EDB holds consultations with Tajik authorities to prepare a financial credit from the EurAsEC Anti-Crisis Fund

Almaty, 28 April 2014. Following a recommendation from the Anti-Crisis Fund (ACF) Council, Tajik authorities and Eurasian Development Bank (EDB), as the ACF Resources Manager, began to prepare a mid-term economic reform programme. The ACF Council is expected to pass a decision on its funding in the second six months of the year. EDB experts visited Dushanbe from 14 to 18 April 2014 to hold consultations with Tajik authorities about the key areas and reforms and discuss the current economic situation in the country. During the visit the EDB team met with heads and technical experts of the Ministry of Finance and the National Bank of Tajikistan, other ministries and authorities, the banking sector, and international financial institutions.

In Q1 2014 the growth of the Tajik economy remained stable (7% against 7.3% year-on-year), while the average annual inflation fell to 4.1% from 6.7%. The high economic activity, improvements in tax administration and optimisation of expenditure made it possible to significantly improve tax proceeds and ensure a budget surplus. This helped increase government deposits to some extent, which shrank considerably during the crisis years. A relatively high deficit of the balance of trade (standing, according to preliminary estimates, at over 48% of GDP in 2013) was financed with current transfers while the deficit in the current account is acceptable.

However, despite the high growth in GDP and population incomes, Tajikistan remains extremely vulnerable to external shocks. The forecasted slowdown of Russia’s economic growth can affect labour migrants’ transfers, which account for about 50% of GDP, and all macroeconomic indicators, including GDP growth, tax proceeds and current balance. Another negative factor is the continuing volatility of world prices of aluminium and cotton, which account for more than 50% of the country’s exports in terms of their value.

An important objective in this situation is to take measure to increase the country’s gross international reserves, which currently amount to approximately 1.5 months of imports. This may be possible if the country pursues a prudent monetary and credit policy aimed at maintaining the inflation rates and a more flexible exchange rate policy and continues to endeavour to consolidate the state budget in order to boost national savings and improve the efficiency of public spending.

In addition, internal growth factors should be developed in an efficient fashion. The key measures here are to stimulate private investments through the creation of a favourable investment climate and the strengthening of the banking system, improve the efficiency of public finance management and mitigate the risks associated with the management of state-run enterprises.

The discussions with Tajik authorities resulted in the determination of the main areas of mid-term reforms, including the maintenance of the macroeconomic stability, the improvement of public finance management, and the advancement of the financial sector. The sides agreed to continue to negotiate specific reform programmes on a continuous basis in order to prepare a draft reform program and the opinion of the Resources Manager to be submitted to the ACF Council for consideration in the second half of 2014.

Additional Information

Eurasian Development Bank is an international financial institution founded by Russia and Kazakhstan in January 2006 with the mission to facilitate the development of market economies, sustainable economic growth and the expansion of mutual trade and other economic ties in its member states. EDB’s charter capital exceeds US $1.5 billion. The member states of the Bank are the Republic of Armenia, the Republic of Belarus, the Republic of Kazakhstan, the Kyrgyz Republic, the Russian Federation, and the Republic of Tajikistan. Read more at https://www.eabr.org.

The EurAsEC Anti-Crisis Fund (ACF) amounting to US$8.513 billion was formed on 9 June 2009 by the governments of six countries: Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan. The objectives of the ACF are to assist the member countries in overcoming the consequences of global financial crisis, ensure their economic and financial stability, and foster integration processes in the region. The ACF member countries signed the Fund Management Agreement with Eurasian Development Bank giving it the role of the ACF Resources Manager.