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The state budget for 2004 has been worked out in such a way that, on the one hand, it is based on the real economic power of the state and, on the other, considers objective prerequisites of the speedy development of Turkmenistan. The state budget of Turkmenistan for this year reflects key points of the state policy in terms of national interests and interests of every citizen of our country.

A distinguishing feature of the state budget of Turkmenistan for this year is that it is well balanced, logical, understandable and transparent. For the first time since Turkmenistan gained independence the state budget of Turkmenistan for the current year is a deficit free one.

According to revenues and spending the state budget of Turkmenistan for 2004 totals 63,442,77 trillion manats.

Another feature of the current budget is that it provides for two levels of revenues and spending. In fact, revenues and spending of the first level budget will amount to 13,790,601 trillion manats. It is up 1,800,672 trillion manats or 15% on the level of last year's budget. Revenues will be provided by tax collection and spending will be formed by budget sphere expenditures.

The second level revenues are the revenues of state funds and complexes whereas the second level spending is the spending of the same state funds and complexes.

As compared to 2003 total revenues are to increase by 10,909,080 trillion manats (20,9%) and spending - by 10,409,080 trillion manats (19,6%).

It was defined that the current financing of the state budget of Turkmenistan for 2004 will be provided by interest-free credits of the Central Bank of Turkmenistan accounting for 5% of the first level budget spending.

Besides, the budget for this year separates private sector revenues. They will be worth 1,021,462 trillion manats, a 68,2% increase year-on-year.

The social-economic development of Turkmenistan in 2004 will be oriented at achieving sustainable economic growth rates ensured by raising competitiveness, progressive changes in the economy structure meeting the world trends. Work on the further shaping of the economic model capable of providing a gradual increase in well-being of the population, effective reproduction and modernization of production facilities and strengthening of the economic security of the state will be continued.

The priority tasks of the economic policy for 2004 are as follows:

• Social orientation;

• Stimulation of progressive structural changes in the economy;

• Establishment of conditions for progressive development of the processing industries of new technological level; boosting scientific-technical and intellectual potential;

• Achieving a balanced budget system and increasing its effectiveness;

• Setting up a legal base that will ensure a favorable investment and business climate;

• Setting up conditions for integration of Turkmenistan's economy into the world economy.

Fulfillment of these tasks will make it possible to continue positive trends noted recently in the country's economy and fix the sustainable growth rates.

A key condition for the development of the economy of our state is the improvement of the investment and business climate, setting up equal conditions of competitiveness for all business structures across Turkmenistan along with enhancing effectiveness of the state regulation of the economy.

Pursuing a strong social policy and structural changes will become possible only by achieving strong economic growth rates. The main indicator that characterizes the economic situation in the country is the growth of the gross domestic product (GDP). It will be 120% in 2004, one of the highest in the world.

The bottom line of budget spending is its social orientation. Over 75,8% of spending will be channeled into financing social-cultural events.

A policy of increasing the population's income will be continued in 2004. Its main task is to increase an absolute wage that will enable us to enhance labor effectiveness and its prestige.

In view of this fulfillment of measures on changing the system of wages, intensification of the economic relation between the level of qualification, labor quality and wages will remain a priority direction.

Earned income will remain the main source of the population's money income. Along with traditional sources of income such earnings as income from entrepreneurship, using private property, family households, shares, bonds and other securities will be developing.

There were envisaged increasing the real income of the population and labor motivation, making wages a reliable and main source of income, ensuring worthy life to workers and their families, raising the standard of living of the population.

Turkmenistan's high growth rates allow it to consistently fulfill the National program, "The strategy of economic, political and cultural development of Turkmenistan until 2020", as regards stepping up state guarantees for the population of Turkmenistan, in particular, payment of pensions and providing social security.

The total amount of budget spending for social security is seen at 2,964,298 trillion mantas, which is up 906,960 bln. manats or 44,1% on the level of 2003 budget.

These funds will be spent for pensions payment worth 2,194,600 trillion manats, all types of state allowances worth 421,9 bln manats. Apart from this, there was provided financing of bonuses for pensioners and benefits recipients in the amount of 33,8 bln manats on the occasion of Nouruz bayramy (Spring holiday) on March 20 and money prizes totaling 3 bln manats on the occasion of Ak Goyun holiday (reaching the age of the Prophet by citizens of the state).

