A SUPPLEMENT TO EUROMONEY - April 1997TurkmenistanLike many other former Soviet Republics this young Central Asian state was slow to embark on reforms. However since the beginning of 1996 the government has been seeking to implement an ambitious stabilization and reform programme in order to make up for lost time. Although Turkmenistan has the fourth largest gas reserves in the world, access to the only pipeline to the west is restricted by the Russians. This has hindered the growth of the country, since 60% of its GDP comes from gas. Therefore the Central Bank issued a loan to raise the desired capital, but this lead to an increase in the money supply which in turn led to increased inflation. This meant that, unlike many of its neighbours, who by 1995 had reached some degree of stabilization, Turkmenistan still had a major hyperinflation problem (1360%). ReformsThis lead to the adoption of a reform programme in 1996 which has helped to improve the situation. Prices were liberalized and a tight monetary and fiscal policy was introduced. The exchange rate was unified and the foreign exchange rate was revived. |