TURKMENISTAN: ECONOMIC POLICY PROJECT MOVES FORWARD ON

UNCLAS SECTION 01 OF 02 ASHGABAT 001253 SIPDIS SENSITIVE STATE FOR SCA/CEN, EUR/ACE, EEB AID/W FOR EE/EA E.O. 12958: N/A TAGS: PGOV PREL EAID TX SUBJECT: TURKMENISTAN: ECONOMIC POLICY PROJECT MOVES FORWARD ON PRIVATE SECTOR DEVELOPMENT STRATEGY ¶1. (U) Sensitive but unclassified. Not for public Internet. ¶2. (SBU) SUMMARY: On August 27-28, the Chief of Party for USAID's Economic Reforms to Enhance Competitiveness (EREC) program met with the director of the Institute for Strategic Planning and Economic Development (ISPED) and the Chairman of Supreme Regulatory Chamber (SRC) to discuss plans for cooperation and to identify specific tasks for joint implementation. The ISPED agreed to cooperate with USAID in developing a strategy for state support of private sector growth. The SRC, which serves as the chief audit body in Turkmenistan, asked for assistance in capacity building of staff as well as developing legislation for the government procurement. Collectively, these plans for concrete cooperation represent a breakthrough in USAID's relationship with two newly created and seemingly progressive institutions. END SUMMARY. TANGIBLE COOPERATION WITH ISPED BEGINS ¶3. (U) In an August 27 meeting, ISPED director Mr. Ashirkuli Kurbankuliev thanked USAID/BearingPoint's Chief of Party (COP) for its support for English-language courses for ISPED staff by EREC that have recently started. BearingPoint asked whether the Concept for Private Sector Development (PSD) which ISPED recently shared with EREC has been reviewed by Deputy Chairman responsible for economic development. The ISPED Director said that the Deputy Chairman has already reviewed the initial version, as have the Ministry of Finance and the Association of Industrialists and Entrepreneurs, and ISPED has been cleared to proceed with developing a PSD program. According to the director, the PSD program has higher importance and demands more effort than the concept paper's development, because it covers the government's specific activities in support of PSD. ¶4. (U) At the meeting's conclusion, the sides agreed to work together to develop a state program for Private Sector Development, including: --Methods of privatization of state-owned property; --Forms of entities into which state property can be privatized; and -- Attraction of foreign investors in privatization. Also, EREC will assist ISPED to develop a website, in accordance with a recent government decree, and train employees in maintaining it. Two USAID/EREC technical advisors will travel to Turkmenistan to work with ISPED on methodology for developing the program in September. During this time, the advisors will help to develop a joint workplan for capacity-building for ISPED staff, and offered to provide a draft in 2-3 weeks for the Institute's review. CONTROL CHAMBER TO HOST AUDIT EXPERT ¶5. (U) On August 28, 2008, BearingPoint Chief and USAID Program Management Specialist met with Supreme Regulatory Chamber Chairman Tuvakmamed Japarov, Deputy Chairman Gadyr Mushikov, and 3 department heads. The Supreme Regulatory Chamber Chairman thanked USAID for arranging the study tour to Kazakhstan in April 2008 for six Supreme Regulatory Chamber staff, which was the "first opportunity for Supreme Regulatory Chamber specialists to share experiences with foreign counterparts" and yielded "undeniable" results. Supreme Regulatory Chamber representatives also shared their impressions of the study tour. Their exposure to methodology, financial audit mechanisms, control measures, and regulatory documents was useful, but they found it difficult to grasp all of it during a single, short visit. One participant noted that performance audits are conducted in Kazakhstan at the end of program implementation, which doesn't allow mistakes identified during the implementation stage to be fixed. ¶6. (U) The Supreme Regulatory Chamber Chairman said he would like Supreme Regulatory Chamber staff to continue to take part in capacity-building seminars and workshops on financial audit and performance audit methodology. He said that updated legislation on government procurement is needed since the previous law was drafted several years ago. Developing auditing standards in line with international standards was also important. International donors in Turkmenistan should effectively coordinate their activity while developing accounting standards, including for banking sector. The ASHGABAT 00001253 002 OF 002 Supreme Regulatory Chamber designated a specialist to represent the Chamber in an interagency working group that is expected to be created in order to coordinate the development of accounting and auditing standards in Turkmenistan. ¶7. (U) EREC's COP informed Japarov that the project could provide an international advisor to assist the Supreme Regulatory Chamber in the areas highlighted by Chairman, (i.e. financial audit, performance audit and auditing standards). The Supreme Regulatory Chamber Chairman said the expert would be "well received." The EREC COP also offered to identify a specialist in government procurement to assist with drafting a law. ¶8. (SBU) COMMENT: Technical assistance opportunities in Turkmenistan have been very limited in recent years, a situation which appears to be slowly changing thanks to the emergence of several new institutions with progressive directors. The capacity level of these institutions' staff varies, so it is not surprising that they would seek assistance in developing new skills based on international practices. The discussions during this visit clearly revealed a desire for cooperation among these two counterparts. As a next step with Supreme Regulatory Chamber, USAID/BearingPoint expects the technical advisor to arrive in October 2008 for three months. The technical advisors to ISPED will begin their work supporting the private sector development strategy in September ¶2008. END COMMENT. CURRAN