes.

The FERF, whose receipts through 1993 came from an 80 percent tax on gas exports to Europe, has continued to grow slightly despite the elimination of the export tax early in 1994, since the tax on gas exports was replaced by a confiscatory 60 percent surrender requirement. As opposed to a standard surrender requirement where the exporter is compensated in domestic currency for the foreign currency proceeds sold to the Central Bank, the gas company did not receive any such compensation during the first quarter of 1994. However, as of April 19, 1994, the CBT started applying an exchange rate of manat 2 per U.S. dollar to the surrender of 60 percent of export earnings of the gas company. 1/ Moreover, not only did this measure give rise to a multiple exchange rate practice, it also continued to generate government revenue, as the foreign exchange proceeds were credited to the Government’s accounts with the CBT.

b. Interstate debt arrangements

A debt agreement was signed between Russia and Turkmenistan on June 2, 1993 whereby the Government of Turkmenistan assumed the liability of the CBT to the Central Bank of Russia (CBR) incurred on account of interrepublican trade. 2/ The total amount of the debt was Rub 143 billion (Rub 7 billion was actually owed to Kazakhstan), of which Rub 113 billion was to be paid on December 31, 1993, and Rub 30 billion was to be paid on June 1, 1994. 3/ Unpaid debt was supposed to be converted into U.S. dollars and interest would accrue at a rate of LIBOR plus 2 percent. However, according to the CBT, none of these payments were actually made on their due dates. Similarly, liabilities to Russia, on account of ruble shipments through October 1993 (around Rub 950 billion), have not only not been formally repaid, but have in fact been erased from the accounts of the CBT.

6. Developments in the financial system and banking supervision

a. The financial system and its supervision

A moratorium on bank licensing was in effect from June 17, 1993, until January 1, 1994. Commercial banks already operating in Turkmenistan were required to be relicensed under the November 1993 banking law. Of the 22 banks operating in October 1993, 19 banks remain; 3 previously independent commercial banks became branches of the other commercial banks as they could not meet the new capitalization requirements. Also, since the lifting of the moratorium, two new banks have been licensed, both of which involve 50 percent foreign ownership and two other joint-stock banks have been closed down.

As of July 1, 1993, all new cooperative banks were required to have a capital base of Rub 500 million, banks with foreign participation were required to have a capital base of Rub 700 million, and private banks a capital base of Rub 250 million. All existing banks were to reach these levels of capitalization, converted into manat, by January 1, 1994. As discussed above, by that date, 19 out of the 22 pre-existing banks were able to meet the requirements and thus were relicensed. The CBT has again revised the minimum capital standards for commercial banks and has set a ratio of risk weighted assets to capital of six percent. The CBT has also revised the minimum capital requirements for all banking institutions and required banks to have a minimum of equity capital of no less than manat 5 million by September 1, 1994.

CBT regulations limit commercial bank exposure to a single client to 25 percent of capital. However, bank inspections conducted since October 1993 reveal a number of severe violations. Several specialized banks (Agroprombank, Investbank, Turkmenbank, and Vneshekonombank) have not met such regulations.

b. Lending activities of commercial banks

Close evaluation of auditing reports submitted by the CBT’s supervision department reveals a disturbing trend in the general lending activities of the commercial banks. Many banks continue to lend in excess of their capital limitations, past due loans are rising, and some banks continue, to some extent, to renew past due loans. Most of the banks do not make any analyses of the borrowers’ ability to pay, and generally rely on the existence of a guarantor (private or a Ministry), and in many cases on an insurance policy issued by third party insurance companies, which guarantee that the loans will be repaid in part or in total in the event that the original obligor, or guarantor, do not meet their obligations.

In regard to the structure of lending by sectors, CBT data indicate that the share of loans to the agricultural sector has increased substantially from 6 percent in 1992 to 16 percent of total lending as of November 1, 1994. Furthermore, the share of loans to enterprises in trade and material supplies has stayed at around 40 percent, while the share of loans to industrial enterprises has fallen to 8 percent (Table 9). 1/

Table 9.Turkmenistan: Bank Lending by Sector, 1989-94
196919901991199219931994
(In millions of manat, end-period)
Total bank lending5.76.519.1385.42,921.07,155.0
Short-term loans5.25.717.9380.92,814.76,934.2
Of which:
Industry1.92.28.990.3627.9584.8
Agriculture0.30.20.223.5629.51,167.4
o/w Kolhozes0.30.10.218.3464.2937.6
Transport and communications0.00.00.16.399.570.3
Construction0.51.10.610.5171.3355.2
Material supplies0.50.52.461.5254.7422.5
Trade1.40.91.891.1520.52,282.0
Other0.40.73.779.5511.32,052.0
Long-term loans0.50.71.24.6106.3220.8
(In percent of total)
Total bank lending100.0100.0100.0100.0100.0100.0
Short-term loans91.088.693.998.896.496.9
Of which:
Industry33.034.846.523.421.58.2
Agriculture5.22.80.96.121.616.3
o/w Kolhozes4.51.81.04.715.913.1
Transport and communications0.30.10.41.63.41.0
Construction9.416.43.32.75.95.0
Material supplies7.97.612.816.08.75.9
Trade24.314.59.523.617.831.9
Other6.310.719.620.617.528.7
Long-term loans9.011.46.11.23.63.1
Source: Central Bank of Turkmenistan.
Source: Central Bank of Turkmenistan.

V. External Sector Developments in 1994

1. Overview

Being highly dependent on the production and exporting of energy resources and cotton, developments in Turkmenistan’s economy have to a large extent reflected those in its balance of payments (BOP). On the trade side, exports of and payments for natural gas and oil have dominated the evolution of both the current and the capital account. On the exchange side, the exchange rate regime and policies concerning the allocation of foreign exchange have constrained the full flowering of the non-gas and non-cotton sectors.

During 1994, Turkmenistan’s balance of payments has been influenced by four factors: (i) the increasingly severe problem in receiving payment for gas, and to a lesser extent electricity, exports; (ii) the predominance of barter and clearing trade, even in trade with non-FSU countries; 2/ (iii) the determination of the Government to continue to increase reserves in the FERF; and (iv) the distorted and restricted exchange system. The combination of these four factors resulted in a significant real compression of recorded imports in the first three quarters of 1994—to an annual volume estimated at more than 10 percent below the already low 1993 volume—as well as a modest further accumulation of reserves.

While trade data are still somewhat weak in Turkmenistan, significant progress has been made in terms of timeliness, accuracy, and consistency. Preliminary trade data are available monthly from the CBT and are reconciled with State Customs—which now attempts to collect information on all aspects of trade—as well as with the major participants in international trade: the Ministry of Oil and Gas and the Ministry of Agriculture. As a result, although current external sector statistics remain far from perfect, the official data do form the basis for a reasonable assessment of Turkmenistan’s external sector developments.

2. Developments in trade in late 1993 and 1994

a. Major export products

(i) Natural gas

Turkmenistan is the fourth largest natural gas producer in the world. Gas exports are estimated to have made up approximately 70 percent of total export value of Turkmenistan in 1994, roughly the same as in 1993. During 1994 Turkmenistan exported gas to the Central Asian and trans-Caucasus countries via pipelines through Kazakhstan and Uzbekistan. 1/ The volume of gas exports during 1994 is estimated to have declined sharply from 1993 and to have been substantially lower than the contracted amount. Compared to the 51 billion m3 exported in 1993 and the 46 billion m3 contracted for deliveries during 1994, the actual deliveries in 1994 were only 30 billion m3. The shortfall in the actual gas exports are attributed to, inter alia, interruptions in deliveries due to non-payment of gas, notably to Ukraine and Georgia.

Though the volume of gas export is estimated to have declined significantly, price rises were able to offset, to a large extent, the 41 percent real decline. During 1993 gas exports to the FSU area were priced in rubles at a unit price that was substantially below the prevailing world prices; beginning in 1994, the world c.i.f. price of US$80 per 1,000 m3 was adopted. 2/ As a result, the value of exports is estimated to have declined by 9 percent to roughly US$1,650 million in 1994 (Table 10 and Chart 4). However, there are serious problems, both with paying for the transportation of gas exports, and with receiving payment for gas exports, which are expected to result in only very modest actual receipts.

Chart 4TURKMENISTAN SELECTED EXTERNAL INDICATORS, 1992-94

Source: Data provided by the authorities; and staff estimates.

Table 10.Turkmenistan: Consolidated Quarterly Balance of Payments. 1992-94
199219931994
QIQIIQIIIQIVYear
Est.Est.
(In millions of U.S. dollars)
Trade balance1,139.6986.8355.4205.0188.0200.99493
Exports2,148.72,626.4744.9562.7556.7560.92,425.2
Gas exports1,248.91,806.0488.1383.7409.2366.31,647.5
Ukraine886.0156.2153.2198.2192.4700.0
Georgia299.079.569.334.956.3240.0
Cotton Exports427.8120.6106.371.399.4397.6
Oil Products186.451.041.246.146.1184.4
Electricity99.252.53.718.774.9
Other107.032.727.830.130.2120.8
Imports1,009.1-1,592.7-389.5-357.7-368.7-360.0-1,475.9
Services (net)-213.2-336.8-117.3-128.5-106.9-125.0-477.7
Gas transportation-173.0-123.1-91.1-10.3-397.5
Interest paid-2.6-2.6-2.6-1.3-9.1
Other services58.3-2.8-13.2-113.4-71.1
Private transfers11.72.60.20.93.7
Other incomes14.82.2-5.621.66.124.2
Current account926.4676.5240.373.5102.982.9499.5
Capital account-203.8-528.0-311.1-72.2-43.6-56.9-483.9
Official credit-215.1-631.6-336.1-97.2-68.6-81.9-583.9
Direct financial credits (net)9.6299.328.283.074.664.4250.2
Disbursement301.230.687.684.397.0299.6
Amortization 1/-1.9-2.4-4.6-9.7-32.6-49.4
Net change in arrears-930.9-364.3-180.2-143.2-146.3-834.0
Arrears owed 2/-930.9-384.3-180.2-143.2-226.3-934.0
Of which gas-914.8-274.3-177.1-143.2-210.4-805.0
Of which by Ukraine-671.9-143.7-100.8-108.3-192.2-545.0
Arrears paid20.080.0100.0
Gas credit 3/
Foreign direct investment11.3103.625.025.025.025.0100.0
Errors and omissions-830.3337.8102.8-30.2-34.238.3
Overall balance-107.7486.332.0-29.025.026.054.0
Financing107.7-486.3-32.029.0-25.0-26.0-54.0
Net foreign assets of
banking system, increase (-)108.7-486.3-32.029.0-25.0-26.0-54.0
Change in arrears 4/
Financing gap
Memorandum items(In percent of GDP, unless otherwise specified)
Current account balance54.721.636.413.416.514.920.9
Overall balance-6.415.54.8-5.34.04.72.3
Average nominal exchange rate0.42275110017588
Gross official reserves788820791816842842
(in months of imports)5.96.36.66.67.06.8
Arrears and debts to Turkmenistan 5/-951-1,315-1,495-1,639-1,785-1,785
Debt service
(in millions of dollars)2.05.07.212.333.958.5
(in percent of exports)0.10.71.32.26.02.4
(in percent of current gas receipts)0.212.38.77.174.017.0
External debt 1/5.47.412.814.218.717.5
(in millions of U.S. dollars)168196279354418418
Current gas receipts
(in millions of dollars)871418417546345
GDP (in millions of dollars)1,694.63,1326615476235582,389
Sources: Central Bank of Turkmenistan; and staff estimates.

Assumes the technical credit loan of USS148 million from Russia is defaulted in 1994.

Arrears of other FSU countries to Turkmenistan.

Credit extended to importers of Turkmen gas. In 1994, arrears of Ukraine and Georgia are assumed to be rolled-over with new gas credit by Turkmenistan.

Arrears of Turkmenistan to others.

Arrears and debts of other FSU countries to Turkmenistan.

Sources: Central Bank of Turkmenistan; and staff estimates.

Assumes the technical credit loan of USS148 million from Russia is defaulted in 1994.

Arrears of other FSU countries to Turkmenistan.

Credit extended to importers of Turkmen gas. In 1994, arrears of Ukraine and Georgia are assumed to be rolled-over with new gas credit by Turkmenistan.

Arrears of Turkmenistan to others.

Arrears and debts of other FSU countries to Turkmenistan.

Gas transport charges have been the subject of extensive negotiations between Turkmenistan, on the one hand, and Kazakhstan and Uzbekistan, on the other—the two countries which all Turkmen gas must cross. After reaching several tentative agreements on payment for gas transit, and for the operation of the compression stations, a 1994 agreement calls for delivery of gas to the two countries—6.0 and 2.9 billion m3 for Kazakhstan and Uzbekistan, respectively—free of charge, as payment for using the pipeline across their territory (Table 11). 1/ As a result, Turkmenistan received no payment for approximately US$400 million worth of exported gas, i.e. for the amount shipped to Kazakhstan, Uzbekistan and Russia.

Table 11.Turkmenistan: Gas Exports and Payments, 1994(In millions of U.S. dollars)
CountryExport Volume 1/Price 2/ValuePayment CurrentAmort Total DueTotalGas Arrears Stock As Of Beg. of yearFlow (Gross) During yearStock As Of End of yearDebtDebt and Arrears
(During 1994)
Armenia1808060600.32020.320.3
Azerbaijan2.5802005050150150150
Georgia380240501060214.7180394.7394.7
Kazakhstan 3/45020020020016.416.416.4
Kazakhstan 4/215303030
Russia 4/0.625151515
Ukraine 5/145070015590245671.94551126.91126.9
Uzbekistan 3/28016016016031.531.531.5
Uzbekistan 4/0.92522.522.522.5
Total30.01,647.5742.5100.0842.5934.8805.0218.21,521.61,739.8
of which:
Transit397.5397.5397.5
Net payments1,250.0345.0445.0
Source: Ministry of Oil and Gas.

In billions cubic meters.

In U.S. dollars per 1,000 cubic meters. The price of Russian gas in Germany as of August 1994 is US$85.

Gas delivered as payment for gas transit charges, at contract prices.

Gas used in the process of shipping gas across the country (i.e., to run the compressors).

Assumptions: Ukraine makes a payment of US$80 million in the fourth quarter of 1994 toward its arrears to Turkmenistan. Total arrears outstanding as of end-1993 are then regularized into a long-term loan with a 2-year grace period and a 5-year maturity. The arrears accumulated during 1994 are regularized during 1995. Similarly, Georgia pays US$60 million during 1994, of which US$10 million in amortization, and regularizes the balance, with loan terms of 2-year grace and 7-year repayment.

Source: Ministry of Oil and Gas.

In billions cubic meters.

In U.S. dollars per 1,000 cubic meters. The price of Russian gas in Germany as of August 1994 is US$85.

Gas delivered as payment for gas transit charges, at contract prices.

Gas used in the process of shipping gas across the country (i.e., to run the compressors).

Assumptions: Ukraine makes a payment of US$80 million in the fourth quarter of 1994 toward its arrears to Turkmenistan. Total arrears outstanding as of end-1993 are then regularized into a long-term loan with a 2-year grace period and a 5-year maturity. The arrears accumulated during 1994 are regularized during 1995. Similarly, Georgia pays US$60 million during 1994, of which US$10 million in amortization, and regularizes the balance, with loan terms of 2-year grace and 7-year repayment.

With regard to the remaining gas exports, payment arrears were a serious problem throughout 1994. In the first quarter of the year Turkmenistan received approximately 15 percent payment on its non-transit natural gas exports. While the situation improved modestly in the subsequent quarters, total gas payments for the first three quarters of 1994 totalled only 33 percent of non-transit gas shipments (Table 37).

The primary debtors to Turkmenistan in 1993 were Ukraine, Georgia, and Kazakhstan. In 1994 Azerbaijan joined that list. As of end-1993, the amount of debt and arrears owed to Turkmenistan was US$951 million, of which gas accounted for US$931 million. Of the latter amount, Ukraine accounted for US$671.9 million. By end-1994, total debt and arrears are estimated to have increased to US$1,785 million, of which US$1,740 million was due to gas. (Table 10 and Chart 4). Of the latter amount, Ukraine and Georgia account for US$1,500 million (Table 11). During the first three quarters of 1994, not only had Ukraine been delinquent on the scheduled amortization payments on the arrears from 1993, it had also failed to make payments for current deliveries.

