Annual Report on Exchange Arrangements and Exchange Restrictions, 2007


International Monetary Fund. Monetary and Capital Markets Department
Published Date:
October 2007
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(Position as of December 31, 2006)

Status under IMF Articles of Agreement
Article XIVYes.
Exchange Measures
Restrictions and/or multiple currency practicesInformation is not publicly available.
International security restrictions
Other security restrictionsYes.
References to legal instruments and hyperlinksn.a.
Exchange Arrangement
CurrencyThe currency of Turkmenistan is the Turkmen manat.
Exchange rate structure
UnitaryEffective January 1, 2006, the exchange rate structure was reclassified to unitary from dual due to technical correction in the classification.
Conventional pegged arrangementThe exchange rate (cash and noncash) is determined through weekly foreign currency auctions held by the Central Bank of Turkmenistan (CBT), in which authorized commercial banks participate. The exchange rate is manat 5,200 per $1. Access to foreign exchange auctions is granted to authorized banks, whose applications are verified by the CBT. Banks participate in auctions for conversion operations on behalf of clients, and for transactions approved by the CBT. Applications are submitted at the exchange rate set at the previous auction. If the demand exceeds the volume of foreign exchange offered by the CBT, the excess demand is transferred to the subsequent trading sessions. A parallel foreign exchange market, which is not recognized by the CBT, is in operation with a rate of about manat 24,000 per $1 since January 2006.
Exchange taxExchange taxes of 50% and 30% are levied on monetary receipts from exports of natural gas and oil and petroleum products, respectively, and allocated to the foreign exchange reserve.
Exchange subsidyNo.
Forward exchange marketNo.
References to legal instruments and hyperlinksn.a.
Arrangements for Payments and Receipts
Prescription of currency requirementsSettlements with other countries are made through a system of correspondent accounts. Settlements with countries with which Turkmenistan has bilateral payments arrangements are effected in accordance with the procedures set forth in these agreements. Barter transactions, other than natural gas exports, must take place through the State Commodity Exchange (COMEX). All other transactions are performed in convertible currencies.
Controls on the use of domestic currencyControls apply in accordance with the CBT instructions on provision of loans, bank accounts, noncash settlements, and cash operations of banks in Turkmenistan.
For current transactions and paymentsYes.
For capital transactions
Transactions in capital and money market instrumentsYes.
Transactions in derivatives and other instrumentsYes.
Credit operationsYes.
Use of foreign exchange among residentsAccording to the Law of the Monetary Unit, the manat is the sole legal tender in Turkmenistan.
Payments arrangements
Bilateral payments arrangements
Administration of controlThe CBT is authorized to issue exchange control regulations, depending on the type of operation involved. The use of foreign exchange reserves is controlled by the government of Turkmenistan.
Payments arrears
Controls on trade in gold (coins and/or bullion)
On domestic ownership and/or tradeYes.
On external tradeA license is required to engage in international trade in gold.
Controls on exports and imports of banknotesForeign banknotes and manat may be imported or exported freely, provided funds are declared on arrival or departure.
References to legal instruments and hyperlinksLaw of the Monetary Unit; CBT Instruction on Issuance and Cash Operations of Turkmen Banks.
Resident Accounts
Foreign exchange accounts permittedLegal entities and individuals may hold foreign exchange accounts with local commercial banks.
Held domesticallyThese accounts may be opened for legal entities with a certificate of registration issued by the Foreign Investments Registration Department of the Ministry of Economy and Finance (MEF). All external payments from these accounts must be made in accordance with CBT procedures; cash withdrawals in foreign currency by individuals may be made without CBT approval.
Held abroadYes.
Approval requiredYes.
Accounts in domestic currency held abroadNo.
Accounts in domestic currency convertible into foreign currencyCBT approval is required for the conversion.
References to legal instruments and hyperlinksn.a.
Nonresident Accounts
Foreign exchange accounts permittedLegal entities and individuals may open such accounts in accordance with CBT procedures.
Domestic currency accountsYes.
Convertible into foreign currencyNo.
Blocked accountsn.a.
References to legal instruments and hyperlinksn.a.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for imports
Minimum financing requirementsn.a.
Advance import depositsYes.
Documentation requirements for release of foreign exchange for imports
Domiciliation requirementYes.
Preshipment inspectionYes.
Letters of creditYes.
Import licenses and other nontariff measures
Negative listImports of a small number of goods on a negative list (e.g., arms, narcotics) are prohibited.
Import taxes and/or tariffsExcise taxes are levied on a specific list of goods (alcoholic beverages, cigarettes, jewelry, and cars).
State import monopolyNo.
