Central Asian delayed action bomb: Turkmenistan is becoming insolvent

Starting from Jan 1 2016 all foreign companies operating in Turkmenistan will have to remunerate their employees noncash in Turkmenistan manats.

According to Alternative Turkmenistan News, the Government has sent a circular letter to all Turkmen companies so they inform their employees.

The first on the list are foreign companies like Dragon Oil and Petronas Carigali as well as local oil producers paying their employees in foreign exchange. Experts say that the Turkmen authorities are doing this because they are running short of foreign exchange and cash.

“We are becoming insolvent. Our foreign exchange reserves are coming to an end. We are spending more than we are earning,” says a source from the Turkmen government.

Trading Economics confirms this. It says that Turkmenistan’s current account deficit amounts to $5bn, which means that the country is insolvent.

In Oct 2011, the Turkmen authorities adopted a law allowing foreign companies to pay wages in USD.

Before that they controlled almost all foreign exchange transactions.