Country Risk Rating

A high-risk political and economic situation and an often very difficult business environment can have a very significant impact on corporate payment behavior. Corporate default probability is very high. - Source: Coface

Business Climate Rating

The highest possible risk in terms of business climate. Due to a lack of available financial information and an unpredictable legal system, doing business in this country is extremely difficult.


  • Fourth largest natural gas reserves in the world (nearly 10% of the total)
  • Strategic position in Central Asia and between China on the one hand, and Russia and Europe, via the Caspian Sea, on the other
  • Healthy public accounts and a low level of debt
  • Obtained observer status at the World Trade Organization (WTO) in July 2020, with the intention of commencing accession negotiations by 2025


  • High dependence on hydrocarbons (60% of exports, 33% for gas alone, in 2021)
  • Strong dependence on China (which receives nearly 75% of gas exports)
  • Low share of private sector, anticompetitive market structures (State monopolies dominating the economy, credit and investment management)
  • Very difficult business climate, tight trade, price and foreign exchange restrictions and controls that hamper FDI
  • Poor infrastructures (especially transport and health) and underdeveloped regional connectivity
  • Weak governance (corruption, authoritarianism, repression, politicization of the judiciary, opacity of the statistics system)
  • Porous border with Afghanistan (presence of the Taliban) and weak military resources

Current Trends

Gas sales support economic growth

In 2022, economic growth will slow modestly due to the war in Ukraine and its impact on Turkmenistan’s main imports (iron, steel, machinery, vehicles). The main driver of the economy will be natural gas exports. Despite the slowdown caused by strict containment measures in China, its leading trading partner, higher energy prices will support the value of exports. However, the plan to increase gas exports to China by delivering the fourth leg (“Line D”) of the Central Asia-China gas pipeline will be challenging to achieve in 2022. However, it could be accelerated after China expressed interest in increasing Turkmen’s gas imports to compensate for the loss of fuel from Australia. On 20 May 2022, an agreement on the supply of Turkmen gas to Kazakhstan was signed. Concomitantly, Azerbaijan and Armenia have announced their interest in increasing their Turkmen gas imports via Iran. These agreements could either increase the country’s gas production or compensate for potential losses in the event of a drop in Chinese demand (due to the zero-COVID policy). In the first few months of 2022, most commodities would have experienced deflation, likely due to very high base effects in 2021, when the country experienced a spike in prices of imported goods due to COVID-related logistical hurdles. However, higher global food prices will support price growth, which will be positive for the year, but limited by price controls. The Central Bank (CBT) does not publish an updated official interest rate, and, given the underdeveloped banking sector, monetary policy has little impact on the economy. The authorities apply an official parity of Manat3.5:USD1, access to foreign currency at this rate is restricted, resulting in a black market rate of Manat29.9:USD1 in 2021. In May 2020, the president ordered that 100% (previously 50%) of foreign currency entering Turkmenistan be transferred to the Stabilization Fund, the sovereign wealth fund, exchanged at the official rate. There is no verifiable data on international reserves, but they should be able to support the currency because of their abundance of natural gas sales and limited government spending.


Balanced fiscal and external accounts

The government’s main priorities in 2022 will be maintaining price stability, ensuring food security, and stimulating exports. In early June, President Serdar Berdymukhamedov announced that the government would allocate USD 300 million to food security, half of which would support domestic producers. The government also wants to reduce the volume of imported food further. While this may alleviate inflationary pressures, it could lead to shortages due to inefficient domestic agricultural planning and adverse weather conditions. Thus, spending will increase, but the budget deficit will narrow slightly as the government expects more revenue from export taxes and excise duties. Moving to a balanced budget will be a policy priority from 2022-23, as the government seeks to limit the extremely low external debt (20% of GDP in 2021, about 5% of GDP for its public share). Although the trade surplus will decline slightly in 2022, the significant natural gas exports and import substitution policy will almost bring the current account into balance.


Country emerges from autarky: bilateral agreements signed

After incumbent President Gurbanguly Berdimuhamedow resigned, Serdar Berdymukhamedov, his son, won the early presidential election on 12 March 2022, with 72.97% of the vote and no significant opposition. The president visited Iran on 14 June, where several agreements were signed to diversify energy buyers and boost joint natural gas and oil production in the Caspian Sea. In recent months, the Turkmenistan-Afghanistan-Pakistan-India pipeline (TAPI) has been high on the foreign policy agenda. The project has received renewed interest following bilateral meetings between Turkmen officials and their Indian and Pakistani counterparts. However, the project is expected to progress slowly in 2022 due to a lack of funding and uncertainty about the Afghan security situation. The country is looking to strengthen its cooperation with Turkey, which wants to increase its investment in Turkmenistan and exploit its vast natural resources. With Uzbekistan, several agreements have recently been signed; an agreement on the management, protection, and rational use of the waters of the Amu Darya river, as well as trade agreements (worth USD 450 million) in the automotive, electronics, and textile sectors, to increase bilateral trade to USD 2 billion a year (from USD 880 million in 2021). Finally, the country has finalized the construction of the Aqineh-Andkhoy railway line in Afghan territory, which was interrupted during the pandemic. This 30-km segment will connect the Chinese railway network to the port of Turkmenbashi on the Caspian Sea. However, regional cooperation was shaken on 21 July when Tajikistan and Turkmenistan refused to sign a treaty committing all Central Asian countries to “friendship, good neighboring, and cooperation.” The only reason given: the two countries wish, beforehand, “(to have) completed all internal procedures.” 


Coface (08/2022)