Country report: Turkmenistan

     The social development of the country depends largely on the state of the economy. As one of the republics of the USSR, the economy of Turkmenistan had served mainly as a source of raw materials for processing in industries located in other republics. Economic ties within the USSR, and the shared production and technological specialization made the economy of Turkmenistan dependent on imports from other republics. The economy was based on the extensive exploitation of abundant, relatively inexpensive natural resources, but not on the use of technologies. Depletion of resources and an increase in extraction and processing costs have resulted in a decline in economic efficiency and, consequently, in an overall economic and social decline.

     Turkmenistan has chosen the strategy of phased, gradual economic reform, hinging on the readiness of the economy and the people to adopt new economic mechanisms. At all stages of economic reform, the main priorities of the government are macro-economic stabilization, economic growth and social security for the people, including a high level of employment.

     For a long time, the government controlled retail prices for the principle food products, and a third of the public budget was allocated to their production. Price ceilings for productive services were set. Since 1993, the population has been provided with gas, water and electricity (subject to certain norms) free of charge. However, the list of controlled prices has gradually decreased.

     At present, price controls are exercised in the agricultural sector on grain and cotton, and in the industrial sector on certain products in the energy sector. Annual income per capita has not decreased too considerably, owing to the insignificant increase in retail prices as well as benefits which the poor receive. In addition, phased, socially-oriented reforms have made it possible to prevent sharp declines in production in the main services.

     In the current situation of growing unemployment, those unemployed could be helped by better support for the labour market (through job placement services first of all) and strengthening its infrastructure.

     While the government has taken all efforts to deliver social services during the transition, significant fiscal constraints are bound to emerge as reforms proceed. This will impede the progress of universal social transfers in the long run. Therefore, in order to widen the revenue base of the state budget and continue supporting human development, adequate attention has to be paid to the other half of human development: economic empowerment of the population, and their participation in decision-making.