The European Union, together with the OECD and the government of Turkmenistan held a webinar on 30 June 2020, as part of the EU Central Asia Invest programme. Participants discussed COVID19-related challenges in Turkmenistan and current policy responses and future plans by the government, and explored some lessons from OECD and Central Asian countries that might inform government efforts.
The webinar was opened by the Head of the State Finances and Economic Policy Department within the Ministry Finance and Economy Ms Galina Romanova and the Head of the EU Delegation to Turkmenistan Ambassador Diego Ruiz Alonso. Ms Romanova highlighted the efforts of the government in response to COVID-19, such as the adoption of a national strategy including sanitary, economic, monetary, and legislative measures, which will be implemented by an interagency committee. Ms Romanova noted the rising co-operation with international actors in Turkmenistan. Mr Alonso echoed the importance of international and regional cooperation and commented on the high dependency on commodities and falling international demand that put a strain on Turkmenistan’s public finances and call for sustained economic reforms in favour of private sector development.
Mr Luke Mackle (OECD) looked at the impact of COVID-19 on Turkmenistan’s economy and noted the importance of coupling immediate policy responses with long-term structural reforms, such as investing in digital infrastructure to implement the government’s digital agenda, improving the legal environment for investment, and addressing barriers in the operational environment for SMEs. He presented a range of fiscal measures taken by OECD governments to support business and workers during the crisis.
Ms Romanova reiterated that the government had taken measures to sustain the business environment, by offering preferential treatment on tax and credit to firms in priority sectors, such as agriculture, transport and tourism. Ms Peline Atamer reported that the OECD foresees intensifying competition for foreign direct investments (FDI) in the aftermath of this crisis, with FDI flows expected to fall globally by 30% in 2020. In Turkmenistan, FDI had already been declining over the past decade and remain concentrated in extractive sectors, thereby exacerbating the country’s economic vulnerability. Since Investment Promotion Agencies (IPAs) play a strong role in attracting and retaining FDIs, the OECD recommends creating an IPA and modernising and consolidating investment legislation. Ms Romanova outlined the government’s support to public-private partnerships to foster investments and reported that Turkmenistan is taking active steps to improve the investment climate, including establishing a one-stop shop and creating free trade zones. There is commitment to enhance the legal framework, taxation schemes and administration mechanisms for higher investment attraction.
Concluding, Ambassador Alonso echoed concerns regarding the impacts of COVID-19 on Turkmenistan’s private sector and reiterated the EU’s readiness to support the government in combining structural reforms with the emergency responses to COVID-19 in order to ensure long-term improvements for the country’s private sector and the economy.