The law, "On the state budget of Turkmenistan for 2004", reads that wages, pensions, allowances and stipends are the secured items of spending of the state budget of Turkmenistan.

The state budget of Turkmenistan provides for the allocation of 1,376,022 trillion manats for the practical implementation of the decree, "On free distribution of electricity, gas, water and salt for the population of Turkmenistan until 2020", adopted at the 14th joint session of the People's Council, State council of elders and nationwide movement "Galkynysh".

The prospects of the development of healthcare provides for the drastic improvement of quality and effectiveness of healthcare services. With this in view there are plans to further improve first medical-sanitary aid based on a family principle with the emphasis on preventive activities as well as arranging advanced diagnostic and hospital services. This year three diagnostic centers - in Ashgabat, Dashoguz and Mary regions - are to be built. It will make it possible to enhance effectiveness of preventive measures as regards prevention and detection of diseases at earlier stages.

The state budget for 2004 provides for healthcare spending accounting for 2026,5 bln manats, up 45 bln manats or 2,3% on spending of last year.

Priorities of educational policy in 2004 will be the strict observance of constitutional rights of citizens of Turkmenistan for education and setting up the intellectual potential of the nation. People from every walk of life will have the right for education. The level of general education of the population will remain a crucial condition to provide the country's competitiveness as globalisation takes pace. Improvement of quality of the national education in such the environment becomes one of the priorities of economic development and social policy.

A growth in informational flows and state-of-the-art technologies requires the availability of specialists with broad knowledge and skills that are capable of quickly transforming from one activity to another.

A system of professional education will be improved towards more precise adaptation to the actual and prospective requirements of the labor market. Introduction of new principles of enrollment to institutions of higher education - minimum 2-year work experience to enhance practical orientation of educational process - will contribute to it.

The biggest share (30%) in the entire budget spending for 2004 amounting to 4133,6 bln manats falls on education. It is 192 bln manats up on the 2003 budget spending. Financing of preschool establishments, secondary schools, institutions of higher education and special educational establishments, other establishments of higher education, students' stipends as well as equipping them with school furniture, computers and school literature will come from these funds.

The allotment for the development of culture, mass media and sport will rise by 24,2 bln manats (7,4%) to 350,4 bln manats. On the whole, financing of culture, mass media and sport will equal 2,5% of the total amount of the state budget spending.

The increase in spending comes from daily increase in TV broadcasting of the state directorate of the Turkmen TV as well as printing of newspapers in a four-colored format.

The mass media appropriation will render the state support for periodicals in terms of paper, typography expenses, the support of state establishments of TV and radio broadcasting and for the development of logistics of these organizations.

The 2004 appropriation will ensure financing of cultural establishments; libraries, museums, theatrical-public objects, overhaul of cultural and arts buildings as well as new performances, refilling museums and libraries' funds. It will ensure further preservation of cultural potential and heritage of the country, the development of national culture, access for citizens to cultural values and great legacy of the Turkmen people.

In view of the further development of sport in the country, healthy life style propaganda among the population, raising sportsmen of highest qualification the allotment of financial resources will be made in priority order for training sportsmen, holding sport events and further developing sport in Turkmenistan.

The issues of rational use of natural resources, preservation of environment from negative impact of industrial sector are the main part of the social-economic policy of our state, for this is not only the base of the economy and social sphere but also the guarantee of normal life for generations to come.

Production methods in all enterprises of the national industry are examined in terms of meeting ecological standards; works on reconstruction and shifting of many enterprises - cement, bitumen, cotton ginnery plants as well as planting of greenery in industrial zones - outside cities are under way; conversion of boiler-houses into using ecological clear gas fuel nears the end. The Turkmenbashi complex of oil refineries undergoes modernization. The Turkmen lake being built in Karakum desert opens up great prospects.

A grand project of the hand-made lake will enable us to solve the problem of salted lands, pollution of water, ground water floods and waterlog of meliorated lands and deserted pasturage. The construction of the Turkmen lake will make it possible to recover for agriculture 4 thousand km2 of waterlogged deserted pasturage as well as to water additional 1,4 mln hectares of pasturage. Intensive planting of trees around cities and villages, along main highways of the state is under way, contributing to the improvement of ecological situation.

