The Asian Development Bank (ADB) has published its Country Partnership Strategy (CPS) for Turkmenistan in August 2024 outlining a plan to transform the nation into a sustainable, climate-resilient economy from 2024 to 2028. According to the strategy, despite its wealth in natural resources and upper-middle-income status (UMIC), Turkmenistan faces challenges such as overdependence on hydrocarbons, limited export markets, and slow private sector growth. The CPS aims to promote economic diversification, human development, and institutional reforms in Turkmenistan.
Turkmenistan faces development challenges that are not financial but rather “soft constraints”, such as gaps in institutions, regulations, capacity, and information. ADB’s CPS will expand engagement through projects, technical assistance, and other modalities. As a group C developing member, Turkmenistan is eligible for regular ordinary capital resources lending, with allocations during the CPS period dependent on the government’s borrowing policy, project quality, and ADB’s portfolio performance in the country. Group C countries do not qualify for concessional assistance / loans by ADB.
Gross Domestic Product
As of 2023, Turkmenistan’s GDP was estimated at 60.6 billion USD, with a GDP per capita of 8,536 USD. The official exchange rate has been pegged at TMT3.5 per USD since 2015, and while external liquidity improved between 2021 and 2023, restrictions on foreign exchange transactions, particularly for state-owned enterprises (SOEs), continue to constrain economic flexibility.
Number of projects
The country strategy does not mention the dual exchange rate. ADB’s portfolio in Turkmenistan includes only one active project, the TAPI gas pipeline, a $500 million loan.
Since 2003, ADB has served as the secretariat for the Turkmenistan–Afghanistan–Pakistan–India (TAPI) gas pipeline, providing technical assistance and becoming a transaction advisor in 2013. However, instability in Afghanistan has disrupted ADB’s operations for regional projects like TAPI and the Turkmenistan–Uzbekistan–Tajikistan–Afghanistan–Pakistan energy initiative.
Inflationary context
Inflation was 21.14% in 2021 but moderated to an average of 3.03% in 2022 and 1.39% in 2023 stabilized through import substitution and price controls on essential goods. The inflation forecast will range from 3.75% to 4.85% in 2024. Indexing wages and pensions to inflation is necessary to protect purchasing power, as suggested by the UN’s Common Country Analysis.
Social context
Human capital development should be a priority focusing on expanding technical and vocational education to prepare the Turkmen workforce for a diversified economy.
Government spending on health and education was 5.1% of GDP in 2020, lagging behind other UMICs, emphasizing the need for increased investment in human development.
Operational challenges
Implementation delays due to capacity constraints, lengthy decision-making processes, and unfamiliarity with ADB procedures are significant risks. The lack of a national e-procurement platform also hinders transparency and efficiency in public projects. ADB will collaborate with the government to enhance macroeconomic analysis and management, improving forecasting tools and understanding economic elasticities and multipliers.
Environmental and climate challenges
Turkmenistan is highly vulnerable to climate change, particularly droughts and flooding, with agriculture reliant on the Amu Darya River for irrigation. The CPS emphasizes improving water management and climate adaptation measures. Total greenhouse gas emissions of Turkmenistan, including contributions from land-use changes and forestry, were estimated at 157 million tons of carbon dioxide equivalent in 2019, with 41% of these emissions coming from methane. The CPS promotes transitioning to a low-carbon economy by improving energy efficiency, reducing emissions, and harnessing renewable energy potential, particularly solar and wind, estimated at 666 gigawatts.
Total greenhouse gas (GHG) emissions of Turkmenistan, including contributions from land-use changes and forestry, were estimated at 157 million tons of carbon dioxide equivalent in 2019, with 41% of these emissions coming from methane.
Turkmenistan faces development challenges that are not financial but rather “soft constraints”, such as gaps in institutions, regulations, capacity, and information. ADB’s CPS will expand engagement through projects, technical assistance, and other modalities. As a group C developing member, Turkmenistan is eligible for regular ordinary capital resources lending, with allocations during the CPS period dependent on the government’s borrowing policy, project quality, and ADB’s portfolio performance in the country.