Turkmenistan attempted to deal with the arrears problem in two ways: first, through a series of agreements with major gas trading partners, covering both payments for current shipments and payments on outstanding arrears; and second, through occasional delivery cutoffs. The agreements have been largely ineffective in dealing with either current payments or outstanding arrears. For example, a repayment agreement was reached between Ukraine and Turkmenistan in November which stipulated that (i) the arrears outstanding as of end-1993 would be rescheduled over the next seven years, which would include a grace period of two years and a repayment period of five years; (ii) the arrears accumulated during 1994 would be settled during 1995; and (iii) Ukraine is to remain current on all gas to be shipped during 1995 and to make amortization payments of US$300 million during November and December 1994. However, by end-December 1994 Ukraine had paid only $46 million.

Supplies to Ukraine were shut off in January, February and November, and those to Georgia in October and December. The rate of gas flow to Azerbaijan was also reduced on several occasions throughout 1994, but the Turkmenistan authorities have explained this was not due to a policy decision but rather to technical difficulties with transportation. Based on information available at end-November 1994, total payments in 1994 are projected at about 20 percent of total current deliveries, or 25 percent of non-transit gas shipments. As a result, from the more than US$1,650 million in projected gas exports, Turkmenistan is expected to receive only about US$345 million in current payments in 1994.

While Turkmenistan is currently restricted to exporting natural gas to countries of the FSU due to its pipeline network, plans are under consideration for several projects to expand Turkmenistan’s gas export markets: a pipeline to Western Europe across Iran and Turkey, a pipeline to China to ultimately supply Japan with Liquified Natural Gas (LNG), and the construction of domestic polyethylene and LNG plants.

The authorities have made some progress on the pipeline project through Iran. The first of two stages of the project will entail laying a pipeline from the western part of Turkmenistan, where several large gas wells are in operation, to the Caspian Sea, and over the mountain ranges in Iran before crossing the Turkish border. Although the flow capacity of the pipeline will be 28-30 billion m3 per year, Turkey has contracted to purchase 5-15 billion m3 a year, leaving the rest (15 billion m3) to be exported to Western Europe. The total cost of the first two stages is estimated at US$2 billion and US$5 billion, respectively. If construction commences in 1995 as planned, gas deliveries to Turkey could start as early as 1997. The second stage would extend the pipeline on both ends: within the territories of Turkmenistan to the large gas deposits in the eastern part of the country, and within Turkey all the way to Istanbul.

(ii) Cotton

Cotton is Turkmenistan’s second largest export item, as it comprised about 15 percent of total exports in 1994, or over 50 percent of non-gas exports. The Ministry of Agriculture has an effective monopoly on the export of cotton. Despite recent official pronouncements in favor of cash trade, there is little quantitative information on the payments composition of cotton exports. Accordingly, it is assumed that most cotton exports were sold on a barter basis both in 1993 and 1994 (Table 41). The bulk of the exports was bartered for construction. A Presidential decree of January 1994 specifies how the proceeds from cotton exports will be allocated across the various sectors of the Turkmenistan economy.

(iii) Oil

Oil exports are estimated to be almost US$200 million in 1994, up slightly from a reported US$186 million in 1993. In 1994, as in 1993, oil exports have been constrained by transport capacity, due to a shortage of railway tankers.

(iv) Electricity

Electricity exports are estimated to be about US$100 million in 1994. Electricity is currently exported only to Kazakhstan, although plans are under consideration for exports to Iran, Pakistan and the Caucasus. Exports to Kazakhstan are likely to decline in coming years, as Kazakhstan expands its domestic electricity production.

(v) Other exports

Exports of all other products comprise only 5 percent of Turkmenistan’s exports (1.5 percent if gas condensates are excluded). The majority of such exports are either energy and energy-based products (i.e., white spirits, fertilizers) or cotton and cotton-based products (i.e., cotton seeds, carpets).

b. Major import products

Reflecting Turkmenistan’s highly specialized production—a legacy of the Soviet era—Turkmenistan imports a wide variety of products. Consumer goods accounted for around 40 percent of total imports in 1993 and the first half of 1994, with the rest being producer and industrial goods. Among the consumer goods, foodstuffs comprised just over half of the total. Major food imports were meat, dairy products, grain and grain products, sugar and sugar products, and beverages. Major non-food consumer goods imports included medicines, textiles and other clothing, and furniture. Among producer and industrial goods, major imports included all types of transportation equipment—ground transport vehicles, ships and planes—as well as electrical machinery and parts and nuclear reactors, boilers, equipment and mechanical devices (Table 42).

c. Trade with FSU countries

Turkmenistan’s FSU exports are dominated by gas; the major FSU export partners are Ukraine, Georgia, and Azerbaijan. During 1994, some 70 percent of total exports were with the FSU partners. With regard to imports, there is currently no detailed information on the products imported from the various FSU countries. Major sources of FSU imports for Turkmenistan are Russia and Ukraine, with significant imports also coming from Georgia, Kazakhstan and Azerbaijan.

The bulk of Turkmenistan’s FSU trade continues to be conducted by barter or clearing arrangement, rather than by cash. In 1993, 98 percent of all FSU imports came in on barter arrangements. In 1994, all electricity was for barter, while 80 percent of gas exports was contracted to be paid for by clearing arrangements or via gas transit services. This is reflected in the decline in the fraction of imports for which Turkmenistan paid in cash declined from 64 percent in the first quarter of 1994, to 34 percent and 18 percent in the ensuing two quarters (Tables 43, 44 and 47).

d. Trade with non-FSU countries

Turkmenistan trades with a wide variety of non-FSU countries, over 50 during 1994. Major trading partners include Turkey, Iran, Italy, Germany, the United Kingdom, and the United States.

The majority of Turkmenistan’s exports to non-FSU countries are cotton and cotton products, which amounted to over half of total non-gas exports in 1994 (Table 46). Moreover, cotton exports accounted for roughly two-thirds of exports to the non-FSU area. The second largest category is mineral products—primarily petroleum products, which accounted for another quarter of exports to the non-FSU area. All other exports comprised less than 15 percent of total non-FSU exports.

Turkmenistan’s non-FSU imports are far mere diverse than its non-FSU exports. Major import categories from non-FSU countries include textiles, food products, automobiles and electronics, and non-precious metals. These categories comprised almost half of total non-FSU imports in the first half of 1994 (Table 47).

Barter and clearing arrangements play a significant role in Turkmenistan’s non-FSU trading, just as in its FSU trading. As indicated above, nearly all cotton is sold under barter arrangements. In 1993, 54 percent of Turkmenistan’s non-FSU imports came in under a barter or clearing arrangement, compared to roughly one third in 1994. During 1994, less than half of non-FSU imports were paid for with cash, while only 9 percent of non-FSU exports were exported for cash (Tables 48 and 49).

3. Services and transfers

Services and transfers remains the weakest area of the external sector data. The two main components of invisibles have been gas transport and construction services. The dominant factor in services is payment for gas transit; however, each gas transit agreement specifies a different price for valuing the transit gas (US$50 to US$80 per 1,000 m3), as well as a different price for valuing gas used to run the compressor stations (US$15 to US$25). As a result, the “value” of the gas used to pay for transportation is subjective. 1/ Nevertheless, based on the contracted price of gas delivered in lieu of transit fees and for technical reserves, the total value of gas transit totaled some US$400 million in 1994.

Construction services for the gas, oil, and hotel sectors rendered from abroad totalled some US$200 million for the year. According to CBT projections, Turkmenistan will run a modest surplus on rail transportation services in 1994 as well as on sea and air services, although solid information on these latter areas is lacking.

4. Official credit flows and foreign direct investment

Turkmenistan has signed a number of foreign credit agreements with export credit agencies and bilateral creditors, including Belgium, China, the European Community, Germany, Iran, Israel, Pakistan, Turkey, the United Kingdom, and the United States. These agreements essentially establish credit lines on which Turkmenistan is free to draw. As of November 15, 1994, signed official credit agreements totalled US$477.7 million. 1/ Of that total, US$168.3 million had been disbursed by end-1993, with an additional US$202.5 million disbursed in the first three quarters of 1994. Total acknowledged outstanding debt, therefore, as of October 1, 1994, was US$370.9 million (Table 50).

These loans are primarily for food, medicines, and construction. Construction credits are being used to finance the construction of the new airport, several new hotels, and textile plants. Since most of the larger loans are short-term, a debt service payment scheduled for 1995 amounts to US$196 million (including US$186 in amortization and US$10 million in interest). Debt service in percent of total exports is estimated to have risen from less than 1 percent in 1993 to 2.4 percent in 1994, and, based on the scheduled debt service, to increase to 8.4 percent in 1995 (Table 56).

Information on foreign direct investment (FDI) in Turkmenistan is limited, and of questionable reliability. FDI in 1993 amounted to US$103.6 million, buoyed primarily by investments of US$72 million made by one Argentinean gas company and payments by participants in auctions of oil fields. In 1994, total FDI is seen to have remained unchanged from the 1993 level, reflecting continued capital inflow into the energy sector.

5. External reserves

Despite the decline in export receipts in 1994 and the mounting excess demand for foreign exchange by importers, Turkmenistan continued to increase its external reserves. It is estimated that the stock of reserves increased to US$816 million at the end of September 1994, or approximately 6.6 months of imports. This compares to US$788 million at the end-1993 and 5.9 months of imports.

VI. Exchange and Trade System

1. Background

With the introduction of the manat as Turkmenistan’s currency on November 1, 1993, it was the authorities’ stated intention to allow the exchange rate for the manat to be determined freely in a weekly auction. However, the introduction of the manat coincided with the loss of Turkmenistan’s hard currency quota for gas exports to Eastern Europe through Russia, and thus the loss of the majority of Turkmenistan’s convertible currency earnings. During the twelve months following the manat’s introduction, the exchange system has become increasingly less transparent and more restrictive. In general, the overvalued exchange rate has severely distorted relative prices and retarded the activities in external trade. A black market continues to operate, with a rate of roughly 200 manat per dollar in mid-November 1994 (Table 40).

2. Exchange arrangements

Multiple exchange rates are applied to different types of transactions. There is an “official rate,” used for Government accounting purposes that applies to all transactions with the Central Bank except those to Turkmengas. In addition, there is a “commercial rate,” which applies to certain transactions conducted with commercial banks.

After being held at 2 manat per dollar from the introduction of the manat until March 1994, the official rate was fixed at 10 manat per dollar until August. A commercial rate was introduced in April 1994 at a fixed rate of 60 manat per dollar. Coinciding with the establishment of the State Commodity Exchange (SCE), the official and the commercial exchange rates were unified at 75 manat/US$ in August. While surrendered export receipts are now converted at the unified rate of 75 manat/US$, Turkmengas sales of foreign exchange to the Central Bank are still carried out at 10 manat per dollar.

Prior to February, commercial banks were not permitted to engage in foreign exchange operations on their own; rather, they served the role of “brokers” to deal with the CBT. In February, 1994, permissions were granted to licensed commercial banks to engage in foreign exchange operations. At present, there are six commercial banks with such a license. Individuals are allowed to buy foreign exchange for travel abroad, up to US$500 per trip per visa. Regulations allow enterprises to buy foreign exchange for any purpose. In practice, however, the overvalued commercial rate has resulted in an excess demand for funds in this market, and thus enterprises are denied access to foreign exchange.

According to information available from the CBT for the first five months of 1994, sales of foreign exchange by the Central Bank, cut of foreign exchange surrendered to it (non-gas surrender requirements remain the property of the Central Bank, while gas surrender requirements are turned over to the Government) totalled US$4.4 million. These sales were primarily transacted at the official exchange rate, with a modest sum being sold to commercial banks in early May at the commercial exchange rate, to assist the start-up of this market. Surrendered gas proceeds totalled US$19.5 million, which were exchanged initially at 0 manat per U.S. dollar, and starting in March at 2 manat per dollar. 1/ Sales from the government’s FERF totalled US$19.5 million; some of these funds were sold at the official exchange rate of 10 manat per dollar, while others—relating to certain government transactions—were sold at 2 manat per dollar. Purchases by commercial banks (other than from the Central Bank) at the official rate totalled US$235,000 in May, and US$70,000 in the first week of June, while sales at the commercial rate totalled US$693,000 in May and US$98,000 in the first week of June.

3. Prescription of currency

In January 1994 the Central Bank of Turkmenistan issued a directive allowing commercial banks to reestablish correspondent accounts with banks in FSU and non-FSU countries. Prior to this time, all payments were centralized through the accounts of the Central Bank.

The vast majority of transactions with FSU states are subject to bilateral payments agreements (BPAs), with most of these transactions being carried out as part of a barter or clearing agreement (specifically, those associated with gas trade). Currently, Turkmenistan has signed BPAs with Russia, 10 FSU countries and two Baltic states. 2/ In addition, a growing share of non-FSU trade, including all cotton exports, are being conducted under clearing arrangements as well.

On January 20, 1994, by a presidential decree, domestic circulation of foreign currency notes was permitted temporarily until further notice. The use of foreign currency is permitted in selected sectors, mostly in services (hotels and restaurants). However, in December 1994, a Presidential decree was issued prohibiting the domestic circulation of foreign currency.

4. External payments and receipts

a. State Commodity Exchange

The SCE was established on August 1 and came into full operation on August 15, 1994, with the stated objectives of facilitating international trade in commodities by enhancing the export volumes and the prices of primary commodities produced in Turkmenistan (e.g., cotton, oil products, and other raw materials). However, in practice, it had the additional effects of centralizing all external trade-related activities, and, most importantly, effecting the full-retention of foreign exchange earnings from commodity trade. At present, exports of all major commodities are effectively subject to a 100-percent surrender requirement. In fact, by stipulating that all exchanges be undertaken in manat at the commercial rate of 75 manat/US$, the SCE has retained all the foreign exchange flowing through the SCE. Moreover, since its introduction, the SCE conducted no foreign exchange sales to potential importers, greatly exacerbating the shortage of foreign exchange.

b. Proceeds from exports and invisibles

In addition to certain items (such as arms, narcotics and antiquities) whose trade is prohibited or restricted for national security reasons, the export license requirement for all other products has been lifted in conjunction with the establishment of the SCE, as mentioned above.

Foreign currency receipts from gas exports are still subject to a 60 percent surrender requirement. Prior to the establishment of the SCE, foreign currency receipts of SOEs for non-gas exports were subject to a 50 percent surrender requirement, at the official exchange rate, and export receipts of private companies were free of surrender requirements. Export receipts in excess of the applicable surrender requirement could be used for imports, sold at the commercial exchange rate, or held in foreign currency deposits either domestically or abroad. However, with SCE an effective 100-percent surrender requirement now applies to all export earnings.

c. Payments for imports and invisibles

Except for a negative list of prohibited imports introduced in early 1993, all other imports are legally free of restrictions. According to the authorities, no import licenses are required. In practice, however, lack of access to foreign exchange (due to the SCE) effectively prohibits imports or payments for invisibles by most businesses. Individuals are prohibited access to foreign exchange, other than up to US$500 for travel abroad per trip. All trade engaged by both state as well as private enterprises are required to be conducted through the SCE.

5. Exchange measures subject to Fund jurisdiction

During the 1994 consultations, several exchange restrictions in Turkmenistan were identified. The limitations on payments for imports, on travel allowances, and the full retention of the surrendered export receipts to the SCE give rise to exchange restrictions subject to approval under Article VIII. The advance import deposit requirement, which is not remunerated at a market interest rate, and the special exchange rate applied to Turkmengas sales of foreign exchange proceeds, give rise to multiple currency practices (MCPs). Since these measures were introduced after Turkmenistan became a member, they are also subject to approval under Article VIII. 1/

APPENDIX I Turkmenistan: Statistical Issues

I. National Accounts. Price Indices. Wages and Employment

1. National accounts

The State Statistics Committee (Goskomstat) of Turkmenistan continues to publish statistics based on the statistical methodologies inherited from the Soviet Union. Due to a lack of staff trained in international statistical methodology and inadequate computer resources, Goskomstat has been forced to provide its statistics to international agencies with serious caveats, and has repeatedly requested technical assistance. The Fund has provided extensive technical assistance on national accounts and price statistics.

Goskomstat of Turkmenistan continues to compile two measures of output: Gross Social Product (GSP) and National Income Produced in the Material Sphere (NIP), i.e. indicators used under central planning. GSP includes all intermediate levels of production, while NIP is valued both including and excluding indirect taxes, less subsidies. Using monthly and quarterly volume of production indicators, data are first compiled in comparable prices (that is, current period expressed in the prices of the previous period). Data in current prices are then derived using wholesale and consumer price indices. Aggregate data for Gross Domestic Product (GDP) also are compiled in current prices but are not published. GDP estimates for 1992 and 1993 have been provided to the staff but the quality of these estimates is dubious.