The main objectives of the state policy in the industrial field in 2004 are the provision of sustainable and high growth rates in the industrial production, betterment of its structure and enhancement of its effectiveness. The major efforts in this field will be exerted towards the enhancement of competitiveness of national products, supporting investment and innovation activities in the industry. The industrial GDP will make up 39,6 trillion manats, a 22% increase comparing to 2003.

The priority will be given to the fuel-energy and cotton processing sectors of the economy. Investment resources will be, first of all, directed to those sectors that ensure full industrial cycle - from extraction and collection of raw materials to output of final products along with the maintenance of cost effectiveness of these productions.

A share of processing industries in the overall amount of the industrial production will be 71% and its growth rates will lead on the average by 3,1% in the industrial sector, as a whole. It shows that there is a steady process of overcoming the raw material processing orientation of the country's industry, and Turkmenistan's integration into the world economic processes is growing not only due to exports of hydrocarbons and agricultural products at the initial stage of industrial processing but also due to exports of different ready products.

Gas output in 2004 is expected to rise to 78 bcm, including exports of 63 bcm. Oil output with gas condensate will total 15 mln tons and its exports - 6,8 mln tons. Marketable products of the oil complex will account for 18,7 trillion manats.

Realization of trans-national oil and gas projects will continue. It will contribute to the further expansion of sales markets for hydrocarbons.

The important factor of our country's progress is the sustainable growth in power engineering sector. The development of power engineering in 2004 will be aimed at fully meeting the needs of Turkmenistan as well as building up electricity exports to Iran, Turkey and Afghanistan. Implementation of a number of measures on reconstruction of the existing and construction of new power stations is planned.

According to projections power stations of the state energy corporation, Kuwwat, are expected to generate 12,6 bln kW/h of electricity in 2004 as opposed to 10,9 bln kW/h in 2003.

The projected increase in electricity consumption in 2004 is based on the adequate rates of growth in the industrial production and increase in the amount of electricity exports.

All in all, it is designed to export electricity amounting to 2,1 bln kW/h in 2004 with the growth rates as much as 3 times the level of 2003.

The extensive and rational exploitation of the natural resources mostly located in the eastern and western regions of Turkmenistan is the basis of the chemical industry of the country.

Enterprises of the state concern, Turkmendokunkhimiya, successfully fulfill the program tasks on chemical products output accounting for over 50 types. There will be produced 610 thousand tons of mineral resources in 2004 with the growth rates at 120,8% against projections for 2003.

Part of the products of chemical sector, namely fertilizers, sulfuric and nitric acids, carbon dioxide, salt extra, white salt, electrodes, calcium carbide, polyethylene film as well as other sorts are used in the branches of the state's economy while such products as sodium sulfate, granular salt, technical salt, technical iodine, technical carbon, granular sulfur will be exported.

Large-scale investment projects on development and expansion of industrial facilities of the chemical sector, projected for 2004, will ensure production of such necessary chemical products as carbamide, caustic soda, chlorine magnesium defoliant, and potassium sulfate.

In general, as regards "Production of construction materials" sector, production growth rates will be 109% in 2004 against projections for 2003, including for the Ministry of construction and construction materials at 112,4%.

It is planned to produce 1020 thousand tons of cement, 3150 thousand km2 of construction glass, 450 mln pieces of conditional bricks for wall materials, 6400 thousand m3 of non-mineral materials, 310 thousand m3 products from general ferroconcrete, 80 thousand m3 of porous fillers. The total amount of the construction materials production will account for 550 bln manats out of which 282 bln manats worth of production will be made by enterprises of the Ministry of construction and construction materials.

There are plans to achieve production growth rates largely through the more efficient exploitation of existing facilities, improvement of production methods, using the advanced resource- and energy saving technologies. Cooperation with foreign companies, including joint ventures, will continue.

Output of commodities (by all categories of business structures) is expected to rise to 16,2 trillion manats in the state, as a whole, in 2004.

Priority will be given to the development of foodstuff industries, its modernization and construction of new plants that will allow us to substantially increase production of foodstuff, expand its assortment and nomenclature, ensuring food independence of the country.

Production of foodstuff is projected to grow to 7,4 trillion manats in 2004 that is 0,1 trillion manats up on 2003.

The private sector of the economy has a considerable role to play in the development of foodstuff market that is projected to produce 77,2% of the foodstuff of the entire production in the country.