References to legal instruments and hyperlinksn.a.
Exports and Export Proceeds
Repatriation requirementsUnder the Currency Regulations Law, foreign exchange proceeds from current and capital transactions with nonresidents must be repatriated (transferred or imported) to Turkmenistan.
Surrender requirementsThe private sector and public enterprises in the cotton sector are exempt from surrender requirements.
Surrender to authorized dealersState-owned enterprises must sell a portion of their foreign exchange proceeds on the Interbank Currency Exchange.
Financing requirementsn.a.
Documentation requirements
Letters of creditYes.
Preshipment inspectionYes.
Export licensesAll exports are required to be registered with the COMEX.
With quotasQuantitative and price restrictions are imposed on exports of cotton and other raw materials to protect domestic supplies of goods.
Export taxes
Collected through the exchange systemPart of the foreign exchange proceeds from exports of natural gas and oil are allocated to the foreign exchange reserve.
References to legal instruments and hyperlinksn.a.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersPurchase of foreign exchange for these payments requires prior approval of the exchange control authorities. Foreign exchange for a few nontrade transitions—medical treatment abroad, financial support for students studying abroad, official travel by public officers, and travel abroad in connection with the death of an immediate relative—is available at the commercial banks’ cash foreign exchange window.
Trade-related payments
Prior approvalYes.
Investment-related paymentsIn accordance with the law on foreign investments in Turkmenistan, after payment of taxes, profits may be reinvested in Turkmenistan, held in bank accounts in domestic or other currencies, or transferred abroad.
Prior approvalYes.
Payments for travel
Prior approvalYes.
Quantitative limitsYes.
References to legal instruments and hyperlinksn.a.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsYes.
Restrictions on use of fundsNo.
References to legal instruments and hyperlinksn.a.
Capital Transactions
Controls on capital transactionsThese transactions are subject to the regulations of the CBT and the MEF.
Repatriation requirementsNo.
Controls on capital and money market instrumentsBoth inward and outward capital transfers are subject to CBT and MEF approval.
On capital market securitiesSecurities may be issued and circulated in Turkmenistan after registration with the MEF.
Shares or other securities of a participating nature
Purchase locally by nonresidentsYes.
Sale or issue locally by nonresidentsThese transactions are subject to quotas by the Cabinet of Ministers (CM).
Purchase abroad by residentsYes.
Sale or issue abroad by residentsYes.
Bonds or other debt securitiesn.a.
On money market instrumentsThese transactions are subject to quotas by the CM.
On collective investment securitiesControls apply to all these transactions.
Controls on derivatives and other instrumentsA market for transactions in derivatives does not exist.
Controls on credit operationsCredit institutions operate under licenses issued by the CBT. Controls apply to all credit and guarantee operations.
Controls on direct investment
Outward direct investmentYes.
Inward direct investmentInvestments by legal entities are not restricted. Investors are required to register with the Foreign Investment Registration Department of the MEF. If the amount exceeds $500,000, approval of the CM is required.
Controls on liquidation of direct investmentForeign investors have the right to recover investments within six months of liquidation.
Controls on real estate transactions
Purchase abroad by residentsYes.
Purchase locally by nonresidentsYes.
Sale locally by nonresidentsn.a.
Controls on personal capital transactions
Settlements of debts abroad by immigrantsn.a.
Transfer of assetsn.a.
Transfer of gambling and prize earningsn.a.
References to legal instruments and hyperlinksn.a.
Provisions Specific to the Financial Sector
Provisions specific to commercial banks and other credit institutionsA CBT license and CM authorization are required. Provided a license is granted, no controls apply to individual transactions.
Borrowing abroadYes.
Maintenance of accounts abroadYes.
Lending to nonresidents (financial or commercial credits)Yes.
Lending locally in foreign exchangeYes.
Purchase of locally issued securities denominated in foreign exchangen.a.
Differential treatment of deposit accounts in foreign exchange
Reserve requirementsYes.
Liquid asset requirementsYes.
Credit controlsYes.
Differential treatment of deposit accounts held by nonresidents
Reserve requirementsYes.
Liquid asset requirementsYes.
Interest rate controlsYes.
Credit controlsYes.
Investment regulations
Abroad by banksYes.
In banks by nonresidentsYes.
Provisions specific to institutional investorsA CBT and/or an MEF license is required for investments, depending on the type of institutional investor.
Insurance companiesn.a.
Pension fundsn.a.
Investment firms and collective investment fundsn.a.
References to legal instruments and hyperlinksn.a.
Changes during 2006
Exchange arrangementJanuary 1. The exchange rate structure was reclassified to unitary from dual due to technical correction in the classification.

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