NIP estimates are converted, by the staff, to GDP equivalents by means of a “translation key.” This methodology consists of adding on estimates of missing components to Goskomstat’s NIP measure. However, these estimates of GDP are unreliable given that the calculation of NIP suffers from methodological weaknesses in regard to data collection and lack of suitable price deflators. Turkmenistan is in an early stage of reform of its national accounts system and would benefit from technical assistance and training in all aspects of national accounts.

One major problem identified with the decomposition of national income utilized is the treatment of investment, described by Goskomstat as “accumulation.” An estimate is obtained from reports of enterprises, and includes both investment in new capital goods and revaluation of existing capital goods. It thus follows that even without any new investment, in an highly inflationary environment, asset revaluation alone will lead to very high estimates for accumulation as measured by Goskomstat. The authorities are now aware of this problem, and are attempting to decompose accumulation into revaluation and investment. The inclusion of revaluation of assets explains the jump to historically high reported shares of accumulation in 1992 and 1993 GDP.

2. Price indices

The main measure of inflation in Turkmenistan is the retail price index (RPI). The RPI is based on the standard Soviet methodology, and is a Paasche index based on a changing set of weights emanating from retail sales data. 1/ Prices are surveyed in the six largest cities of Turkmenistan, and the average individual commodity prices in each city are weighted by total sales to derive the average price for the country as a whole. Unfortunately, the RPI has extremely limited coverage of private kiosks and private exchanges of goods and services at established markets. The RPI reflects the inherited Soviet methodological concept of total coverage, instead of sample surveys, and comprises 2,500 goods and services, which has complicated the collection of price information.

Goskomstat initiated a pilot project to estimate a Laspeyres consumer price index (CPI), by using a constant set of weights (from retail sales) and price relatives from the regular RPI reporting network. The authorities are expected to move to the compilation of a fixed base Laspeyres type CPI index using information from the latest household budget survey. However, a complete lack of computer systems has precluded significant progress in this area.

Turkmenistan calculates a producer price index (PPI) as its measure of inflation on the producer level. The PPI is a fixed-weight index, with weights determined as the share of a particular industrial sector’s output in the total value of output during the preceding year. However, the fixed weights are changed each year and the index is based on a Sauerbeck methodology.

3. Wages and employment

Wage data are reported both as the average for the latest quarter and for the most recent month, based on the average wage bill and the average level of employment. Goskomstat prepares tables on wages and salaries by industry and by region, providing the number of full-time employees and their salaries. In addition, a monthly household income/expenditure survey is compiled, with information on non-wage income.

The provision of employment statistics is not centralized under one government agency in Turkmenistan. Rather, two different government agencies track employment and wages, using different definitions of such basic sectors as agriculture. Due to differences in scope and definition, the Government’s various data are only roughly comparable.

II. Fiscal Accounts

The statistical reporting of the financial operations of the Government is timely but somewhat incomplete. In particular, the budgetary accounts do not include any of the Government’s foreign currency transactions, including foreign financing, which have been, at least until recently, considerable. An economic or functional classification of expenditure has just started being prepared by the authorities but its reliability is still questionable. The Government has until recently relied upon monthly reporting of its revenue and expenditure by commercial banks. However, following technical assistance from the Fund which included the assignment of a Resident Advisor, a Treasury became operative on January 1, 1995.

There have been a number of shortcomings in the fiscal reporting process. Shortcomings have related mainly to the non-inclusion of the operations of several extrabudgetary funds in the fiscal reporting system, as well as certain off-budget outlays, the classification of financing items as revenues, and the lack of preparation of an economic classification of expenditures. However, for 1994, most of the transactions of the extrabudgetary funds have been included in the latest fiscal accounts and quarterly budget execution reports have incorporated a better presentation of important financing items.

Progress is still required in the areas of: (i) calculation of the outstanding debt of the Government; (ii) the inclusion of certain financing items as revenue items, thus understating the size of the deficit; and (iii) debt assumption operations that do not appear on budget, thus creating discrepancies in the magnitude of domestic banking financing reported by the CBT and the Ministry of Finance.

III. Money and Banking Statistics

Under a program of technical assistance from the Monetary and Exchange Affairs and Statistics Departments of the Fund, progress has been made in compiling monetary statistics from the existing bank accounting system. Work also has progressed, with the assistance of experts from the cooperating central banks, on the development of a new Chart of Accounts for the CBT and of accounting instructions, with implementation expected by early 1995.

The CBT, however, does not publish any monetary accounts and credit statistics. A monetary survey is currently prepared by EUR II Department with the assistance of the STA Department.

IV. Balance of Payments

In the third quarter of 1993, the source of merchandise data was changed from enterprise surveys prepared by Goskomstat to customs statistics compiled the newly created State Customs Office (SCO). While this step represented progress in putting in place the proper institutional arrangements, the customs statistics at present have substantial coverage and valuation problems arising from the weakness of border controls. Since the first quarter of 1994, a reporting system has been established, data collected and processed, and quarterly balance of payments statements compiled within the CBT. However, considerable work is required to bring Turkmenistan’s balance of payments to international standards and conformance with the Fund’s Balance of Payments Manual. The major shortcomings at present relate to: (i) the customs statistics used to compile the general merchandise account; (ii) the coverage of data for various balance of payments entries; and (iii) an excessive degree of decentralization of data collection.

Weaknesses in the coverage of data for various balance of payments transactions reflect incomplete implementation of recommendations by technical assistance missions to introduce surveys and poor responses by enterprises and official institutions. Arrangements for monitoring foreign direct investment and external debt are grossly inadequate. Data on humanitarian assistance received from abroad are not available. Transactions with foreign armed forces, embassies, and international organizations located in Turkmenistan are not recorded at present.

APPENDIX II Turkmenistan: A Note On Financial Crowding-Out

A financial crowding out may occur when either real lending rates are too high, or real deposit rates are too low in a situation of high inflation and (relatively) high reserve ratios. Under these circumstances, private investment would be strongly discouraged or private savings (in the form of loanable funds) would be severely limited. Although this form of crowding out has the same real effects as the traditional crowding out, which is usually associated with the extraction of real resources by the public sector, it differs from the latter in two important respects: first, it does not result from the interplay of market forces, but rather from government intervention in financial markets. Second, it may manifest itself not only through high lending rates (the traditional form of crowding out), but also through low, perhaps negative, deposit rates. In the latter case, disintermediation occurs and the development of the financial sector is severely hampered.

As such, financial crowding out is a more realistic possibility in FSU countries than traditional crowding out. It poses a capital market dilemma generated by inflationary public finance and government market intervention in the financial sector. This policy dilemma may be shown as follows:

For a typical commercial bank let

and π = profits.

Then, the profit maximization condition would be

Rewriting equation (3) as

and substituting (4) into (1), the profit equation for a typical commercial

The first order maximization condition then yields:

Equation (6) states that the effective interest revenue of the banking sector, i.e., interest income adjusted for the interest-free required reserve ratio m, should equal the interest cost of deposits.

In real terms, equation (6) may be rewritten as:

which yields

Thus, the profit maximizing real lending rate is a weighted average of the real deposit rate and the inflation rate, with weights of 11-m and m1-m respectively.

The wedge that inflation drives between the two interest rates is a function of the reserve requirement. The policy dilemma between a high lending rate or a low deposit rate, noted earlier, may be brought into focus by considering the following policy actions:

Case 1. Suppose that in order to mobilize savings the Government wishes to keep a minimum real deposit rate of zero. Then, equation (8) would yield:

An example:

In Turkmenistan, the minimum reserve requirement is 20 percent; inflation in 1994 is running at an annualized rate of 1,000 percent; then, equation (9) implies that the real lending rate would be 23 percent, equivalent to a nominal rate of 1,250 percent. It is obvious that, under such conditions, all investment projects would be crowded out.

Case 2. Suppose that the Government decided to avoid a real lending rate higher than 10 percent, in support of all investment projects with a rate of return higher than 10 percent. In this case, the real deposit rate would be calculated from equation (8) as

An example:

Using the same numbers for Turkmenistan as those in the previous example, equation (5) shows that the real deposit rate would be -10 percent. In other words, for the Government to achieve a 10 percent real lending rate, depositors would have to accept a substantially negative deposit rate; this would obviously have detrimental effects on the availability of capital funds.

Case 3. The Government could decide to distribute the burden of high inflation equally between lenders (savers) and borrowers. Setting r1 = -rd in equation (8) we obtain:

An example:

Under the same numbers for Turkmenistan, equation (11) would imply a real deposit rate of -10 percent and a real lending rate of 10 percent. As shown in the earlier case, the substantially negative deposit rate represents a serious burden for savers with adverse consequences for the availability of financial savings through the banking system.

In reality, the monetary authorities of Turkmenistan have opted to subsidize borrowers heavily, not only in absolute but also in relative terms. This is shown in the following Table, which presents the target and actual deposit and lending rates. By “target” we mean the rates implied by the inflation assumption and the opposite actual rate from equation (6).1/

For example, the target deposit rate is a function of the actual lending rate, and vice versa.

Turkmenistan: Target and Actual Interest Rates, 1994(In percent)
TargetActualDifference
(1)(2)(2) - (1)
Deposit rate
Nominal4015050
Real-87-7710
Lending rate
Nominal187.5050-137.5
Real-74-86-12
“Equal Burden” Rates
Real deposit (-real lending)-10
Nominal deposit890150-740
Nominal lending1,11050-1,060
Memorandum items
inflation rate = 1,000 percent
reserve requirement = 20 percent
Sources: Original data from CBT; and staff estimates.
Sources: Original data from CBT; and staff estimates.

Lenders, notably public enterprises, are subsidized not only because the real lending rate is negative, but also because the actual rate differs from the “target” rate by more than the respective comparison of the deposit rate. According to the assumptions and calculations of the above Table, the actual real lending rate is “more negative” by 12 percentage points, whereas the actual real deposit rate is “less negative” by 10 percentage points.

The Table also shows what should have been the deposit and lending rates, if the monetary authorities had wished to equalize the burden (in real terms) between borrowers and lenders. It is shown that, compared with the target nominal rates, the current actual rates imply a subsidization of borrowers by 320 percentage points.

APPENDIX III Turkmenistan: Summary of Major Taxes as of December 1, 1994
TaxNature of Tax, Deductions, and ExemptionsRates
1.Taxes on consumption
1.1.Value-added taxTaxpayers: legal entities—including enterprises with foreign investments or foreign legal entities—engaged in production and other commercial operations; persons engaged in entrepreneurial activity without having formed a legal entity, if their earnings from the sale of goods and services are greater than ten times the minimum wage per year.Exemptions: (a) services associated with the shipment, loading, unloading, of foreign freight in or through the territory of Turkmenistan; (b) goods and services intended for official use by foreign diplomatic and equivalent representations; (c) urban passenger transportation services (except taxis); (d) housing and administrative services provided to the public; (e) landing and resale of loans, including insurance operations; (f) operations involving monetary deposits; payments: transfers; circulation of currency; money; banknotes; checks and securities, such as stocks, bonds, certificates; and bills of exchanges; (g) activities performed by specially authorised agencies for which a state fee is charged or royalties paid for mineral resources; (h) care services for children in preschool, for the sick and elderly people, fees for instruction provided to children and adolescents at clubs, and for the use of sports facilities and cultural and educational institutions; (i) burial and cemetery services; (j) rites and ceremonies performed by religious organizations and associations; (k) goods sold by manufacturing enterprises operated by societies for the blind and deaf for the purpose of providing job training; (l) transactions involving the sale of confiscated assets; (m) patent and licensing operations (except those involving agents) associated with industrial property and copyrights; (n) soientific research and experimental design work financed by the budget; (o) transactions involving sales of assets by the Turkmenistan State Depository for Precious Metals (Gokhran); (p) medical services, medicines sold, medical supplies and equipment; (q) food prepared for educational institutions, hospitals, and other social and cultural institutions and organisations financed by the Budget; (r) services provided by communications enterprises associated with delivering pensions and benefits to the public; (s) goods and services produced and sold by sheltered workshops operated by paychiatric and neuropaychiatric institutions and social organisations for the disabled; (t) goods and services produced and sold by enterprises, institutions, and organisations at which disabled persons account for at least 50 percent of the total number of employees; (u) goods produced by agricultural enterprises and used as in-kind payments in place of wages, and also produce used to provide meals to workers brought in from elsewhere to perform farm work. (The exemptions for agricultural sector were removed in the third quarter of 1994).20 percent on all of the goods and services (16.67 percent on goods sold at VAT-inclusive prices).
(Decree of the President, No. UP-253, On the Introduction of the Value-Added Tax, January 6, 1992. Decree of the President, No.512, On the Value-Added Tax, January 6, 1992. Instruction of the Ministry of Finance, No.1, January 8, 1992. Decree of the President No. UP-720, On the Value-Added Tax, December 31, 1992). Instruction of October 8, 1993, on VAT. Decree of the President of November 10, 1993 No.1554. Decree of the President of August 2, 1994, No.1896.Payments The procedure and deadlines for payment of the VAT will be determined by the State Tax Inspectorate in cooperation with MEF. Enterprises will transfer the VAT to the appropriate budgets in accordance with norms established by the time the Budget is approved. Persons engaged in entrepreneurial activity will transfer the VAT to local budgets.
Objects of taxation: the objects of taxation will be the turnovers involving (a) the sale of all goods and services either used by an enterprise for its own consumption or acquired elsewhere, (b) sale of goods and services in exchange for other goods and services, (c) the transfer of goods and services to other legal entities and individuals free of charge or with partial payment, and (d) sale of mortgaged items.
1.2.Excises
(Decree of the President, No. UP-254, On the Introduction of Excises, January 6, 1992. Decree of the President, No.513, On Excises, January 6, 1992. Instruction of the Ministry of Finance, No.2, January 8, 1992, No.810 On Excises, August 25, 1992). Instruction of the MEF of December 24, 1993, On Order of Deduction of the Excises. Decree of the President, No.1870, On Prices for Alcoholic Beverages and Other Goods. Latter of State Inspectorate of September 8, 1994.Effective January 1, 1992, a tax, payable by producers of listed goods which are juridical persons including their branches outside Turkmenistan, on the excise-inclusive price of listed goods.Exemptions; (a) goods exported to outside the FSU; (b) goods imported from within or outside the FSU.Rates
1. Jewelry

2. Caviar

3. Tobacco

4. Natural astrakhan

skin (clothes and fur)

5. Natural leather

6. Antique goods

7. Furniture

8. Vodka, liquor.

produced in Turkmenistan

9. Dessert wines

10. Brandy, produced

in Turkmenistan

11. Beer

12. Russian vodka.

produced in Turkmenistan

13. Vodka, liquor,

cognac, produced outside
(In percent)

20

15

10

10

10

10

10

65

60

65

10

50

30
Payment: Self-assessed payment is due on the third day following the assessment period. The assessment period for alcoholic products is daily.
2.Taxes on incomes and profits
2.1Personal income taxEffective January 1, 1992, a tax on the individual income of permanent (or deemed permanent) residents received in cash or in kind. Credit is given for foreign tax paid on foreign-source income. Also taxed is the income of nonresidents received from sources in Turkmenistan.Exempt income: (a) income of collective farm workers (exempted by the decree); (b) state social security and social insurance benefits and assistance from charitable funds; (c) alimony received as child support; (d) students’ stipends; (e) payment for students’ work at trade schools; (f) state and supplementary pensions; (g) receipts from donation of blood, mother’s milk, etc.; (h) workers’ disability compensation; (i) foreign currency payments received for work abroad; (j) raceipts from sale of private property; (k) income from small personal farming; (l) inheritances, other than of royalties, and gifts; (m) state loan bond and lottery winnings; (n) proceeds of insurance; (o) interest and winnings on bank deposits and state treasury obligations; (p) suggestion awards; (q) in-kind bonuses from enterprises up to the value of the minimum wage per year and in-kind prizes received in competitions; (r) assistance in cases of natural disasters; (s) income invested in shares of former state enterprises and reinvested dividends (subject to taxation if shares are later sold); (t) legislated compensation payments except for unused leave; (u) military service pay of active personnel and reservists called to duty; (v) income of Meroes of the Soviet Union, recipients of the 3rd level of the Order of Glory and disabled veterans; (w) income of war veterans and former partisans; (x) income of internal security personnel disabled on duty; (y) income of parents and wives of military personnel killed on duty; (s) wages of workers assigned to agricultural work; (aa) income of those made invalids through nuclear accidents; (bb) unemployment benefits and retraining stipends from the state employment assistance fund; (cc) legislated severance benefite; (dd) legislated payments in lieu of free housing; (ee) income of congenital invalids and the legally blind; (ff) income of hero-mothers; (gg) income of veterans of service in Afghanistan; (hh) income from a percent farmstead, for the fist two years, (ii) income of active military and internal security personnel; (jj) as granted by a local council in consideration of a person’s financial status.Rates
(Statute on Income Tax from the Citizens of Turkmenistan, Foreign Citizens and Persons Without Citizenship, confirmed by decree of the President, No. VII-252, January 6, 1992, On Income Taxes, Decree of the President, No. 950. June 30, 1993, On Income Taxes, Decree of the President, No.980, October 1993). Decree of the President, N. 1251, of June 10, 1994.Annual income



