ADB highlights operational challenges in Turkmenistan

The Asian Development Bank (ADB) published the country factsheet in April 2024 with the summary of ADB’s operations in Turkmenistan. ADB’s focus in Turkmenistan includes enhancing transport infrastructure, diversifying the economy, developing human capital, and reinforcing policy-making capacities.

ADB’s financial partnership with Turkmenistan in numbers:

  • The overwhelming majority (99.9%) of ABD loans are given to the public sector in Turkmenistan.
  • In 2023, ADB’s loan disbursements to Turkmenistan amounted to $107.8 million.
  • As of 31 December 2023, ADB has committed 14 public sector loans, grants, and technical assistance totaling $634 million to Turkmenistan. ADB’s current sovereign portfolio in Turkmenistan includes one loan worth $500 million for the National Power Grid Strengthening Project aimed at improving domestic interconnections and grid reliability.
  • In 2023, ADB provided technical assistance worth $225,000 to advance private sector participation and develop a roadmap for public-private partnerships.

ADB loans, grants and commitments to Turkmenistan by sectors

*Sovereign portfolio consists of ADB-financed loans, grants, equity investment, and sovereign guarantee committed and not financially closed. Regional projects with loans/grants to multiple countries are reported separately.

ADB is assisting Turkmenistan in its accession process to the World Trade Organization (WTO), which involves drafting the Memorandum on Turkmenistan’s Foreign Trade Regime, including the collaboration in organizing roundtable discussions and donor engagement events. Furthermore, ADB facilitated a study tour to Uzbekistan for government officials, focusing on topics such as energy efficiency, the privatization of renewable energy projects, and regional energy trade. Lastly, ADB extended support for regional technical assistance within the framework of the Central Asia Regional Economic Cooperation (CAREC) Program.

Operational challenges for ADB activities in Turkmenistan

  • Operational challenges in Turkmenistan stem from limited local capability to fully comply with the procedures of international banks for initiating, preparing, approving, and executing projects.
  • There is a limited use of global standards like the International Financial Reporting Standards (IFRS). Financial management and ensuring environmental and social safeguards are challenging for local agencies.

According to the factsheet, improving public investment planning, adopting a more organized approach to development projects, and managing public debt more efficiently are crucial needs. ADB recommends Turkmenistan to establish better systems for decision-making and communicating about public and guaranteed loans. Turkmenistan should also make the processes for starting, approving, and executing projects with external financial support more transparent and predictable.

Looking ahead to the future

The forthcoming Country Partnership Strategy (2024-2028) of ADB plans to support Turkmenistan’s transformation into a more sustainable, climate-resilient, and competitive economy. This strategy emphasizes low-carbon energy generation, economic diversification, and structural reforms. ADB’s approach integrates three pillars: infrastructure investments, institutional strengthening, and partnerships for knowledge. Four cross-cutting themes are climate change, regional cooperation, gender equality, and good governance.

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