ENGRUS

Turkmenistan: Economy, Finance Ministries Merged to Save Money

Turkmenistan has merged two key ministries in the latest of a series of cost-cutting measures undertaken to lift the economy out of the doldrums. 

While declining to publicly acknowledge that it has a problem, Turkmenistan evidently continues to suffer from cashflow problems.

On October 6, state media reported that President Gurbanguly Berdymukhamedov reversed a decision he took nine years by creating a single entity out of the Economy and Development Ministry and the Finance Ministry. When Berdymukhamedov created the two ministries in 2008, he argued that it would allow for a “new approach to creating a financial and economic strategy.”

Turkmenistan has never, however, developed much of an economic strategy beyond relying heavily on its natural gas exports, which generate far less revenue now than they did in 2008.

The new ministry will be headed by Batyr Bazarov, who formerly headed the Economy and Development Ministry.

Berdymukhamedov said that primary goal of the new ministry will be to “attract investment, modernizing economic and financial structures, diversification, and improving their [financial structures] competitiveness of world markets.” He went on to argue for the need to implement reforms that would “enable the creation of a powerful class of owners and to work on the industrialization of the country and the development of the electronics industry.”

Typically, Berdymukhamedov is confident when speaking of desired outcomes, but the details of how Turkmenistan is supposed to achieve those goals without addressing its profoundly nebulous, erratic and personalized style of governance, corruption, the lack of even basic genuine democratic structures, the nonexistence of an independent judiciary, visa regulations designed specifically to keep people out, sketchy data-gathering by the state statistics agency, draconian currency controls, weak internet penetration, a basket-case education system is not quite so clear.

Bazarov has his work cut out, as even Berdymukhamedov appeared to concede.

“The tasks facing the financial complex remain unchanged — this is supporting the stability of the national currency and the financial situation,” he said at a government meeting.

The national currency, the manat, is still experiencing trouble. Since the sale of US dollars was effectively banned in January 2016, the black market rate has doubled to 7 manat to the dollar — as opposed to the official rate of 3.5 manat to the dollar. 

Government employees’ salaries have been chronically delayed, and the situation only appears to have normalized now that Asian Indoor and Martial Arts Games are out of the way.

In the short term, the most immediate result of the ministries merger will be that the unemployment rate will inch up yet again. There is no reliable official data about unemployment in Turkmenistan, but estimates have been known to vary anywhere around the 50 percent mark.

In another cost-cutting exercise, Berdymukhamedov has ordered Turkmenhaly, the state-run carpet exporter, to be absorbed into the Textile Industry Ministry. Economic and textile officials are now also being ordered to privatize several entities within Turkmenhaly, including wool processing enterprise in Mary and carpet factories in the towns of Baharly and Esenguly.

This all fits a pattern.

Last year, Turkmenistan scrapped its Oil and Gas Ministry and the presidential State Agency for the Management of Hydrocarbon Resources, which issued operating licenses. Then in July, Berdymukhamedov ordered the abolition of Turkmenneftegazstroy, the state company responsible for building oil and gas-related infrastructure, and ordered that its responsibilities be taken over by the state gas monopoly Turkmengaz.

At the same time as scrapping Turkmenneftegazstroy, Berdymukhamedov ordered the merger of state-run retail lenders Prezidentbank and Halkbank. In addition, he demoted the State Tax Service to a department within the Finance Ministry. 

As if this were not evidence enough that not all is well in Turkmenistan, there is the matter of the preposterous routine reprimands issued by the president, wherein the officials in question hang their heads like scolded children while their boss reads them riot act. Four people got it at this week’s Cabinet meeting: the Industry Minister and the Textile Industry Minister for “allowing a drop in the volume of exported goods,” the Railways Minister for “allowing a drop in the volume of passenger and freight transportation” and the Communications Minister for, yes, “allowing a drop in the volume of communications services.”

On this last point, it hardly says a lot about Turkmenistan’s desire to attract investors and whatnot when the government decides, as a prelude to a visit from President Vladimir Putin, to pull the plug on a Russian-owned cellular phone services operator.

On September 29, MTS subscriber found themselves bereft of services after state-run Turkmentelecom denied the company access to the country’s wireless communications grid. If the issue of MTS came up in conversation between Putin and Berdymukhamedov, there has been no reporting of the fact.

RFE/RL’s Turkmen service, Radio Azatlyk, has reported that negotiations between MTS representatives and communications officials are expected to run through to October 8. After that deadline, MTS could potentially be looking down the barrel of a long-term suspension of its operations in Turkmenistan. So much for modernizing the economy.