251 to 1,000 manat

1,001 to 3,000 manat

3,001 and above
Marginal rate (In percent)



3

6

10*
(*the first 250 menat not taxeble)
Roralty recipients
Less than 1,200 manat

Less than 4,000 manat

Less than 10,000 manat
60

70

80
If more than 10,000: 8,000 manat and 90 percent of amount exceeding 10,000 manat
Payment: Final tax is withheld by from workers’ wages by their principal employer. Tax is withhold from royalty income but an annual reconciliation is required. Self-employed persons make quarterly advance payments, reconciled upon the filing of an annual return of income.
Deductions: (a) for certain invalids, 50 percent of all income; (b) for single mothers with two or more children, 50 percent of all income; (c) for widows and widowers with two or more children and not receiving survivor’s benefits, 50 percent of all income; (d) for one of the parents raising a congenital invalid, 50 percent of all income; (e) for persons with three or more children, 30 percent of income from their principal place of employment.
In case of multiple qualification, only the highest deduction is allowed. Local councils msy also grant deductions.
For entrepreneurs and the recipients of royalties, the usual business expenses are deductible with the exception of interest on long-term, overdue or deferred loans.
2.2.Enterprise profits tax
(Statute on Tax on Profit of Enterprises, Organizations and Other Legal Entities, confirmed by decree of the President, No.511, January 6, 1992. Instruction of the Ministry of Finance, No.3, January 17, 1992. Resolution of the President, No.1091, December 31, 1992) Instruction of February 9, 1993, On the Order of Deduction of Profit Tax. Law of October 8, 1993, On Profit Tax.Taxpayers: The following entities engaged in production and other commercial operations in the territory of Turkmenistan: (a) legal entities (including organizations supported by the budget, banks, lending and insurance institutions), including enterprises with foreign investments; (b) international associations, foreign legal entities, and subsidiaries and representations of foreign legal entities.Exemptions: (1) The following activities are exempted from the payment of the tax: (a) newly created enterprises engaged in the production and processing of agricultural products, and in the manufacture of consumer goods and building materials, if these operations account for more than 70 percent of their total revenues—in the first year of operation, they will be exempt from paying any profit tax, and in the second year of operation they will pay 50 percent of the tax.Rates (In percent)
Enterprises, organizations, and other legal entities (including procurement, supply and sales, and other commercial operations, except commission-based operations) are taxed at a rate of 25 percent
(2) Taxable profit shall be reduced by (a) the amount of expenditures made out of profits remaining at enterprises’ disposal to support health-care, public education, cultural, and sports facilities and institutions up to 30 percent of the total expenditures; end (b) the amount of contributions made to ecological and health-promotion funds, and to public education, health care, and social security enterprises, and children’s social organisations supported by the State Budget up to 5 percent of taxable profits.Enterprises engaged in exchange and brokerage and intermediary operations (including playing the role of middlemen or agent in a commission or agency contract) are taxed at a rate of 45 percent



Payment: Twice monthly advance payments are required and quarterly financial statements must be filed. Tax on interest end dividends is withheld at source.
Separate Corporate Income Tax: Enterprises will pay taxes on the following types of income/profit separately from the above-mentioned profit tax: (a) 15 percent on income (dividends and Interest) earned on stocks, bonds, and other securities belonging to enterprises and royalties, with the exception of income earned on government bonds and other securities; (b) 60 percent on income (Including income from leasing and other uses of property) from casinos, rental of audio and video cassettes; (c) 60 percent on profits earned from public concerts and entertainment events if there are more than 2,000 people in attendance.Privileges for enterprises working in free economic areas: (a) amount of profit for the first three years of profit-making activity is not taxable; (b) enterprises with foreign investments, if investment in authorised capital makes up more than 30 percent of share, do not pay tax; (e) profit, reinvested in export projects and others is not taxable.
Foreign legal entities will pay (a) tax at a rate of 15 percent on income from dividends (including income from the distribution of profits of enterprises with foreign investments) and interest, as well as income from copyrights, licenses, lease payments, royalties, and other revenues, the source of which is located in Turkmenistan; and (b) tax at a rate of 6 percent on income from freight charges paid to foreign legal entities in connection with international shipments.
Objects of taxation: Gross profits defined as the total amount of profit from the sale of goods and services, fixed capital, and other property of enterprises, and income from nonsale operations—not including the VAT and excise taxes—minus the production and sales expenses incurred in connection with these operations.
Decree of the President no. 1781, on Setting Norms for Payroll Costs—Regulations, April 25, 1994“Excess wage tax”; the taxable profits of enterprises, organisations, and legal entities are increased by the amount by which payroll costs for personnel engaged primary activity exceed standard payroll costs. Standard payroll costs are determined on the basis of the actual average number of employees engaged in an enterprises’ primary activity during a reporting period, and three times the minimum wage established by the law.Deductions: When calculating the amount by which payroll costs for personnel engaged in an enterprise’ a primary activity that are applied to production cost for goods sold exceed the norm, the following are not included: the value of items (including uniforms and special work clothes) that are provided free of charge in accordance with a given contract and remain the worker’s personal property (or the value of special benefits associated with their sale at reduced prices), as well as the value of food provided free of charge and field allowances, supplemental payments fox work that involves extensive travel, shift work, and a work schedule that does not conform to standards, and payments associated with work under hasardous and difficult conditions, as well as work in desert and arid locales, as provided for by law.
The tax for exceeding standard payroll costs has to be paid regardless of an enterprise’s financial performance and also regardless of any tax concessions or profit tax exemptions in effect.
2.3. Decree of the President no. 1433, On Taxation of Income from the transfer of Minaral Rights, August 5, 1993Tax on Income from the transfer of mineral rights: legal entities receiving income from the transfer of mineral rights in Turkmenistan to foreign investorsRate: 60 percent of the income from the transfer of mineral rights in the currency in which income is received.



The tax is paid promptly and in full to the Foreign Currency Fund.
3.Taxes on propertyThe tax is paid promptly and in full to the Foreign Currency Fund.
3.1.Enterprise property taxEffective January 1, 1992, a tax on the emortited value of fixed assets, current assets (excluding monetary assets), unfinished construction projects end means of transportation of Juridical persons, including branches of foreign end CIS legal entities, situated in Turkmenistan.Exemptions: (e) property used for production end storage of agricultural produce; (b) property meintained from state or local budgets for health care, sports, education or culture, except rural cinemas and video clubs; (c) transportation routes, bridges, etc.; (d) communication lines, local post offices and rural telephone offices; (e) public roads; (f) property used for fire safety end environmental needs; (g) city transit; (h) property of religious end ethnic cultural organisations; (i) community property of public end invalids organisations and their enterprises.Rate: 1 percent per annum.



Payment: The tax is self-assessed end paid quarterly.
(Regulation on the Administration of the Enterprise Property Tax, confirmed by decree of the President, No.514, January 6, 1992. Instruction of the Ministry of Finance, unnumbered and undated).
3.2.Land Tax
(Temporary statute on Procedures for Collecting Payments for Land from Non-Agricultural Enterprises, Institutions, Organizations and Citizens and Use of these Payments in 1992, confirmed by decree of the President, No.516, January 6, 1992). OBS: Law on the land tax is under consideration. After the last decree of January 6, 1992, the two temporary decrees were adopted then canceled swaiting the decision of the Cabinet of Ministers.Effective January 1, 1992, a tax on ownership and use of land in urban and rural areas.Exemptions: (a) participants in the Great Patriotic War and persons who have performed international duty; (b) certain invalids; (c) families of four or more children having lost the breadwinner; (d) Heros of the Soviet Union, Heros of Socialist Labor, recipients of the 3rd level of the Order of Glory or the Order of Labor Glory, and hero-mothers; (e) other persons as granted by a local council.
3.3. Tax on means of transportation



(Regulations on Tax on Means of Transportation, confirmed by decree of the President, No.515, January 6, 1992, Decree of the President No.1096, December 31, 1992, Decree of November 22, 1993, Decree of the President no. 1575, November 22, 1993. Decree of the President no. 1826, June 10, 1994)
Effective January 1, 1992, a tax on ownership by juridical or individual persons of cars, motor cycles, tractors, etc.. Tax rates depend on the horsepower of the vehicle and will be paid annually. Caterpillar vehicles and buses are exempt.



Tax on means of transportation crossing borders of Turkmenistan from Azerbaijan, Belarus, Iran, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, Uzbekistan.
Cars:

1 manat/1 horse power

1.5 manat/1 kw power



Trucks:

2 manat/1 horse power

2.1 manat/1 kw power



Motorcycles:

0.6 manat/1 horse power

0.8 manat/1 kw power
4.Taxes on international tradeCars

Trucks

Motorcycles
200 manat

100 manat

100 manat
4.1. Customs dates



The 1981 Customs tariff of the former U. S. S. R. remains in effect in Turkmenistan. Imports from outside the FSU are subject to duties depending on the country of origin.
OBS: Decree on customs duties is under consideration. According to the existing provision on tariffs, approved by MEF and State Customs Office, of January 6, 1993, N.MA-/15; 12-1/21, there are customs duties for cargos inspections; 0.3 percent of contractual value of goods should be paid on entry and exit. Foreigners should pay in hard currency at existing exchange rate.
5.Other taxes
5.1. State duties



(Decree of the President, No. UP-258, January 6, 1992. Schedule of State Duties, confirmed by decree of the President, No.510, January 6. 1992). Decree of the President, No.1077, of November 29. 1993, On State Duties.
Effective January 1, 1992, fees for various services performed by local councils, such as petitions, appeals filed with the court, registration of civil-status documents, and issuance of vises.Examples of state duties:

Petitions are subject to a duty of 5 or 15 percent of the value of the suit depending on the amount.



Copies (duplicates) of court decisions and verdicts are subject to a duty of 0.1 percent of the minimum monthly wage for each document.

Notarial services agreement associated with granting citizens lifetime, inheritable possessions of parcels of land are subject to a duty of 3 percent of the value of the agreement.
5.2.Natural Resources TaxEffective January 1, 1993, entities that recover and mine natural resources are required to pay a tax for the use of mineral resources. The rate varies by the type of natural resource and is charged on the after VAT sales price.Rates (In percent)
(On Introducing a tax Levied on the Use of Mineral Resources, Decree of the President, No.1095. December 31, 1992).Gas Petroleum and mineral processing

Offshore oil and gas processing, gas sulfate

Chemical, iodine, bentonite
22

10

8

5
In addition, salt combine and enterprises that mine raw materials for the production of construction materials are taxed at 5 percent effective January 1, 1994.
Payment Quarterly
6.Local taxes and fees:17 types of local taxes and fees, such as tax on the construction of resorts, advertising tax paid by legal entities and individuals advertising their products, tax on the resale of automobiles and equipments, resort fees, business operation fees, licensing fees for the sale of wine and vodka products, special fees to support the police, licensing fees for the right to hold local auctions and lotteries, and fees for parking motor vehicles.
Decree of the President No.1620, December 14, 1993. Instruction “On orders of deductions of local taxes”, No.5, March 5, 1994.
APPENDIX IV Turkmenistan: Real Wages with Allowance for Subsidies

1. Problems with simple measures of the real wage

Estimates of the real wage are typically obtained by deflating the nominal wage by some measure of the price level. In transition economies, however, such measures may miss a large part of the overall change in living standards. Governments of these economies often provide extensive subsidies for consumption. The way in which the simple measure of the real wage described above fails to capture the effect of these measures on real income may described in two ways, viz: (i) subsidized products have a lower weight in the RPI basket than would be the case if subsidies were removed; as a result, changes in the RPI tend to capture disproportionately more the impact of non-subsidized goods than subsidized goods and services. 1/ (ii) equivalently, the measured nominal wage is below the wage that would be received if subsidies were instead paid directly to workers.

One way to overcome this weakness of traditional real wage measures is to add the -per-capita subsidy 2/ to the simple nominal wage before deflating by the price level. How this correction would modify the results of the simple deflation approach is shown in the next section. 3/

2. Estimation of the real wage with allowance for subsidies

The table below shows the calculations of the minimum and average simple and broad wage between December 1993-December 1994; it also shows calculations of two alternative measures of the real wage: deflating the nominal values on the basis of, first, the RPI and, second, the minimum consumption basket.

a. The minimum wage

As an example of the importance of subsidies in assessing the change in real purchasing power, a broad real wage measure may be estimated in Turkmenistan for the period after the introduction of the manat, i.e., from December 1993 to December 1994. The nominal wage in December 1993 was manat 150, and was raised by 67 percent to manat 250 by December 1994. Prices during the same period rose by 1,074 percent, implying a fall in the simple real wage to 14 percent of the end-1993 level.

Subsidies in 1993 totalled manat 788 million. 1/ To obtain the value of subsidies in December 1993, it may be noted that the total annual subsidy (TAS) expressed in current prices is given by:

SJan.(1+PJan)+SFeb.(1+PJan).(1+PFeb)…+ SDec.(1+PJan).(1+PFeb)…(1+PDec), where Si is the subsidy in month (i) expressed in December 1992 prices.

Turkmenistan: Simple and Broad Wages, 1993-94
December 1993December 1994Percent Change
In manatIn percent
Simple wages
Nominal minimum15025067.0
Real minimum I 2/15021-86.0
Real minimum II 3/150424/-72.0
Nominal average3421,979479.0
Real average I 1/342169-51.0
Real average II 2/3423863/113.0
Broad wages
Nominal minimum1871,328610.0
Real minimum I 1/187113-40.0
Real minimum II 2/1872583/138.0
Nominal average3793,057707.0
Real average I 1/379260-31.0
Real average II 2/3795953/157.0
Sources: Original data provided by Turkmen authorities; and staff calculations.

Comprised of manat 461 million from the budget and manat 327 million from the Ministries.

Deflated by RPI.

Deflated by the minimum consumption basket index.

October 1994.

Sources: Original data provided by Turkmen authorities; and staff calculations.

Comprised of manat 461 million from the budget and manat 327 million from the Ministries.

Deflated by RPI.

Deflated by the minimum consumption basket index.

October 1994.

If the real value of the subsidy is assumed to be constant during 1993, then:

Given monthly inflation estimates in Table 23,

i.e., in December 1992 prices, S = manat 12.8 million

or in December 1993 prices, S = manat 137.2 million.

With a population of 3.714 million, the monthly per capita subsidy in December 1993 is manat 37 million, and the broad real wage is thus manat 187 at the end of 1993.

Turning to 1994, the latest available information is for the month of August. The Institute of Economy and Finance (IEF) has estimated the annualized cost of subsidies in August 1994 at manat 6.5 billion in August 1994 prices. The value of the per capita subsidy in December 1994 prices would thus be manat 1,078, implying a broad wage of manat 1,328. The rise in the nominal broad wage is thus 610 percent, implying that 60 percent of real-purchasing power as of end-1993 is retained.

The Turkmen authorities do not focus primarily on the RPI when considering the real value of the minimum wage. Rather, the minimum consumption basket (MCB) prescribed by the IEF is used as a basis for their calculations. 1/ Nonetheless, if the simple nominal minimum wage is deflated by the MCB, then by end-October 1994 2/, the implied simple real wage has fallen to 28 percent of its end-1993 level. If, however, the December 1993 subsidy estimate is added to the December 1993 minimum wage, and the IEF estimate for subsidies in August 1994, expressed in October 1994 prices, is added to the minimum wage in October 1994 before deflating by the MCB, then the real minimum wage in October 1994 is estimated to have actually increased to 138 percent of its end-1993 level.

b. The average wage

The simple nominal average wage increased 479 percent from manat 342 in December 1993 to manat 1979 in December 1994, and when deflated by the RPI has thus declined to 49 percent of the end-1993 level. Inclusion of subsidies implies a broad average wage of manat 379 in December 1993, rising by 707 percent to manat 3,057 in December 1994. The real wage measured in this way only falls to 69 percent of its end-1993 level.

