TURKMENISTAN: 2008 FISCAL TRANSPARENCY REPORT

UNCLAS ASHGABAT 000308

SIPDIS

SIPDIS

STATE FOR SCA/CEN, EEB/IFD/OMA (SNOW AND FIGUEROA),AND SCA/RA LEO
GALLAGHER

E.O. 12958: N/A
TAGS: PGOV EAID ECON PREL TX
SUBJECT: TURKMENISTAN: 2008 FISCAL TRANSPARENCY REPORT

REF: STATE 16737


1.

1) Information on country whose central government receives
foreign assistance from the United States:

Turkmenistan. The death of former President-for-Life Saparmyrat
Niyazov on December 21, 2006, offered a new opportunity to engage
the Government of Turkmenistan on a number of issues, including
fiscal and economic transparency. Under the former president, a
system of non-transparent off-budget funds allowed the president and
others to siphon off large amounts of hydrocarbon revenue for pet
projects and personal gain. Although corruption and lack of
transparency continue to be problems, the new president, Gurbanguly
Berdimuhamedov, has announced a few positive changes, including
decisions to eliminate the off-budget funds and establish a GAO-like
Supreme Auditing Chamber. He also has expressed willingness to work
with the international community to begin bringing Turkmenistan's
regulations and practices into conformity with international
standards.

The U.S. Embassy and the international donor community are seeking
to respond to these opportunities, but the scope of the changes
needing to be made, the relatively short time that has passed since
the current president's inauguration, and donor funding constraints
have limited what can be done.

2) Relevant laws and regulations governing the public
disclosure of revenues and expenditures in national budgets:
Turkmenistan's law "On the Budgetary System" (1996) states that
Turkmenistan's Parliament approves the annual state budget. The law
does not require that the annual budget be published.

3) The adequacy of those laws and regulations, and the extent
to which they are implemented and enforced:
N/A

4) Those countries receiving such assistance where no such laws
or regulations exist, and the extent to which such revenues and
expenditures are publicly disclosed: Each year, the Government of
Turkmenistan announces on government-controlled television, in the
official government Russian-language newspaper, "Neytralniy
Turkmenistan," and in Turkmen-language newspapers the passage of the
annual state budget. The announcement only gives the amount of tax
collected from each region and the federal city of Ashgabat, as well
as the amount of money to be apportioned to each region and to
Ashgabat from the state budget.


5) Programs and activities sponsored by the United States
Government to promote accurate disclosure of revenues and
expenditures in the national budgets of such countries, and the
results of those programs and activities: The recently awarded
USAID/BearingPoint project, Economic Reforms to Enhance
Competitiveness (EREC, plans to do this type of work, and a team is
coming to Turkmenistan in March 2008 to define potential partners
and initial activities. However, during at least the first year,
this project will be limited by available funds and Ministry of
Finance counterpart interest.

-- Is the host country's budget made public? As already mentioned,
the passage of the state budget is announced, as well as the amount
of revenue apportioned to each region and Ashgabat and the amount of
tax collected from each region and Ashgabat.

-- If so, through what medium (e.g., publication, internet)?
Newspaper, television

-- Are all revenues and expenditures included in the
publicly-available budget? No

-- If the revenues and expenditures are available in a
publicly-available budget, how meaningful and accurate is the
information? N/A

-- If a country is weak on fiscal transparency, is it due to
capacity or lack of will? Although lack of will has been a problem
in the past, there are some indications that capacity problems
increasingly are playing into the equation, as well.

-- Are there any USG programs to strengthen the host country's
capacity to develop sound fiscal policies and that support
transparency and good governance? No, although the
USAID/BearingPoint project, which is just getting off the ground,
will offer some limited training in this area. The U.S. government
may also provide an advisor from the Department of Treasury, if
funding permits.

-- Are other donor countries or multilateral institutions (e.g. the
EU or World Bank) providing assistance in these areas? The World
Bank is in the process of putting together a strategy paper for
re-engagement in Turkmenistan, but, in reality, no significant
action can be expected for several years, at best.

-- Has the country volunteered for the IMF to report on the
country's compliance with standards and codes covering fiscal
transparency? Turkmenistan has not volunteered to let the IMF
report on compliance with standards and codes covering fiscal
transparency.

HOAGLAND