International Finance

ADB approves first full country partnership strategy for Turkmenistan

Highly concentrated export basket and export markets have made the economy vulnerable to changes in commodity prices

The Asian Development Bank’s (ADB) Board of Directors has endorsed a 5-year Country Partnership Strategy (CPS) for Turkmenistan to support regional cooperation and economic diversification during 2017-2021. This is ADB’s first full CPS with Turkmenistan since the country joined ADB in 2000.

Fueled by its hydrocarbon exports—Turkmenistan is the 12th largest natural gas producer in the world, with the 4th largest natural gas reserves, and the 10th highest oil producer in the Asia and Pacific region—the country’s economy has grown rapidly. However, highly concentrated export basket and export markets have made the economy vulnerable to changes in commodity prices. Turkmenistan’s national development strategy aims to shift to a growth model based on economic diversification, innovation, and sustainable development, with greater regional cooperation.

“Turkmenistan has made important progress in recent years and achieved upper middle-income status,” said Sean O’Sullivan, Director General of ADB’s Central and West Asia Department. “ADB will work with the government and people of Turkmenistan to build on this progress by enabling the country to diversify its energy markets, improve its regional transport connectivity, and diversify its non-hydrocarbon economy.”

The CPS provides three main avenues of support: hydrocarbon market diversification and energy trade promotion; diversification of the non-hydrocarbon sectors through transport infrastructure investments to improve market connectivity, and supporting private sector development, including small and medium-sized enterprises; and knowledge work on economic diversification and reforms.

Regional power interconnection projects such as Turkmenistan-Uzbekistan-Tajikistan-Afghanistan-Pakistan (TUTAP), Turkmenistan-Afghanistan-Pakistan (TAP), and the Turkmenistan-Afghanistan-Pakistan-India (TAPI) natural gas pipeline project will be the primary vehicles of ADB support to diversify Turkmenistan’s power and natural gas export markets to South Asia. ADB has been instrumental for TAPI’s progress to date, serving as the TAPI secretariat since 2003 and, more recently, acted as transaction advisor. Going forward, ADB will continue to support the project, including the possibility of providing financial advice, financing shareholder equity in TAPI pipeline company, and non-sovereign loans, and credit enhancement.

ADB will support transport infrastructure investments to improve market access and regional connectivity. Modernizing institutions to increase the role of the private sector in the non-hydrocarbon economy, starting with small and medium-sized financing, will be a key area of engagement. To meet the needs of policymakers, ADB will also support knowledge work on economic diversification and economic reforms. Regional cooperation and integration, particularly within the Central Asia Regional Economic Cooperation (CAREC), which Turkmenistan joined in 2010, is a priority area of the CPS.

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