If, instead, the simple nominal wage is deflated by the MCB, its purchasing power is found to have increased to 113 percent, and the rise for the broad measure to an even higher 157 percent of the end-1993 level.

APPENDIX V Turkmenistan: Technical Assistance

Substantial technical assistance and training has been provided to Turkmenistan in virtually every area of economic policy. In 1993 and the first eleven months of 1994, there were twenty-one technical assistance missions, provided by FAD, MAE, STA, and the Institute, not including visits by experts from cooperating central banks. Extensive technical assistance has been provided on strengthening monetary and fiscal institutions; enhancing the effectiveness of monetary, exchange rate and fiscal management; and improving the compilation of statistics. In addition to an intensive program of missions, the Fund has also stationed a resident representative in Ashgabat since October 1993 and has provided a resident advisor to the Central Bank and posted a resident advisor in Treasury Management at the Ministry of Economy and Finance. Other international agencies and governments—including the World Bank, EBRD, OECD—are also providing a wide variety of technical assistance. In general, the authorities have been receptive to the technical assistance that has been provided; however, the implementation of the recommendations has been limited by political constraints and the lack of skilled personnel.

1. Monetayy affairs

The technical assistance has included advice on banking legislation, central bank accounting and internal audit, payments system, central bank organization and management, foreign exchange operations and management, banking supervision, monetary research and analysis, currency issuance, and monetary operations and money market development. Four MAE missions, in June and December 1992, in May 1993, and in May 1994, focused on the modernization of the Central Bank and the banking system. Also, in October 1993, a mission was conducted to support the authorities’ introduction of a new national currency. A resident advisor has been posted at the CBT since February 1994.

2. Public finances

The Fiscal Affairs Department has given comprehensive advice to Turkmenistan in the areas of budgetary procedures and the establishment of a Treasury system. Four missions, in March and December 1992, in July 1993, and in January 1994, focused upon the establishment of a Treasury system and the improvement of public finance management. A resident advisor has assisted the Ministry of Economy and Finance in the setting up of the Treasury since January 1994. The Treasury is expected to be fully operational by early 1995. The development of a treasury system is aimed at achieving control of budget execution. Particular attention is to be given to cash management, debt management, and financial planning. The recommendations included the phased implementation of a computerized treasury system which would allow the Ministry of Finance to monitor, control, and adjust the receipt and spending of budgetary funds on a continuous basis.

3. Statistics

The Fund’s technical assistance program in statistics has focused on the development of the institutional framework appropriate to the needs of a market economy. The assistance has focused upon establishing procedures for collecting and compiling monetary, government finance, balance of payments, national accounts, and consumer price statistics in accordance with international standards.

A total of nine STA missions have been organized since May 1993, three in the area of money and banking statistics, two each in the areas of balance of payments statistics and the compilation of price indices, and one on the improvement of government finance statistics. An additional multitopic mission took place in July 1993.

4. Training

Besides the continuing strong participation of Turkmen officials in courses in Washington and at the Vienna institute in the areas of macroeconomic management, expenditure control, financial programming, taxation, statistics and other areas, the Fund’s Institute conducted two courses on macroeconomic and financial policies. Seminars and training sessions have also been conducted by MAE and STA technical assistance missions.

APPENDIX VI Ministries and Institutions

I. Ministries and Institutions Essentially Supported by the Central Budget

1. Ministry of Foreign Affairs

2. Ministry of Defense

3. Ministry of Social Security

4. Ministry of Economy and Finance

5. Ministry of Justice

6. Ministry of Health Care

7. Ministry of Public Education

8. Ministry of Culture

9. Ministry of International Economic Relations

10. State Customs Board

11. National Security Committee

12. State Statistics Committee

13. Physical Culture Committee

14. State Tourists Corporation “Turkmen siyakhat”

15. “History and Culture Monuments” Protection, National Exploration and Restoration Directorate

16. Committee on Protection of State Secrets in Press and Other Means of Information

17. Enterprise Support Department

18. Medicinal-Sanitation society

19. Plants Quarantine State Inspection

20. Institute of Economics

21. State Tax Inspectorate

22. Attorney General’s Office

23. Supreme Court

24. The Highest Economy Court

25. Main State Inspection on Standardization, Entrails of the Earth Protection and Safe Operation in National Economy

26. State Society “Jenet” (vocational training)

27. Patents Office

28. National Fund of Science and Technology

29. Scientific Production Society “Stomatology”

30. State Committee on Land Tenure and Land Reforms Execution

31. “Turkmenatlary” State Society (Horses)

32. National TV-Radio Company

33. State Cinema-Video Company

34. Ministry of Nature Use and Environmental Protection

35. Presidential Directorate for the Economy

Ministries and Institutions

II. Mainly Self-Supporting Institutions

1. Ministry of Oil and Gas

2. Ministry of Consumer Goods

3. Turkmen State Energy Corporation “Kuvvat”

4. Corporation “Turkmenavtohysmatsovda”

5. Turkmen State Scientific-Production Society “Turkmenderman”

6. State Society “Turkmenkhalibirleshic”

7. Production Furniture Society “Turkmenmebel”

8. Turkmen Sea Steamship Line

9. “Kopedag-Lada” Stock Company

10. Stock Commercial Banks and Insurance Companies

11. Non-State Sector Enterprises

12. Ministry of Autotransport

13. Ministry of Home Affairs

14. Ministry of Water and Land Improvement

15. Ministry of Construction and Architecture

16. Ministry of Agriculture and Foodstuff

17. Ministry of Communication

18. Ministry of Trade and Resources

19. Ministry of Bread

20. State Information Agency “Turkmen Press”

21. Fishery State Committee

22. National Board of Civil Aviation

23. State Railway

24. “Turkmen Consumers” Society

25. “Turkmenautoyollari” State Concern

26. “Turkmegeology” Production Society

27. Turkmen Aerogeodesic Enterprise

28. Turkmen River Steamship Line

29. Ministry of Construction Materials Industry

Table 12.Turkmenistan: Conversion from NMP to GDP, 1988–93
198819891990199119921993
(In millions of manat)
Net material product (National Income Produced)9.49.710.624.6563.18,073.7
Plus: wages and salaries of organizations in the “non - productive” sphere 1/2.22.52.94.334.9618.4
Plus: social insurance allocations in the “non - productive” sphere0.20.20.21.310.5185.5
Less: funds for business travel in the material production sectors0.10.10.10.20.610.4
Plus: profits less subsidies in the “non-productive” sphere0.00.10.10.11.2-17.0
Less: non-material services performed by material production sectors 2/0.10.10.11.737.5518.9
Plus: depreciation in all spheres 3/2.12.32.13.45.92,397.3
Less: losses of material stocks0.30.40.52.59.177.0
GDP13.414.215.229.3568.410,651.6
(In percent)
Memorandum item:
Ratio of Goskomstat GDP to NMP141.9147.3142.9119.1100.9131.9
Source: Data provided by the Turkmen authorities.

Includes income from private activities less incomes of domestic servants.

Includes the expenditures of those services on social-cultural activities and entertainment.

Includes other depreciation adjustments for 1991.

Source: Data provided by the Turkmen authorities.

Includes income from private activities less incomes of domestic servants.

Includes the expenditures of those services on social-cultural activities and entertainment.

Includes other depreciation adjustments for 1991.

Table 13.Turkmenistan: National Income Produced and Utilized, 1988–94 1/
1988198919901991199219931994
Jan.-JuneJan.-Sept.
(Actual)(Prelim.)
(In millions of current manat)
National Income Produced 2/9.49.710.624.6563.18,073.728,765.159,250.1
Agriculture3.74.25.111.491.71,106.51,039.514,312.6
Industry 3/2.52.21.75.0366.84,659.715,576.424,129.7
Construction1.91.81.94.450.61,294.95,193.315,533.8
Transport and communications0.60.60.91.621.7415.94,752.51,778.1
Other 4/0.80.91.12.132.2596.72,203.43,495.8
National Income Utilized 5/9.49.710.624.6563.18,073.7
Consumption7.27.88.614.391.11350.8
Personal6.36.97.512.761.4951.2
Social0.91.01.11.629.7399.6
Accumulation2.42.72.413.4239.2
Trade balance-0.6-1.3-1.0-5.6
Exports of goods5.35.35.310.2
Imports of goods5.86.76.315.8
Losses0.30.40.52.59.0
Other 6/0.10.10.2223.8
(In real terms) 7/
National income Produced 2/4,947.34,388.74,913.35,071.316,707.1505.82,452.94,324.3
Agriculture1,884.61,846.22,243.82,109.15,350269.7200.9869.8
Industry 3/1,139.31,012.8848.4852.75,836.5322.91,786.72,297.2
Construction943.1824.3889.51,00522,692.159.8250.4759.6
Transport and communications295.5302.2441.2600.51,205.325.178.7148.1
Foreign trade34.028.423.681.5
Forestry7.00.11.00.5
Retail trade, public dining, wholesale trade, and state procurement
Information- services6.38.110.66.515.60.22.84.6
Other branches/printing39.1
Residual 8/384.5363.8453.3412.31,600.433.0132.4244.5
National Income Utilized 5/
Consumption3,552.73,825.43,856.44,454.8
Personal3,101.63,345.03,328.13,721.1
Social451.1480.4528.3742.7
Accumulation1,003.31,231.9877.71,236.8
Other 6/391.3-668.6179.2-620.3
Source: Data provided by the Turkmen authorities.

Data for 1992,1993 and 1994 are incomplete, because they do not include trade balance.

Also known as net material product.

Understates value-added by the natural gas sector.

Calculated as a residual within national income produced. Includes trade and distribution, other branches, and special earnings of foreign trade (except for 1992,1993, and 1994).

Turkmen authorities do not routinely calculate total national income utilized, due to problems with obtaining information on the trade balance.

National Income Produced minus sum of identified components of national income utilized.

In 1983 rubles for 1988–1992 data; subsequently, in prices of the preceding year.

Calculated as a residual within national income produced. Includes trade and distribution, other branches, and special earnings of foreign trade (except for 1992,1993, and 1994).

Source: Data provided by the Turkmen authorities.

Data for 1992,1993 and 1994 are incomplete, because they do not include trade balance.

Also known as net material product.

Understates value-added by the natural gas sector.

Calculated as a residual within national income produced. Includes trade and distribution, other branches, and special earnings of foreign trade (except for 1992,1993, and 1994).

Turkmen authorities do not routinely calculate total national income utilized, due to problems with obtaining information on the trade balance.

National Income Produced minus sum of identified components of national income utilized.

In 1983 rubles for 1988–1992 data; subsequently, in prices of the preceding year.

Calculated as a residual within national income produced. Includes trade and distribution, other branches, and special earnings of foreign trade (except for 1992,1993, and 1994).

Table 14.Turkmenistan: Value of Gross Industrial Output, 1988–94(In millions of current manat)
1988198919901991199219931994 1/
Jan.–JuneJuly–Sept.
ActualPrelim.
Total9.19.39.629.4373.65,892.38,206.815,336.4
Heavy4.14.14.213.1253.24,501.16,319.810,835.4
Fuels-energy2.42.52.59.9215.93,916.75,535.99,379.9
Electricity0.40.50.51.117.5328.2516.2721.0
Fuels2.02.02.08.7198.43,588.55,019.78,658.9
Metals0.00.00.00.00.42.32.65.0
Machine-building and metal-work0.50.50.50.98.5127.9146.5303.9
Chemicals and petrochemicals0.40.40.40.811.499.2223.6352.5
Forestry and woodworking0.10.10.10.21.118.433.476.1
Construction materials0.60.50.61.214.3258.8371.6695.8
Other0.10.10.10.11.777.86.222.2
light3.73.84.012.173.0676.6193.5356.3
Textiles3.23.33.511.067.2605.4
Sewn goods0.40.40.50.94.460.4156.0286.9
Leather and shoes0.10.10.10.21.410.837.569.4
Food industries1.31.41.44.247.4714.6728.21,394.7
Food processing0.50.60.61.417.2272.3527.91,052.1
Meat and milk0.40.40.41.814.8214.7180.4307.5
Fish0.10.10.10.10.812.119.935.1
Flour0.30.30.30.914.5215.5
Source: Data provided by the Turkmen authorities.

Components for 1994 do not sum to totals due to missing observations.

Source: Data provided by the Turkmen authorities.

Components for 1994 do not sum to totals due to missing observations.

