World Bank Delegation Visits Turkmenistan

Ashgabat, 3 February 2008 (nCa) --- World Bank vice president for Europe and Central Asian region, Shigeo Katsu, is visiting Turkmenistan.

He is accompanied by Mrs. Annette Dickson, regional director for Central Asia, and Mrs. Mehnaz Taimurian, coordinator of World Bank programmes in Central Asia. Regional IFC representative and some experts are also in the delegation.

The delegation is focused ont expansion of interaction with Turkmenistan, especially for the benefit of populations in the rural areas.

The World Bank delegation, in coordination with the Central Bank of Turkmenistan, had a meeting with more than 70 representatives of organizations, ministries and departments. The purpose was to promote the level of mutual understanding by listening to the participants and giving presentations to acquaint them with the shape of cooperation of the World Bank with transition economies.

In addition to bolstering the social sector, the sides agreed that communication, agriculture and ecology were some of the priority areas for fruitful interaction.

Other areas where great potential exists for mutual cooperation are improvement of infrastructure facilities in public healthcare and education, and institutional reforms in oil and gas sector, trade and transportation.

The World Bank is also interacting with Turkmenistan in its efforts to unify the currency exchange rates i.e. bringing closer together the bank and open market exchange rates of Manat.

This is an ongoing cooperation. World Bank arranged a workshop in Turkmenistan on 19 December 2009 to bring awareness of the price and welfare implications when a country embarks on unifying the currency exchange rates. The workshop, attended by 100 specialists and students in Turkmenistan, cited case studies of Iran, Belarus, Libya and Mexico.

World Bank is one of the few international organizations consulted by Turkmenistan on the subject of exchange rate unification and its implications on the welfare of the Turkmenistan population.

World Bank has also launched a small grants programme for Turkmen organizations. The programme was announced in December 2007 and the last date for applying for grants is 15 February 2008. Depending on certain factors, eligible organizations can qualify for grants from US $ 4000 to $ 7000.

More details on the grants programme are available at the World Bank website at this URL: http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/ECAEXT/TURKMENISTANEXTN/0,,contentMDK:21588682~menuPK:300741~pagePK:2865066~piPK:2865079~theSitePK:300736,00.html

The World Bank website page about Turkmenistan, whichwas last updated on 19 December 2007, has the following to say:

Despite the daunting reform agenda facing them, the Turkmen authorities have been extremely cautious about taking steps towards real economic reforms. In the past, the Bank sought to engage with Turkmenistan through loans, technical assistance, and policy and strategy advice. However, the results achieved have been very limited.

The Turkmen authorities have recently expressed willingness to engage more actively with the Bank, and they have taken recent positive steps to address long-standing issues that hindered development of a Bank program in Turkmenistan. Thus, the Bank, at the request of the Government of Turkmenistan, is currently exploring ways of supporting Turkmenistan in selected areas through a small and focused technical assistance program.

World Bank website comments about challenges ahead for Turkmenistan:

“First generation” market reforms remain the key challenge for Turkmenistan. Strengthening macroeconomic stability, introducing currency convertibility, liberalizing the foreign trade regime, sharply reducing the role of the state, and privatizing ought to top the authorities’ reform agenda. Other reform challenges include the following:

• Public sector management. Turkmenistan’s top development priority is to ensure that a sound and transparent system of public resource management is in place. With a better system, Turkmenistan could use its considerable natural resource wealth to address the large level of income inequality and improve basic living standards with its own resources.

• Agriculture and rural development. Rural development is critical as it accounts for almost one-fifth of GDP and is a source of livelihood for half of the population. Turkmenistan took an initial step in 1997-1998 in changing the status of most farmers to “lease-holders.” However, in practice, the rural economy continues to operate under total state control over inputs and marketing through state orders.

• Private sector development. Turkmenistan needs to dramatically improve its business environment, particularly for small enterprises, so that the private sector contributes to employment generation and helps reduce poverty. Just 25 percent of GDP is produced by the private sector, which faces steep barriers. These obstacles include highly restricted access to foreign exchange, reflected in the black market premium of 400-500 percent.

• Environment and social indicators. Turkmenistan faces serious environmental, water, and lifestyle problems, which affect the living standards of the population. Health indicators such as life expectancy and infant mortality were historically among the worst in the former Soviet Union countries and, despite some recent improvement in official statistics, remain of concern. The quality of education and basic health services has also significantly deteriorated over the past ten years.

• Regional issues. The development of Turkmenistan is tied to regional issues such as water resource management, energy sharing, Caspian Sea rights, and the development of trade and pipeline routes. However, Turkmenistan has at best been a reluctant participant in regional cooperation activities.