Sectors of the industry producing non-foodstuff products will be further developed in 2004. Output of these products is planned in the amount of 8,4 trillion manats, a 23,5% increase as compared with 2003.

The volume of retail turnover in the country, as a whole, will reach 32,4 trillion manats in 2004, a rise by 30,1% against the level of 2003.

A per capita turnover will rise by 27,2% to 6135 thousand manats in 2004 year-on-year. A retail turnover will be 50% supported by goods and products made by Turkmenistan's enterprises.

It is expected that a private sector share in providing the population with goods will reach 91%.

The main tasks of the transport complex development in 2004 are the formation of a single transport space in the territory of Turkmenistan as a mandatory condition for existence of the single domestic market as well as integration of the transport complex into the world transport system, the formation of competitive international transport corridors in the territory of Turkmenistan to gain to a maximum from the geographic situation of Turkmenistan.

The volume of cargo transportation will increase by 5,6% to 534,3 mln tons in 2004 as compared with 2003. Conveyance of passengers will total 828,3 mln people, a 1,9% rise on the last year.

The technical and economic strategy of the communications development will be directed at the establishment of informational infrastructure and Turkmenistan's entering the global informational community.

Renovation of communication systems will contribute to further development of this sector. Construction and putting into operation of new facilities as well as effective exploitation of existing ones will enable us to expand international communication services. Next year the number of telephones will increase to 439,9 thousand outlets. It is 4,3% up on the level of 2003 considering that 340,7 thousand telephones will be located in citizens' flats. Expansion of a network of satellite communications, radiophones and Internet is targeted.

The agricultural sector remains one of the priority directions of the social-economic policy of Turkmenistan.

Development of farm relations in land cultivation and stock raising, signing contracts between farmers and processing industries, timely crediting commodity producers, provision of fertilizers and fodder of industrial nature, all-out servicing of mechanical works have drastically changed farmers' psychology, made them confident and capable of enhancing their wealth by honest work. As a result, the amount of agricultural production in 2004 will increase by 20,1% on the level of 2003.

The wheat production in 2004 is planned to reach 2,800 mln tons. Cotton production is expected to rise to 2,200 mln tons.

Production of rice, fruits, berries and grapevine will surpass the level of 2003. Stockraising in all types of business structures will be successfully developing.

As before, a system of retaining cotton and bran seeds in private ownership of farmers will be continues in 2004, enabling them to significantly enhance the economic situation of commodity producers in agriculture.

Foreign economic activity of Turkmenistan in 2004 will be export increasing oriented. It is targeted to expand its nomenclature and increase the amount of exports of gas, oil, oil products, electricity, cotton, textiles, yarn and so on.

Foreign trade turnover in 2004 will rise by $1,992 bln to $8,495 as opposed to 2003.

The amount of exports will grow by 34,7% to $5,755 bln year-on-year. It is 22,8% up on the level of 2003. As in 2003, a share of industrial-technical production in the import structure will dominate, making up 85% of all imports or $2,195 bln worth of products.

Foreign trade balance of Turkmenistan in 2004 will be in surplus of $3,015 bln.

The investment policy of Turkmenistan, as one of the major components of the national policy of Turkmenistan, is, on the whole, designed to provide a solid base of economic growth using the high national and resource potential.

Significance of the investment activity is supported by the fact that the high investment activity and increase in construction of industrial objects became one of three priority tasks set by the National program till 2020.

Investments in fixed assets of Turkmenistan from all sources of financing will make up 27,5 trillion manats in 2004 or 1,4 times on the level of 2003.

The policy of independence and neutrality, development of economic ties of Turkmenistan opened up prospects of expanding a zone of international relations in the educational sector. According to international agreements of 2003-2004 one thousand citizens of Turkmenistan will go to study in 8 foreign states.

Our motherland has a great economic potential. The fulfillment of tasks set for 2004 will contribute to the further development of the economy that has a potential of a long term dynamic growth, capable of ensuring a gradual increase in the population's well being, effective reproduction and modernization of the production structure, strengthening competitiveness.

Deepening the institutional and structural changes, connecting the achievements of scientific progress, the world experience to the advantages and peculiarities of the Turkmen model of development will make it possible to shore up the high rates of growth.


Chairman of the committee on economic and social policy of the Mejlis of Turkmenistan.

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