Table 15.Turkmenistan: Value of Gross Industrial Output, 1988–93(In 1982 rubles)
198819891990199119921993
Total4,6744,7964,9635,2064,7995,098
Heavy2,1932,2012,2162,34918441938
Fuels—energy1,3251,3731,3621,4541,1641,225
Electricity224253258268265275
Fuels1,1011,1201,1041,186899950
Metals888977
Machine-building and metal—working246238254283
Chemicals and petrochemicals207191191181
Forestry and woodworking676763656258
Construction materials300278288305325325
Other40474252
Light1,8381,9082,0332,0982,1852,458
Textiles1,5751,6371,7481,78718582088
Sewn goods217225237258270325
Leather and shoes464648535745
Food industries643687714759770702
Food processing281300329359348290
Meat and milk183191194194205196
Fish373934323927
Flour142157157174178189
Source: Data provided by the Turkmen authorities.
Source: Data provided by the Turkmen authorities.
Table 16.Turkmenistan: Production of Selected Industrial Commodities, 1990–94
19901991199219931994
Jan.Feb.Mar.Apr.MayJuneJulyAug.Sept.Oct.
(In millions of cubic meters)
Natural gas87,767.484,348,160,101.765,349.24,395.84,358.72,765.11,943.53,349.03,766.33,174.32,925.32,618.72,794.1
(In thousand tons)
Oil4,994.64,827.34,652.94,421.2311.0289.5323.1312.5320.7308.7318.2313.4330.9325.0
First refinery fraction oil5,464.27,132.25,754.04,453.0347.2327.3394.9369.0381.3418.1364.6360.2353.6469.8
Gasoline847.4855.0940.0731.359.058.478.177.360.563.958.557.351.362.4
Diesel fuel1,619.92,236.01,942.31,399.0117.1107.3132.9140.5111.1155.9131.1131.9110.3143.0
(In thousand square meters)
Construction
Glass5,085.06,098.06,122.05,308.0251.0250.0203.0200.0
(In thousand tons)
Cement Mineral1,084.6903.51,050.11,118.282.294.083.160.335.755.153.351.051.151.1
Fertilizers175.7190.1103.4127.412.78.914.37.6310.07.06.27.74.53.7
(Units)
Centrifugal
Pumps1,064.01,068.81,069.01,035.0124.4116.631.057.0102.0104.05.030.010.0
(In thousand tons)
Cotton fiber415.4419.9440.4412.746.643.643.938.725.215.10.50.628.943.1
(In thousand square meters)
Rugs1,163.61,383.01,127,0933,145.045.034.031.027.037.036.041.034.026.0
Cotton fabrics29,039.029,207.031,189.030,889.02,555.02,337.02,539.02,437.02,211.02,306.01,921.01,719.01,632.01,595.0
(In thousand tons)
Vegetable oil104.3103.785.385.19.69.88.54.07.55.33.00.66.6
(In tons)
Technical Carbon8,855,08,300.06,210.06,050.0450.0350.0500.0450.0400.0400.0560.0570.0660.0660.0
Source: Data provided by the Turkmen authorities.
Source: Data provided by the Turkmen authorities.
Table 17.Turkmenistan: Agricultural Production, 1989–93
196819691990199119921993
(In millions of current manat)
Total gross production5255.846.9617.51115.591626.3
Crop production4.034.485.2514.5398.21977.9
Of which:
Cotton3.143.504.457.6363.83161.1
Grains0.130.140.180.3215.0572.7
Vegetables0.200.2202.80.482.0220.3
Fruits0.070.080.100.183.1113.2
Animal production1.221.371.732.9817.38649.3
Of which:
Livestock for slaughter0.630.700.891.538.95130.6
Of which:
Cattle0.280.320.400.694.034.05
Sheep0.230.260.330.563.2945.1
Poultry0.040.050.060.110.643.6
Milk0.230.260.330.563.29172.0
Eggs0.050.050.070.120.7048.3
Material inputs1.571.661.894.7325.09471.0
Of which:
Crop production0.950.981.492.6218.54277.0
Animal production0.660.681.031.826.54194.0
Memo: Depreciation0.440.440.400.400.41
Net material product3.684.195.1012.7890.501155.0
Of which:
Crop production3.063.504.187.1379.66700.0
Animal production0.560.690.701.1610.84455.0
(In 1963 rubles)
Total gross production2,6392,6472,8332,7142,4822,872
Crop production1,8201,8262,0001,8651,6121,860
Of which:
Cotton1,3371,4091,5191,3921,1261,244
Grains5953616896165
Vegetables11212512211694245
Fruits107821071108680
Animal production8198218338498701,011
Of which:
Livestock for slaughter372371375369210
Of which:
Cattle179176181183187202
Sheep147149148154171177
Poultry272929252115
Milk163168172187187379
Eggs313131292825
Material inputs7527577811,0731,0001,348
Of which:
Crop production465468483589780838
Animal production287289298336220509
Memo: Depreciation181184208208178
Net material product1,8871,8902,0521,9781,4821,524
Of which:
Crop production1,3551,3581,5171,3378321,022
Animal production532532535570650502
Source: Data provided by the Turkmen authorities.
Source: Data provided by the Turkmen authorities.
Table 18.Turkmenistan: Production of Selected Agricultural Commodities. 1990–94
19901991199219931994
TotalPrivatePublic sectorTotalPrivatePublic sectorTotalPrivatePublic sector
sectorQIQIIQIIIQIVsectorQIQIIQIIIQIVsectorQIQIIQIII
Livestock and poultry (live weight, in thousands of tons)179.0175.1172.192.418.321.519.620.3200.3109.419.626.822.122.419.920.919.7
Milk, (in thousands of tons)435.5458.2471.1282.243.353.750.741.0711.0529.340.951.548.840.540.362.135.6
Eggs, (in millions)327.6300.0292.0122.646.562.734.126.0267.01332.035.150.624.723.433.638.122.5
Wool, (in tons)15,957.016270.016,545.08,71923,693.02,572.01,536.018539.010581.04,234.01277.02442.03585.02086.0
Source: Data provided by the Turkmen authorities.
Source: Data provided by the Turkmen authorities.
Table 19.Turkmenistan: Energy Reserves, 1990–92
Reserves in 1990Reserves in 1991Reserves in 1992
LikelyProsp.Oper.LikelyProsp.Oper.LikelyProsp.Oper.
(In billions of cubic meters)
Gas8,087.0326.02,783.08,087.0326.02,751.28,087.0326.02,760.6
(In millions of tons)
Oil697.8100.9212.8697.8100.9211.5697.8100.9211.2
Source: Data provided by the Turkmen authorities.
Source: Data provided by the Turkmen authorities.
Table 20.Turkmenistan: Energy Balances, 1988–94
1988198919901991199219931994
Jan.-June
(In billions of cubic meters)
Gas
Extraction88.389.987.884.360.165.420.0
Import0.20.20.20.20.2
Consumption9.08.79.29.57.27.23.0
Industry6.76.86.87.04.76.51.9
Construction0.10.10.1
Agriculture0.10.10.10.10.10.1
Transportation1.41.41.41.41.40.1
Community needs0.80.80.90.90.90.1
Other sectors-0.40.10.40.9
Losses0.10.10.10.10.1
Exports to CIS79.580.978.762.941.646.015.0
Exports to Europe12.011.28.2
Other 1/-0.10.40.2
(In thousands of tons)
Oil
Processing5,092.85,075.45,140.07,131.85,761.6
Of which:
Gasoline685.3758.5773.3813.91,030.9621.1245.5
Consumption658.0670.0675.0690.0866.3593.0245.5
Exports27.388.598.3123.9164.628.1
Kerosene113.169.1110.498.1326.5345.4148.4
Consumption28.031.032.033.0228.7175.9100.7
Exports85.138.178.465.197.8169.547.7
Diesel Oil1,541.81,618.31,572.52,236.11,942.31,390.6622.9
Consumption862.0889.0896.0903.31,257.01,034.5440.9
Exports679.8729.3676.51,332.8685.3356.1182.0
Mazut 2/1,437.81,302.91,218.01,991.01,667.11,123.0452.1
Consumption286.0290.0294.0398.0852.2192.672.3
Exports1,151.81,012.9924.01,593.0814.9930.4379.8
Coke199.8183.4177.7196.0171.1
Other 1/1,115.01,143.21,288.11,796.7623.7
(In millions of Kilowatt hours)
Electricity
Domestic production12,890.914,507.614,610.814,953.513,182.812,656.8
Imports979.21,058.41,113.21,132.51,151.81,251.6
Consumption7,463.08,054.88,415.48,265.07,785.78,270.3
Industry3,401.43,864.83,732.83,657.03,657.73,918.3
Construction201.0218.2246.8232.7201.7185.3
Agriculture1,610.11,643.11,817.21,852.71,824.21,938.9
Transportation794.4809.21,043.7945.0504.6429.1
Community needs947.2986.7554.51,036.21,068.31,281.9
Other sectors505.9532.81,237.8541.4533.2576.8
Losses1,071.81,209.01237.81321.51,094.91,170.4
Exports5,335.36,302.26,070.86,499.55,456.044,477.0
Other 1/
(Giga-calories)
Heat
Production6,572.26,650.26,789.26,870.06,880.0
Consumption4,792.15,990.66,048.06,150.06,200.04,108.92,096.2
Households1,854.62,265.72,019.62,050.02,060.01,051.4654.3
Community needs1,053.51,043.81,255.11,280.01,270.0937.7458.1
Industrial1,884.02,681.12,773.32,820.02,870.02,119.8983.8
Losses1,780.1659.6741.2720.0680.0
Source: Data provided by the Turkmen authorities.

Includes statistical discrepancies.

Mazut is a semi-refined oil product used for large vehicles and for heating.

Source: Data provided by the Turkmen authorities.

Includes statistical discrepancies.

Mazut is a semi-refined oil product used for large vehicles and for heating.

Table 21.Turkmenistan: Construction Activity, 1988–94(In millions of manat)
1988198919901991199219931994
Jan.-JuneJan.-Sept.
ActualPrelim.
Gross value of construction3.773.413.627.8996.22,534.49,876.432,771.1
Of which:
State3.092.652.775.9373.31,801.7
Cooperative0.360.390.461.168.3169.0
Private0.330.370.390.8014.6563.7
Material inputs1.521.351.473.1944.71,210.64,683.117,237.3
Depreciation0.320.300.260.260.928.9
Net material product1.941.751.904.4550.61,294.95,193.315,533.8
Source: Data provided by the Turkmen authorities.
Source: Data provided by the Turkmen authorities.
Table 22Turkmenistan: Energy Prices, 1991–94(In manat)
Producer PricesIntermediary PriceHousehold PricesIndustrial PricesExport Prices 3/
19911992199319941991199219931994199119921993199419911992199319941991199219931994
Jan 10June 30Jan 10June 30Jan 10June 30Aug 30Jan 10June 30Sep 30Jan 10June 30Sep 30
(Per 1,000 cubic meters)
Gas 1/0.070.341.190.070.371.650.100.300.270.270.090.471.65600.0775.0051.8059
Oil0.160.8075.000.160.800.16
Gasoline AI - 93 2/0.273.68145.080.524.06161.081.044.060.121.50.524.06161.080.5266.56
Gasoline A- 76 2/0.222.67118.960.393.05134.960.783.050.101.00.393.05134.960.3949.92408.00
Kerosene 2/
Industrial0.201.51120.500.271.78135.500.160.271.78135.500.2729.24264.00
Lighting0.211.57121.500.281.84136.500.160.800.060.281.84120.500.2830.21280.00
Jet0.231.46115.000.331.73130.000.001.73130.000.3328.75386.00
Diesel 2/
Heating fuel110.50125.500.100.5125.50125.50312.00
Mazut68.0083.0083.0083.00200.00
Source: Data provided by the Turkmen authorities.

Gas up to 50 cubic meters per person per month is provided free of charge to households.

Price per liter.

In U.S. dollar.

Source: Data provided by the Turkmen authorities.

Gas up to 50 cubic meters per person per month is provided free of charge to households.

Price per liter.

In U.S. dollar.

Table 23.Turkmenistan: Retail Price Index, 1991–94(In percent change over preceding period)
199219931994
Jan.Feb.Mar.Apr.MayJuneJulyAug.Sept.Oct.
Retail Price Index 1/623.29,742.825.518.835.032.215.015.025.735.522.729.5
Services only981.153,163.429.06.86.251.34.91.022.632.69.56.8
Goods only606.77,610.723.318.338.723.818.418.726.035.723.831.3
Of which:
Foods only506.78,586.523.012.523.823.97.98.35.141.915.324.4
Nonfood goods892.94,835.723.522.749.723.726.426.745.530.031.837.8
Source: Data provided by the Turkmen authorities.

Includes goods and services.

Source: Data provided by the Turkmen authorities.

Includes goods and services.

Table 24.Turkmenistan: Producer Price Index, 1992–94(In percent change over preceding period)
199219931994
Jan.Feb.Mar.Apr.MayJuneJulyAug.Sept.Oct.
Producer Price Index8,807.814,160.20.210.31.04.36.178.314.724.54.428.0
Electricity898.67,540.016.07.40.50.3-0.117.20.2
Oil processing2,167.619,250.520.04.6-9.00.15.634.62.4
Chemicals2,819.61,622.36.819.41.349.618.81.465.50.178.8
Petrochemicals931.22,131.550.044.528.0
Machine building600,751.52,009.4-1.11.998.614.61.159.871.57.55.92.0
Forestry and woodworking1,790.55,405.729.12.265.5-1.22.446.62.0-16.613.815.1
Construction materials2,395.22,067.15.42.84.53.017.610.438.648.862.111.6
Natural gas3,496.717,985.2-10.316.7-4.89.72.81.8-1.9-5.912.4
Light industry3,026.6745.11.24.00.312.70.24.210.95.518.016.4
Food processing5,400.94,063.29.519.64.2-0.31.41.04.24.133.1-1.4
Meat2,479.4964.712.90.135.70.5-0.3-0.9-0.11.10.4
Milk and milk products1,740.31,003.43.01.1-0.42.1-1.20.94.1-0.2-1.01.3
Flour and fodder3,749.03,171.95.60.1-1.04.93.0-1.72.52.93.6-1.0
Source: Data provided by the Turkmen authorities.
Source: Data provided by the Turkmen authorities.
Table 25Turkmenistan: Average Retail Prices of Selected Items, 1988–94 1/2/(In manat per kilogram)
1988198919901991199219931994
Jan.-June
Prices paid by workers and employees 3/
Beef0.0070.0080.0090.0220.1212.25416.900
Mutton0.0040.0040.0060.0160.0961.95414.660
Pork0.0040.0050.0060.0150.1041.88421.930
Sausages and smoked meat products0.0070.0080.0080.0190.1552.79520.410
Fish and fish products0.0020.0030.0030.0080.0682.00212.200
Potatoes0.0010.0010.0010.0040.0310.6605.700
Vegetables and melons0.0010.0010.0010.0030.0170.45010.310
Fruits and berries, fresh0.0030.0040.0040.0100.0711.47313.910
Confectionery0.0050.0050.0050.0100.2531.4608.820
Prices paid by collective farmers 4/
Beef0.0090.0100.0110.0250.1422.71320.480
Mutton0.0060.0080.0110.0240.1342.33618.680
Sausages and smoked meat products0.0070.0070.0080.0200.1152.54918.530
Fish and fish products0.0020.0020.0020.0060.0551.07616.420
Potatoes0.0010.0010.0010.0040.0240.4834.230
Vegetables and melons0.0010.0010.0010.0010.0100.2456.800
Fruits and berries, fresh0.0030.0030.0040.0080.0531.01212.500
Confectionery0.0030.0030.0040.0100.1470.9997.880
Source: Data provided by the Turkmen authorities.

Average of prices paid in state retail stores, state rural “cooperative” retail outlets, and urban “collective” (free) markets. Data from the family budget survey.

Prices presented are average for the period.

The family budget survey classifies respondents based on occupation. Workers and employees may reside in both urban and rural areas, and include agricultural employees not classified as collective farmers.

The family budget survey classifies respondents based on occupation. Collective farmers mostly live in rural areas. (Pork prices not available for collective farmers.)

Source: Data provided by the Turkmen authorities.

Average of prices paid in state retail stores, state rural “cooperative” retail outlets, and urban “collective” (free) markets. Data from the family budget survey.

Prices presented are average for the period.

The family budget survey classifies respondents based on occupation. Workers and employees may reside in both urban and rural areas, and include agricultural employees not classified as collective farmers.

The family budget survey classifies respondents based on occupation. Collective farmers mostly live in rural areas. (Pork prices not available for collective farmers.)

Table 26Turkmenistan: Prices of Consumer Goods and Services Whose Retail Prices are Regulated by the State, 1991–94
199219931994
Unit ofAs ofAs ofAs ofAs ofAs ofAs ofAs of
NameMeasureFeb.4, 1991Jan.10Aug.6Feb.5Jun.5Jan.15Aug.31
(In mant)
Flour 1/
Highest gradeKg0.0010.0070.0080.0300.0300.750.75
Grade IKg0.0010.0040.0040.0200.0200.500.50
Grade IIKg0.0030.0030.0120.012
Certain types of bread
Of which:
While loaf bread made
from grade I flour750 gr.0.0010.0030.0040.0100.0100.200.20
Meat
Beef 1/Kg0.0140.0600.1200.2400.5006.008.00
MuttonKg0.0140.0600.1200.2400.5006.008.00
PorkKg0.0110.0600.1200.2400.5006.008.00
Milk (3.2 percent fat content)Liter0.0010.0030.0040.0160.0160.200.50
Sourmilk products
Kefir (3.2 percent fat content)Liter0.0010.0020.0020.0080.0080.200.60
Cottage cheese (18 percent fat content)Kg0.0040.0120.0120.0480.0483.807.00
Sour cream (25 percent fat content)Kg0.0060.0190.1000.2000.4004.507.50
Cream (20 percent fat content)Liter0.0060.0180.1000.2000.4003.006.60
Table salt0.0010.0010.0100.0100.180.18
Vegetable oil 1/Kg0.0030.0110.0120.0400.1401.403.20
Butter 1/Kg0.0200.0600.1200.3000.6007.0010.00
RiceKg0.0050.0120.0300.0500.1201.0010.00
Sugar 1/Kg0.0040.0160.0300.0800.1601.401.40
“Malyutka” children clothing0.0010.0010.0020.0021.801.80
“Russkaya” vodka 2/0.5 Liter0.0190.0800.2000.4001.00026.0060.00
Semi-processed meat
products
Of which:
Beef (average)Kg0.0170.0540.1440.2880.60410.3518.58
Mutton (average)Kg0.0130.0760.1520.3040.6385.005.70
Macaroni productsKg0.0040.0090.020free pricesfree prices1.101.10
Boiled sausagesKg0.0170.0760.1520.3000.6308.0011.00
“Silver carp” fresh and frozen fishKgfree prices0.0270.054free pricesfree prices3.0035.00
Nonalcoholic beverages and mineral waters
Of which:
Tarkhun brand0.33 Liter0.0010.0030.0080.0160.0320.32
Limonad brand0.5 Liter0.0010.0030.0060.0120.0240.25
Ashgabatskaya0.5 Liter0.0010.0020.0040.0080.500.50
Tea (average) 1/Kg0.0190.0600.1200.2400.4008.008.00
Household cleanser 1/350g0.0020.0060.0120.0202.056.70
Combined fodders for the populationKg0.0020.0060.0060.010
Ice creamKg0.0040.026free pricesfree pricesfree pricesfree pricesfree prices
Confectionary goods
Of which:
Caramel (average)Kg0.0040.016free pricesfree pricesfree pricesfree pricesfree prices
Products for children
Sewn goods
Of which:
Suit for school-age boysone0.0420.7121.4622.4003.12080.00195.00
Trousers for school-ageone0.0420.2850.5601.0001.30027.2563.00
Young boy’s shirtone0.0180.1500.1800.2800.3649.9510.00
Girl’s cotton dressone0.0200.0780.1600.660–0.7000.858–0.91016.8325.20
Loafers for school-age boysone pair0.0300.1960.1960.2540.33056.0060.00
Baby shoesone pair0.0100.2320.2320.3000.39021.0021.00
Medicines
Karvalolflask0.0020.0020.0050.0100.430.43
Analginpacket0.0010.0020.0020.0560.1120.700.70
No–shpapacket0.0020.0100.0100.4200.840
Gemodezpacket0.0080.0320.0320.5821.164
Atp (Adenosine triphosphate)packet0.0040.0150.0150.6961.392
Natural gas 3/1 m30.0100.0300.03027 kopeks27 kopeks
over the limitover the limit
Liquified gas 3/Kg0.0010.00139 kopeks39 kopeks
over the limitover the limit
Electricity 3/Kwh12 kopeks12 kopeks0.0050.005
over the limitover the limit
Apartment rentSq.meter0.0010.0010.0010.0020.0100.010
Drinking water, Ashgabat 3/m30.0120.01210 kopeks10 kopeks
over the limitover the limit
(In manat)
Petroleum products
AI-93 gasolineLiter0.0010.0040.0100.0300.1200.301.50
A-76, 72 gasolineLiter0.0010.0030.0080.0300.1000.251.00
Diesel fuelLiter0.0010.0020.0040.0300.1000.50
Lamp keroseneLiter0.0650.0020.0300.060
Household cooking fuelLiter0.0020.0300.0600.0600.060
Urban transportation
fares
Local bus0.0010.0020.0040.0060.100.10
Fixed-route taxi0.0010.0020.0060.0080.0200.602.00
Express bus0.0010.0040.0060.0080.150.15
Local taxiper km0.0010.0020.0100.0500.1200.602.00
Suburban bus fare
Ashgabat–Firyuza0.0050.0060.0200.1000.1702.402.40
Intercity bus fares
Ashgabat–Bezmein0.0040.0050.0160.0800.1361.801.80
Ashgabat–Tedzhen0.0560.0600.2521.0081.71428.0028.00
Railway fares
Ashgabat–Moscow, express ticket0.1140.2300.6882.0644.128168.80
Ashgabat–Tashkent, general
passenger0.0640.1920.9601.920
Ashgabat-Krasnovodsk
(Chardzhou), general passenger0.0300.0400.1200.1200.1809.359.35
Airline faresAs ofAs ofThroughAs of
12/25/9109/08/9205/29/9306/10/93
Ashgabat–Moscow1.2404.9604.96042.00080.000450.00550.00
Ashgabat–Krasnovodsk0.1780.7164.6004.6006.90065.0065.00
Ashgabat–Mary0.0880.3483.6003.6005.40055.0055.00
Source: Data provided by the Turkmen authorities.

