Crisis-Hit Turkmenistan Expects Revenues to Tumble in 2018
Turkmenistan’s parliament, or majlis, unanimously approved the country’s state budget for 2018 on November 24, including a cut in state revenues of 8%.
State budget revenues in 2018 will be 95.5bn manat ($27.29bn at the official exchange rate, but $11.2bn at prevailing ‘black market’ rates). Cuts in investment of the same order are also planned.
Budget revenues come mainly from the oil and gas, chemicals, power and construction industries, but official media did not make clear how theTurkmen government intends to attract $ 27.29bn of revenues. State budget revenues were manat 94.1bn in 2014, 86.3bn in 2013 and 74.9bn in 2012 when the oil price was around $100/b. Even official data show that state budget revenues for 2018 will decrease by 8,063.1mn manat, or by 7.78%, from 2017 levels.
Turkmenistan is now experiencing the worst economic crisis in the last 25 years, mainly due to its dependence on gas export revenues which have plummeted in the last three years. Other factors are Russia's refusal to import Turkmen gas at the beginning of last year and Turkmenistan’s suspension of gas exports to Iran since the start of 2017 due to disagreements over the terms of the contract.
The only current Turkmen gas buyer is China, which in 2016 received 29.4bn m3 from the central Asian republic; slightly more than 30bn m3 is expected to be supplied in 2017. According to Chinese customs statistics, Beijing pays Turkmenistan about $ 185/’000 m3, or $5.14/mn Btu -- for a total of $ 5.55bn/yr.
However, Turkmenistan does not get this money in full. Part of the proceeds from gas exports is used to cover Chinese loans for billions of US dollars, which Beijing issued for the development of gas fields and the construction of gas pipelines to China.
Turkmen statistics have always been closed. However, it is always noted that the 70%-75% of state budget revenues are provided by the gas industry. So it is unclear from what assets the government expects to attract such large sums to its budget. Last month the government decreed that the public must start paying for the energy they use, effectively ending free gas supplies to households.