International agency Fitch Ratings said that it has affirmed Turkmenistan's Long-term foreign currency Issuer Default Rating (IDR) at 'B+'.
The information says that the rating is supported by Turkmenistan's very strong sovereign balance sheet, with the lowest level of public debt and highest sovereign net foreign assets (SNFA)/GDP in the peer group, underpinned by the world's fourth-largest gas reserves.
The Positive Outlook reflects our expectation of further balance sheet strengthening on high energy prices and contained expenditure.
Turkmenistan is one of the key players in the regional energy market. Fitch anticipates only a gradual increase in gas production through 2025, following a 1.8% fall in 2022. Turkmen gas (which accounted for 62% of exports in 2022) is sold at the border. China accounted for close to 80% of gas exports in 1H23, and plans are progressing on the construction of a fourth pipeline.
"We project the economy expands by an average 2.3% in 2024-2025." This reflects only slightly higher gas production, but support from further development of downstream products and somewhat higher capex boosted by the development of Arkadag city.
The state budget returned to surplus in 2022, of 1.0% of GDP, on higher energy prices, and strengthened to 2.3% of GDP in 1H23. Revenues rose 16% in 1H23 (with natural resource and income tax receipts up 47% and 21%, respectively), and expenditure fell 5%.
"All gas exports are made under long-term contracts, with no spot market sales, which has reduced the benefit of last year's spike in international prices, but means the lagged passthrough continues to support revenue growth."
Fitch also forecasts a full year surplus of 1.7% of GDP in 2023, steadily narrowing to 0.1% in 2025 on higher capital spending and moderating energy prices.
Credits: Eziz Boyrov
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