With ration cards.

All other types of vodka at free prices.

Natural gas is distributed free of charge up to 50 cubic meters per month per capital; electricity is free of charge up to 25 kilowatt hour per person, per month. Liquified (bottled) gas is free of charge up to 21 kilograms (1 cylinder per family, per month). Water is free of charge up to 250 liters per person per day.

Source: Data provided by the Turkmen authorities.

With ration cards.

All other types of vodka at free prices.

Natural gas is distributed free of charge up to 50 cubic meters per month per capital; electricity is free of charge up to 25 kilowatt hour per person, per month. Liquified (bottled) gas is free of charge up to 21 kilograms (1 cylinder per family, per month). Water is free of charge up to 250 liters per person per day.

Table 27.Turkmenistan: Wages by Sector, 1988–94(In manat per month period average)
19931994
19881989199019911992QIQIIAnnualJan.-JuneJuly-Sept.
ActualPrelim.
Average wage 1/0.420.440.490.837.9729.0268.27136.6591.21,177.2
Material sphere......1.078.9833.3374.37148.6648.81,328.6
Industry0.460.480.530.9810.8140.0885.99169.5742.71,416.2
Agriculture 2/0.420.480.550.848.0033.9589.90116.2455.21,165.5
Forestry....0.330.554.6022.5442.20103.8371.5805.5
Transportation0.470.500.560.999.1836.3391.74166.3724.71,460.8
Communication0.410.450.490.938.6934.6487.74155.6710.11,407.5
Construction0.580.580.631.079.3431.8275.60171.0780.91,631.7
Trade, distribution, and dining0.310.350.410.706.9722.8549.16102.9486.0923.8
Information—computer services0.320.390.420.747.3931.0467.65121.9520.31,002.8
Other branches (printing) 3/0.626.6723.1249.59120.9434.2808.5
Nonmaterial sphere0.486.4622.9161.15117.2511.0967.1
Services and housing0.340.360.390.656.1624.9561.93110.5478.3978.0
Health0.290300.330.655.2917.5443.0698.6415.51,007.1
Education0.370.370.380.595.8519.4757.90117.8531.0803.4
“Non-productive” transportation 4/..........36.3387.74
“Non-productive” communication 4/..........34.6477.24
Culture and arts0.280.280.340.585.4620.2051.8893.2434.0812.0
Science and research and development 5/0.530.590.640.758.9432.41108.35158.8600.51,407.2
State insurance (and loans)0.350.390.641.6912.7050.1093.19200.6742.31,358.2
Government 6/0.370.430.610.928.8532.9379.54154.5468.81,039.5
Source: Data provided by the Turkmen authorities.

As calculated by the Turkmen authorities. Includes bonuses/premia. Data not strictly comparable after 1989, due to definitional changes.

Excludes collective farmers (after 1989) and those employed full-time on private plots (entire series).

Other branches of material production, includes miscellaneous activities such as hunting, trapping and printed materials.

Transportation and communications services for consumers and government (as opposed to industrial users).

Research and Development Institutes.

Local, Republican, and former all Union government agencies.

Source: Data provided by the Turkmen authorities.

As calculated by the Turkmen authorities. Includes bonuses/premia. Data not strictly comparable after 1989, due to definitional changes.

Excludes collective farmers (after 1989) and those employed full-time on private plots (entire series).

Other branches of material production, includes miscellaneous activities such as hunting, trapping and printed materials.

Transportation and communications services for consumers and government (as opposed to industrial users).

Research and Development Institutes.

Local, Republican, and former all Union government agencies.

Table 28.Turkmenistan: Money Incomes and Expenditures of the Population, 1988–94(In millions of manat)
19931994
19881989199019911992Jan.-JuneAnnualJan.-JuneJuly-Sept.
ActualPrelim.
Total money incomes8.229.2410.6023.50177.07416.302,963.55,802.15,196.5
Wages paid to workers and employees4.755.095.569.6179.92246.391,678.63,756.13,262.3
Wages paid to collective farmers1.351.481.863.3645.3453.05587.41,062.0910.0
Wages paid to cooperative members0.030.160.350.304.914.10118.660.3164.2
Non-wage income of enterprise workers0.150.200.250.544.647.5889.771.243.8
Income from agricultural sales0.440.590.681.9611.7147.0963.2214.4120.4
Pensions, grants and other1.491.721.907.7430.5558.09426.0638.1695.8
Total money expenditure7.648.559.7218.5997.96183.851,497.43,865.33,070.3
Goods5.826.407.1912.5164.07114.28905.92,793.32,219.6
Services0.660.730.761.139.5216.32131.2375.2291.7
Taxes and other payments0.700.790.911.228.4528.07158.6628.0448.3
Accumulation of
financial assets (including deposits)0.440.610.833.8215.6925.06299.565.9108.1
Other0.020.030.03-0.090.220.122.22.92.6
Source: Data provided by the Turkmen authorities.
Source: Data provided by the Turkmen authorities.
Table 29.Turkmenistan: Minimum Consumption Basket and Minimum Wage, 1992-94(In manat)
19921993
JanuaryFebruaryMarchAprilMayJuneJulyAugustSept.Oct.Nov.Dec.
Minimum consumption
basket7.278.1212.4914.2517.0319.8029.2040.0446.0152.0961.33161.24199.47
Percent increase10.6911.6953.8514.0319.5518.2547.5037.1014.9213.2017.75162.9023.71
Category
Food3.083.495.376.357.258.0010.9912.4114.6716.6219.4065.9668.92
Clothes and footwear1.371.512.092.342.863.324.497.958.8310.2712.3829.9737.35
Medical goods0.340.420.950.981.031.152.462.112.382.773.228.3512.37
Furniture1.011.191.992.162.563.845.008.689.7011.5815.4622.7828.98
Utilities0.040.040.060.060.060.060.070.070.070.070.072.692.69
Entertainment0.060.060.060.070.120.130.250.460.710.710.715.778.48
Personal services0.220.220.530.681.421.462.804.315.545.545.544.404.57
Transport0.430.430.570.590.670.671.291.291.291.291.306.996.99
Communications0.010.010.050.050.050.050.090.310.310.310.311.361.36
State charges0.020.020.020.040.040.040.080.110.120.140.170.400.47
Tobacco0.080.150.150.150.160.160.160.620.631.041.042.165.56
Garden tools0.040.040.060.060.070.080.120.710.710.720.722.082.08
Cattle and poultry0.440.440.440.510.530.560.560.560.560.560.563.123.12
Other0.140.100.160.200.200.280.840.460.300.460.455.2116.53
Minimum wage3.203.206.406.406.4019.2019.2019.2019.2019.2019.20150.00150.00
Table 29a.Turkmenistan: Minimum Consumption Basket 1/ and Minimum Wage, 1992-94(In manat)
1994
JanuaryFebruaryMarchAprilMayJuneJulyAugustSept.Oct.
(Prelim.)(Prelim.)(Prelim.)(Prelim.)
Minimum consumption
basket230.1282.1350.1435.0493.8577.9698.8906.61,043.11,177.3
Percent increase15.422.624.124.313.517.020.929.715.112.9
Category
Food79.795.5114.4158.3198.0208.6173.9206.8228.9249.8
Clothes and footwear45.053.469.886.892.5120.4180.1212.3265.8319.3
Medical goods18.532.543.949.952.774.7102.1116.3144.3152.0
Furniture32.448.367.182.791.8114.4168.0290.4316.3358.7
Utilities2.72.72.72.72.72.72.72.72.72.7
Entertainment9.09.09.09.09.09.09.09.79.710.3
Personal services6.28.48.711.212.712.723.728.228.236.1
Transport7.07.07.07.07.07.07.07.07.07.0
Communications1.41.41.41.41.41.41.43.43.43.4
State charges0.61.41.41.41.41.4
Tobacco5.611.212.812.812.812.812.812.812.812.8
Garden tools2.12.12.92.92.92.95.65.911.813.1
Cattle and poultry3.13.13.13.13.13.13.12.13.13.1
Other17.06.36.06.16.06.99.59.19.19.1
Minimum wage150.0150.0150.0150.0150.0150.0250.0250.0250.0250.0
Source: Data provided by the Turkmen authorities; and staff estimates.

A per capita poverty measure reflecting the minimum income needed to sustain existence.

Source: Data provided by the Turkmen authorities; and staff estimates.

A per capita poverty measure reflecting the minimum income needed to sustain existence.

Table 30.Turkmenistan: Employment by Sector, 1988-93
198819891990199119921993
(in thousands, end–of–year)
Total employment1444.81491.81542.31570.81572.91641.5
Material sphere1,071.91,108.91,145.51,173.51,186.21245.3
Industry158.3159.5166.4159.3154.3170.6
Agriculture 1/589.7620.1645.1664.2693.2717.4
State and collective farms
Private plots 2/
Forestry1.71.81.72.12.02.2
Transport and communication77.364.762.562.756.455.1
Construction131.2149.1154.4168.1163.5169.7
Trade, distribution and dining 3/90.789.787.587.388.5102.0
Information—computing services2.82.82.52.21.81.7
Other branches (printing) 4/20.221.225.427.626.526.6
Nonmaterial sphere372.9382.9396.8397.3386.7396.2
Services and housing36.337.838.337.134.240.3
Health76.981.486.486.582.196.5
Education158.9167.8175.5182.0171.9183.8
Science and research and development 5/27.127.528.323.121.018.9
Non-productive transport and communication 6/34.731.129.529.727.727.3
State insurance4.74.95.05.05.56.6
Government 7/34.332.433.833.944.322.8
(In percent of total)
Total employment100.0100.0100.0100.0100.0100.0
Material sphere74.274.374.374.775.475.9
Industry11.010.710.810.19.810.4
Agriculture 1/40.841.641.842.344.143.7
Forestry0.10.10.10.10.10.1
Transport and communication5.44.34.14.03.63.4
Construction9.110.010.010.710.410.4
Trade, distribution, and dining 3/6.36.05.75.65.66.2
Information-computing services0.20.20.20.10.10.1
Other branches (printing) 4/1.41.41.61.81.71.6
Nonmaterial sphere25.825.725.725.324.624.1
Services and housing2.52.52.52.42.22.4
Health5.35.55.65.55.25.9
Education11.011.211.411.610.911.2
Science and research and development 5/1.91.81.81.51.31.1
Non-productive transport and communication 6/2.42.11.91.91.81.7
State insurance0.30.30.30.30.30.4
Government 7/2.42.22.22.22.81.4
Source: Data provided by the Turkmen authorities.

Includes those employed in private agriculture.

Estimate.

Retail and wholesale trade.

Other branches of material production, includes miscellaneous activities such as hunting, trapping, and printed materials.

Research and Development Institutes.

Transportation and Communications services for consumers and government (as opposed to industrial users).

Local, Republican, and former all-Union government agencies.

Source: Data provided by the Turkmen authorities.

Includes those employed in private agriculture.

Estimate.

Retail and wholesale trade.

Other branches of material production, includes miscellaneous activities such as hunting, trapping, and printed materials.

Research and Development Institutes.

Transportation and Communications services for consumers and government (as opposed to industrial users).

Local, Republican, and former all-Union government agencies.

Table 31.Turkmenistan: Industrial Workers, by Subsector, 1988-93 1/(In thousands of persons)
198819891990199119921993
All industry130.5129.3131.5138.3138.9143.2
Heavy industry71.368.770.275.675.979.4
Fuels energy complex14.214.816.119.226.326.1
Machine building19.318.318.019.114.313.9
Chemical forestry13.212.913.112.814.415.1
Construction materials19.718.118.119.713.016.1
Light industry43.344.244.444.149.148.7
Food processing15.916.416.918.613.915.1
Source: Data provided by the Turkmen authorities.

Industrial workers defined as “industrial-productive personnel”. Due to classification differences, does not correspond to industrial employment.

Source: Data provided by the Turkmen authorities.

Industrial workers defined as “industrial-productive personnel”. Due to classification differences, does not correspond to industrial employment.

Table 32.Turkmenistan: Financial Operations of the General Government, 1989-94(In percent of total)
198919901991199219931994
Jan.-Sept.
Actual
Total revenue100.0100.0100.0100.0100.0100.0
Tax revenue51.432.430.425.261.467.7
Income taxes16.38.115.211.627.531.5
Taxes on goods and services35.124.415.113.524.531.1
Taxes on natural resources9.45.2
Nontax revenue48.667.669.619.71.46.4
Extrabudgetary funds22.3
Foreign exchange reserve fund55.137.23.6
Total expenditure100.0100.0100.0100.0100.0100.0
National economy47.959.440.763.646.331.6
Price subsidies9.310.215.831.221.39.0
Capital expenditure24.919.610.621.418.419.3
Other13.729.714.311.16.73.3
Expenditure on socio-cultural projects47.237.455.427.331.128.2
Defense, public order, and safety0.11.12.91.43.8
State administration1.41.61.51.76.67.9
Other expenditure3.51.51.34.514.613.1
Extrabudgetary funds14.8
Foreign exchange reserve fund0.6
Source: Data provided by the Turkmen authorities.
Source: Data provided by the Turkmen authorities.
Table 33.Turkmenistan: Pension Fund and Social Insurance Fund, 1993-94
19931994
Jan.-Mar.Apr.-JuneJuly-Sept.
(In millions of manat)
Receipts304674469614
Wages fund1,7161,7062,1444,572
Collective farms3443526031,788
Others1,3721,3541,5412,784
Employer’s contributions291377452591
Collective farms38494755
Others253328405536
Social Security Funds’s share5776108106
Collective farms11201720
Others4556108127
Pension Fund’s share234301344485
Collective farms26293035
Others209272314450
Employer’s contributions13121723
Collective farms2122
Others11111521
Expenditures271456368542
Pension payments242373254370
Allowances177410492
Operational expenses1291020
Surplus / deficit33-67101132
Memorandum items:
Credit received by the Pension Fund60
Credit repayment60
Transfer to Joint-Stock Company (Turkmenship1741
Source: Ministry of Economy and Finance.
Source: Ministry of Economy and Finance.
Table 34.Turkmenistan: Prospecting Fund, 1992-94(in millions of manat)
199219931994
Actual
Jan.—June
Revenues683129
Expenditures683145
Turkmengeology3913
Ministry of Oil and Gas273129
Other113
Surplus (+) / deficit (-)-16
Source: Ministry of Economy and Finance.
Source: Ministry of Economy and Finance.
Table 35.Turkmenistan: Banking System Interest Rates, 1994(In percent per annum, as of end-October)
Period of Maturity
Asset Holder3 months3-6 months6-12 months1-3 years3 years
I. Deposits
State-owned enterprises571208070
Cooperatives13520615070
Non-profit organizations20706040
Citizens90120150160160
II. Interbank transactions
Banks
Auctions175
Refinance (CBT)5050501010
Source: Central Bank of Turkmenistan.
Source: Central Bank of Turkmenistan.
Table 36.Turkmenistan: Refinance Credit as of November 1,1994(In millions of manat)
Bank0 percent3 percent10 percent50 percentTotal
Agroprombank498441564999
Turkmenistan543406462
Investbank55192247
Coopbank471471
Other152861
Total5524411661.0802.239
Source: Central Bank of Turkmenistan.
Source: Central Bank of Turkmenistan.
Table 37.Turkmenistan: Oat Exports, 1994 1/(January - September)
Contracted annualQuarter IQuarter IIQuarter IIIQuarter I-III
VolumePriceValueVolumeValuePaymentArrean 2/VolumeValuePaymentArrean 2/VolumeValuePaymentArrean 2/VolumeValuePaymentArrean 2/
TransitCurrentTransitCurrentTransitCurrentTransitCurrent
(In millions of U.S dollars)
Armenia2,00080160927.48.71.328522.88.7-14.122.118.8-3.337752.336.2-16.1
Azerbaijan3,0008024089371.417.0-54.455244.22.0-42.254443.525.1-18.41,989159.144.2-115.0
Georgia3,6008028899479.52.5-77.086569.320.4-48.943734.915.8-19.12,296183.738.7-145.0
Kazakhstan 3/6,000502001,01236.236.21,75880.580.51,74079.179.1..4,510195.8195.8
Kazakhstan 4/1530
Russia 4/60025151207.87.8826.16.15.65.62027.819.511.7
Ukraine 5/28,000501,4003,125156.212.5-143.73,063153.252.4-100.83,963198.289.9-108.310,151507.6154.8-325.8
Uzbekistan 3/2,000801601,754129.1129.11178.032.224.21619.325.36.01,887156.4161.325.330.2
Uzbekistan 4/90025232305.7-5.72305.7-5.745911.4-11.4
Chechnya220.5-0.54.34.36.46.46.910.73.8
Total46,1224852,5167,99048.817.34.1-27.46,95238412384-1776,93040991175-14321,8721,281387299-595
Sources: Ministry of Oil and Gas and the Central Bank of Turkmenistan.

