Tajikistan

EDB investment portfolio

01/08/2018

6 projects

$51.4 million

0.8% of the total

EFSD investment portfolio

06/30/2017

3 projects

$150 million

2.7% of the total


Tajikistan became a full member of Eurasian Development Bank in June 2009. Its contribution to the Bank’s capital is US $500,000.

Trends

GDP

Tajikistan’s GDP growth amounted to 7.0% YoY (+6.5% YoY in 1Q 2017). The construction sector regained its status as a growth driver due to its investment momentum in the first months of 2018. Its share in GDP, according to our estimates, declined to 0.4 p.p. in 4Q 2017, but it rose to 1.0 p.p. in 1Q 2018.

The mining industry remains the locomotive of GDP growth, although it demonstrated a slowdown to 15.6% YoY. Sources of growth in manufacturing (+17.4% YoY) mostly consist of the production of textiles and other non-metal mineral products. The stabilization of global cotton prices at a higher level compared to 1Q 2017, together with a large cotton crop in 2017, contributed to an increase in fiber and fabric production (by 3.7 times YoY) and in the seed stock (by 3.5 times YoY). New production facilities enabled a huge increase in the production of cement (by 1.8 times) and concrete (by 1.9 times). The agriculture sector (+5.1% YoY) and retail trade (+5.0% YoY) continue to contribute to GDP growth.

The output gap amounted to –0.2% in 1Q 2018.

Plans to implement investment projects create conditions for GDP growth to continue. According to Rogunskaya HPP’s contractors, the work delivery timetable is being observed. There was a three-fold increase in nominal volumes of imports of machines, equipment and vehicles, as well as a two-fold increase in freight turnover, which clearly points to strong investment activity. Some positive signals are also coming from the consumer sector, where retail trade is recovering as inflation slows.  

Inflation

The large share of food products in the consumer basket (over 2/3) determines the sensitivity of inflation to supply shocks, specifically with regard to agricultural products. The new season’s heavy crop resulted in an inflation trend reversal. Inflation was down by 2.5% YoY in March 2018 from its 9.0% peak in June 2017. Inflation in the non-food sector remains stable and amounted to 4.1% YoY in 1Q 2018. Increased public utility tariffs contributed to inflation in this sector (6.3% YoY).

Inflation is expected to remain low in 2Q 2018 due to the comparison base effect. Non-food segment price fluctuations will be determined by external factors.

External Sector

The net inflow of remittances in 4Q 2017 (by 25.3% YoY, according to our estimates) was accompanied by a four-fold increase in interest payments to foreign investors. As a result, the foreign currency inflow from primary and secondary incomes was up only 5.2% YoY. The nominal growth in exports of goods (+38.0% YoY) and nearly flat imports (–0.2% YoY) resulted in a near halving of the current account deficit to 2.5% of GDP, compared to 4Q 2016. There was a net capital inflow in the financial transactions account due to new direct foreign investments and new external borrowings made by both the public and private sectors. The country’s foreign exchange reserves were used to fill the gap.

Fiscal Policy

In 1Q 2018, there was a budget surplus of 2.8% of GDP, which is 1,7 times lower than in the same period a year earlier. Amid a high comparison base, budget revenues decreased by 11.1% YoY while expenditure decreased by 4.9% YoY. The share of budget tax and non-tax revenues increased by 19.0 p.p. to 82.6%, while the share of other revenues decreased by 2,1 times. Growth in tax revenues accelerated from 9.5% a year earlier to 19.9% YoY in 1Q 2018. Despite the overall decrease in budget spending, public investments in the power sector continue to increase (by 13.0% YoY). There was a reduction in financing of the public administration sector (by 24.4% YoY) and the agricultural and manufacturing sector (by 19.6% YoY), as well as in other expenditures (by 38.7% YoY).

Monetary Policy

In 1Q 2018, the National Bank of Tajikistan decreased the the refinancing rate on two occasions, from 16.0% to 14.0%. With decelerating inflation and a stable Tajikistani somoni (TJS) since the second half of 2017, favorable conditions supported the easing of monetary policy. At the same time, external factors, including geopolitical risks, are seen by the authorities as potential sources of instability for the domestic market. If such risks materialize, the National Bank is likely to change its monetary policy.

Key financial indicators remain weak despite measures taken to revive the banking sector. In 1Q 2018, the share of overdue loans amounted to 22.9% of total loans, or 34.3% including interbank loans. With some decrease in bank deposits in March 2018 (by 2.3% QoQ), the loan portfolio decreased by 4.7% QoQ.


06 August 2018
The net profits of the Eurasian Development Bank (EDB) amounted to US $37.542 million in the first half of 2018, while the target fixed in the bank's strategy until 2022 for the whole year is at US $32 million
25 July 2018
The EDB announces the completion of the technical issue of 001P-01 bond of the nominal value of RUB 10 billion at the Moscow Stock Exchange under the programme (identification number 4-00002-L-001P-02E of 14 June 2018). The coupon rate is 7.60% per annum, the yield is 7.74%. The bond maturity is 1.5 years
19 July 2018
The Council of the Eurasian Fund for Stabilization and Development (EFSD), based on the outcomes of voting by correspondence, has approved the EFSD Annual Report 2017. The EFSD Annual report includes information on the activities undertaken by the Eurasian Development Bank in its capacity of the EFSD Resources Manager and related to manging and administering the EFSD resources in 2017
17 July 2018
Andrey Beliyaninov, Chairman of the Management Board of the Eurasian Development Bank, will talk at the Financing the Real Sector of the Economy Business Forum to take place on 19 July in Moscow
16 July 2018
Applications are invited for enrolment to the International Eurasian Integration School 2018 titled The Eurasian Economic Union: Contouring the Future. The school has been launched by the Russian International Affairs Council, the Alexander Gorchakov Public Diplomacy Fund, the Eurasian Economic Commission, and the Eurasian Development Bank
25 June 2018
The Council of the Eurasian Development Bank (EDB) approved the Bank’s new mid-term strategy for 2018-2022. The meeting was chaired by Bakytzhan Sagintayev, Prime Minister of the Republic of Kazakhstan and Chair of the EDB Council
04 June 2018
The Eurasian Development Bank’s (EDB) delegation headed by Andrey Beliyaninov, Chairman of the Management Board, took part in the Third Annual Meeting of the New Development Bank (NDB) in Shanghai on 28-29 May
29 May 2018
In Q1 2018, multilateral development banks (MDB) approved finance for CIS investment projects for a total of US $2 billion, with sovereign finance accounting for 54% and the private sector 46%
17 May 2018
The Eurasian Development Bank (EDB) has considerable potential, in terms of its contribution to integration in Eurasia, to consolidate integration ties both within the Eurasian Economic Union (EAEU) and in megaregional projects, such as the Belt and Road Initiative
10 May 2018
In the long term, the growth of container traffic along the China – EAEU – EU axis will be constrained by a range of non-tariff barriers, as well as the risk that Chinese provinces will discontinue export container traffic subsidies

Dushanbe Representative Office

Address:
Aini Street 48, Business Centre «Sozidanie»,Dushanbe, 734024, Republic of Tajikistan