Volumes in millions of cubic meters; values in millions of U.S. dollars; price in dollars per 1,000 cubic meter.

A negative number implies accumulation of arrears.

Gas delivered as payment for gas transit charges.

Gas used in the process of shipping gas across the country (i.e., to run the compressors).

The contract calls for 28 bcm to be shipped in 1994. However, due to the cutoff of supplies earlier in 1994, this is no longer feasible.

Sources: Ministry of Oil and Gas and the Central Bank of Turkmenistan.

Volumes in millions of cubic meters; values in millions of U.S. dollars; price in dollars per 1,000 cubic meter.

A negative number implies accumulation of arrears.

Gas delivered as payment for gas transit charges.

Gas used in the process of shipping gas across the country (i.e., to run the compressors).

The contract calls for 28 bcm to be shipped in 1994. However, due to the cutoff of supplies earlier in 1994, this is no longer feasible.

Table 38.Turkmenistan: Net External Arrears owed to Turkmenistan 1/2/ As of September, 1994
Natural gas arrearsElectricityOtherTotal arrears
TotalClearingTransitarrearsArrearsStock
(In millions of U.S. dollars)
Armenia-19.80-16.00-0.40-20.20
Azerbaijan-109.20-99.30-12.10-121.30
Belarus12.8012.80
Estonia34.0034.00
Georgia-361.90-253.20-16.50-378.40
Kazakhstan0.024.204.22
Kyrgyz Republic-4.22-4.22
Latvia
Lithuania1.301.30
Moldova12.7012.70
Russia5.70148.70148.70
Tajikistan-12.20-12.20
Ukraine-1,026.10-674.10-10.70-1,036.80
Uzbekistan-59.60-59.609.50-8.01-58.11
Chechnya6.40
Total-1,577-1,1021210150-1,418
Source: Central Bank of Turkmenistan.

Sources of other arrears include transit gas for Armenia, Azerbaijan, and Kazakhstan; oil arrears, cotton arrears, and the technical loan from Russia.

Negative values imply arrears to Turkmenistan.

Source: Central Bank of Turkmenistan.

Sources of other arrears include transit gas for Armenia, Azerbaijan, and Kazakhstan; oil arrears, cotton arrears, and the technical loan from Russia.

Negative values imply arrears to Turkmenistan.

Table 39.Turkmenistan: Exports by Product Type, 1991-94
Product1991199219931994
Jan.-June
(In millions of U.S. dollars)
Cotton-filament46.8225.9555.7247.5
Cotton seeds2.31.93.90.1
Bund made carpet0.93.43.20.9
Liquorice0.90.90.80.1
Extract of root0.60.10.10.2
Oil products15.247.687.3123.6
Natural gas13.8666.41,806.01,143.4
Gas condensate39.643.246.80.1
Sulphur0.40.40.50.8
Phosphate fertilizers0.91.11.2
White spirit13.815.216.80.1
Sulphate-natrium4.85.25.72.9
Bishofit2.22.52.8
Pirolys products5.56.06.60.2
Cotton fabrics0.21.41.61.3
Epsomit0.40.40.5
Cotton seeds oil0.50.60.67.9
Petroleum coke2.32.52.76.1
Medical glauber salt0.40.50.6
Furnace fuel3.23.53.92.6
Nitrogen fertilizers0.10.10.10.5
Electricity0.193.856.2
Silk fabrics0.80.90.90.5
Wool fabrics0.40.50.54.3
Total156.11,124.02,548.81,599.3
Source: Central Bank of Turkmenistan.
Source: Central Bank of Turkmenistan.
Table 40.Turkmenistan: Changes In the Exchange Rate System, 1993-94
Date of changeOffical RateCommercial RateBlack Market RateSurrender Requirements (In percent)Institutional Changes
[Gas][All other goods]
November 1, 19932N/A100 on gas cash receipts at 0 manat/US100 for all goods at official rate- Introduction of the manat

- Rubles/manat - 500
November 6, 19931.98N/A"- Opened foreign exchange auction
December 11, 19931.9930"- Foreign exchange auction suspended
January 20, 19941.99N/A"50 on state enterprises at 10 manat/USS- Commercial banks with foreign exchange licenses (5) permit malnt. correspond, accts. Domestic use of. foreign currency permitted.
February, 1994255
March 11, 19942N/A- Foreign exchange auction reinstated; no activities, however.
March 15, 1994107060 at 0 manat/USS50 for all state enterprises at 10 None for private enterprises
April 19, 199410N/A60 at 2 manat/USS
April 29, 19941060 sale 57 purchaseN/A- Travel, foreign exchange sold by foreigners
August, 19941075110-11560 at 10 manat/USS100 on all trans. through SCE- State Commodity Exchange introduced
November 1, 19947575170
November 17, 19947575210
Source: Central Bank of Turkmenistan
Source: Central Bank of Turkmenistan
Table 41.Turkmenistan: Cotton Proceeds, 1993-94
19931994
EstimateAs of Sept.1
(In millions of U.S.dollars)
Exports427.8247.5
Cash payment3.014.5
Barter payment409.4232.2
Of which:
Consumer goods58.555.7
Unexplained residual15.40.8
Sources: Ministry of Agriculture and State Customs of Turkmenistan.
Sources: Ministry of Agriculture and State Customs of Turkmenistan.
Table 42.Turkmenistan: Imports by Product, 1992–94(At an annual rate)
Product199219931994
Jan.–June
Total1,124.91,604.9755.8
Consumer goods542.4623.2335.7
Of which:
Food products426.0322.1190.3
Of which:
Meat and by–products79.436.923.4
Fish0.66.463
Milk, dairy, eggs, honey and food of animal origin44.064.27.2
Vegetables, roots and tubers0.912.87.9
Edible fruits, nuts and rinds11.29.1
Coffee, tea and spices19.39.5
Grain crops81.751.427.0
Flour–milling products, malt, starch and wheat gluten33.919.38.3
Oil seeds and fruits1.61.4
Fats and oils3.22.3
Sugar and sugar–based confectionery products29.328.914.9
Cocoa and cocoa products8.08.3
Products of cereal, flour,

and milk, and flour–based

confectionery products
6.65.85.5
Processed fruits, vegetables and nuts6.49.4
Other foodstuffs142.81.62.3
Beverages and vinegar2.628.928.9
Tobacco and substitutes4.216.218.4
Medicines21.743.24.0
Nonfoodstuffs94.7257.9141.4
Of which:
Oils, perfumes and cosmetics8.013.3
Soaps, detergents, lubricants, wax, candles and pastes4.81.9
Albumins, starches and glue4.81.8
Paper and cardboard products3.722.52.9
Carpets and textile floor coverings11.211.9
Leather products4.44.82.0
Fabrics and yarn
Special fabrics, with pile, lace, tapestries and embroidery9.6
Knit materials6.36.42.4
Sewn articles72.20.2
Knit clothing and accessories5.532.113.7
Textile clothing and accessories (except knitwear)44.830.4
Miscellaneous textile articles0.814.46.8
Footwear, gaiters and similar articles28.920.7
Ceramic articles11.22.6
Tools, cutlery, spoons and forks
made of base metals14.41.3
Furniture, bedding, lighting fixtures and parts1.838.517.9
Toys, games and sporting goods1.50.5
Other nonfoodstuffs11.1
Producer and industrial goods582.5961.7420.1
Of which:
Building materials, chemical products, Metal articles and raw materials355.3349.5151.3
Of which:
Chemical products46.067.323.0
Products of inorganic chemistry6.41.8
Organic chemical compounds16.66.42.0
Fertilizers1.63.1
Tanning or dyeing extracts4.80.8
Miscellaneous chemical products5.56.46.7
Chemical fibers32.16.1
Chemical staple fibers23.99.62.5
Building materials24.052.910.7
Articles made of stone, gypsum, cement, asbestos and similar materials13.852.910.7
Other building materials10.2
Metal structures
Mineral–based fuel, petroleum and refining products176.612.838.0
Plastics and plastic articles9.67.8
Rubber and rubber articles16.68.04.6
Wood and wood articles7.427.33.7
Wool, and animal hair3.22.1
Cotton9.65.7
Treated and coated textile materials and articles made of them3.25.0
Glass and glass articles69.01.0
Ferrous metals35.011.27.9
Articles made of ferrous metals5.562.637.8
Copper and copper articles44.23.20.6
Aluminum and aluminum articles4.82.0
Miscellaneous base metal articles and plaster materials4.81.4
Packing materials
Machinery and equipment227.2632.2268.8
Of which:
Nuclear reactors, boilers, equipment and mechanical devices, parts5.9171.774.0
Electric machinery, equipment and parts11.0101.148.7
Vehicles used for surface transportation parts and accessories152.8178.160.7
Aircraft, spacecraft and parts1.60.7
Ships, boats and other vessels9.6163.70.4
Products of machine building47.579.0
High - tech products
Optical, photographic, measuring,

monitoring and medical instruments and

equipment, and parts
0.416.05.3
Sources: Goskomstat and Central Bank of Turkmenistan.
Sources: Goskomstat and Central Bank of Turkmenistan.
Table 43.Turkmenistan: Trade by Type of Payment, 1992–94
19931994 First Quarter1994 Second Quarter1994 July and August
ExportsImportsExportsImportsExportsImportsExportsImports
PaymentTotalNon-FSUPSUNon-FSUFSUNon-FSUFSUNon-FSUTSTTNon-FSUFSUNon-FSUFSUNon-FSUFSU
(In percent of total)
Cash25.524.546.21.220.112.843.364.12.221.740.034.23.518.229.217.7
Clearing34.053.111.597.643.47.421.847.97.048.856.61.842.9
Barter36.221.942.41.275.614.433.712.789.06.531.312.175.26.239.023.7
Of which:
Construction/cotton 1/2.920.50.118.20.137.30.56.513.70.814.03.0
Gas Transit14.828.623.518.4
Others2/4.30.44.30.815.61.48.80.421.74.921.30.630.015.7
Total100100100100100100100100100100100100100100100100
Source: Central Bank of Turkmenistan.

Barter of cotton in exchange for construction.

Unclassified border trade and suppliers’ credits.

Source: Central Bank of Turkmenistan.

Barter of cotton in exchange for construction.

Unclassified border trade and suppliers’ credits.

Table 44.Turkmenistan: Estimated Exports by Type of Payment, 1994
TotalGasCottonElectricityPetroleumOther
(In percent of exports)
Cash16.119.55.918.111.8
Clearing36.252.2
Barter25.393.8100.051.984.6
Of which:
Construction / cotton 1/6.838.413.40.5
Gas transit19.628.3
Other 2/2.80.330.03.6
Total100100100100100100
Source: Central Bank of Turkmenistan.

Barter of cotton in exchange for construction.

Unclassified border trade and suppliers’ credits, and correspondent accounts.

Source: Central Bank of Turkmenistan.

Barter of cotton in exchange for construction.

Unclassified border trade and suppliers’ credits, and correspondent accounts.

Table 45Turkmenistan: Imports from FSU Countries, 1994
CountryQIQIIJuly and August
TotalBarterClearingOtherTotalBarterClearingOtherTotalBarterClearingOther
(In millions of U.S.dollars)
Armenia3.92.61.311.10.28.02.911.610.51.1
Azerbaijan10.30.27.03.110.70.18.22.410.10.19.60.4
Belarus6.70.76.03.11.41.70.90.70.2
Estonia0.60.60.40.10.3
Georgia5.40.41.83.216.716.70.90.9
Kazakhstan26.30.92.023.412.02.53.06.56.31.00.25.1
Kyrgyz Republic6.02.04.07.81.06.83.01.81.2
Latvia6.11.84.32.52.30.22.92.40.5
Lithuania2.60.62.07.00.96.10.70.40.3
Moldova0.60.10.30.21.20.21.00.20.2
Russia52.86.20.745.932.97.10.225.625.810.30.115.4
Tajikistan20.70.720.00.90.50.41.80.90.9
Ukraine48.611.825.910.939.62.531.35.821.71.717.03.0
Uzbekistan8.01.01.15.93.01.10.31.67.92.10.35.5
Total198.627.041.4130.2148.919.967.761.393.821.438.633.8
Source: Central Bank of Turkmenistan.
Source: Central Bank of Turkmenistan.
Table 46.Turkmenistan: Non-FSU Exports by Product, January–June 1994
In millions of U.S. dollarsIn percent of total
Live animals0.040.01
Crops
Fats and oils8.002.11
Mineral products92.4024.33
Chemicals7.852.07
Plastics and rubber0.700.18
Leather and fur, raw and finished3.740.98
Cotton and textiles232.1761.14
Non–precious metais4.311.14
Planes, boats and parts
Other industrial goods30.528.04
Total380100
Source: Central Bank of Turkmenistan.
Source: Central Bank of Turkmenistan.
Table 47.Turkmenistan: Non–FSU Imports by Product, January–June 1994
In millions of U.S. dollarsIn percent of total
Live animals0.01
Crops27.003.57
Food products, alcohol, and tobacco163.0021.57
Mineral products38.005.03
Chemicals21.902.90
Plastics and rubber12.401.64
Leather and fur, raw and finished2.700.36
Wood and wood products3.300.44
Paper products3.300.44
Textiles63.308.37
Hats, gloves, shoes, umbrellas, etc.21.502.84
Cement, ceramics, glass, etc.14.301.89
Non–precious metals51.006.75
Automobiles, electronics, and parts109.4014.47
Planes, boats, and parts1.100.15
Optical and medical equipment5.300.70
Other industrial goods218.3228.88
Total756100
Source: Central Bank of Turkmenistan.
Source: Central Bank of Turkmenistan.
Table 48.Turkmenistan: Non–FSU Trading Partners, January–August 1994
ExportsImports
In millions of U.S. dollarsIn percent of total Non-FSU exportsIn millions of U.S. dollarsIn percent of toal Non–FSU exports
Afghanistan13.23.919.03.5
Argentina6.81.3
Austria4.41.318.83.5
Bangladesh1.10.3
Belgium0.30.11.60.3
Bulgaria0.60.24.70.9
Canada3.10.6
China0.11.20.2
Croatia0.70.1
Cyprus23.67.05.81.1
Czech Republic18.65.513.72.5
Denmark0.30.1
Estonia1.40.41.00.2
Finland3.10.6
France1.4