Regions and Countries

	Table of Contents
p. 11 of 47 BACK | NEXT Developing Asia and the Pacific The global economy Newly industrialized economies Central Asian republics, Azerbaijan and Mongolia Kazakhstan Kyrgyz Republic Tajikistan Turkmenistan Uzbekistan Azerbaijan Mongolia People’s Republic of China Southeast Asia South Asia The Pacific

Tajikistan

Economic performance

Economic growth: GDP grew by 5.0 percent in 2000, up from 3.7 percent in 1999, despite the worst drought in 74 years. The growth rate increased because of improved stability and security following completion of the peace process and parliamentary elections in 2000, and the economic recovery of Russia, still a major export market for Tajikistan. The drought, however, necessitated a government appeal to international funding agencies for $76.6 million in emergency food and related assistance, and the Government allocated an additional $30 million from the budget to purchase seeds. Cotton production rose by 7.1 percent in 2000. Industry sector output grew by 10.3 percent in 2000, compared with 5 percent in 1999.

Employment: Labor markets remained weak, and the narrow base of economic growth has limited employment opportunities. The official unemployment rate in August 2000 was 3.1 percent; the unofficial rate was about 30 percent. The official figures do not include unemployment in inactive state-owned enterprises.

Inflation: Consumer price inflation was 24.0 percent in 2000. Inflation was fueled by a drought-induced 30 percent rise in food prices and by high world energy prices. The currency continued to depreciate, falling by 30 percent against the US dollar in 2000. In October, the somoni replaced the Tajik ruble as the national currency at a rate of 1 somoni to 1,000 Tajik rubles.

Fiscal balance: The fiscal position improved in 2000 because of better tax collection, continued rationalization of government expenditures, and positive economic growth. Improved tax collection led to government revenue of 13.7 percent of GDP, from 13.5 percent in 1999. The budget deficit in 2000 fell to 0.7 percent of GDP despite the emergency expenditures required by the drought, compared with 3.1 percent in 1999.

External sector: The current account deficit increased to 5.7 percent of GDP in 2000, compared with 3.5 percent of GDP in 1999. Imports expanded by 13.6 percent in 2000, while exports grew by 11.4 percent. Exports were led by aluminum, which grew by 44 percent and accounted for 55 percent of exports. Cotton exports fell by 5.4 percent and accounted for 12 percent of exports. Gross international reserves stood at 1.9 months of imports at the end of 2000, up from 1.0 month at the end of 1999. Tajikistan’s external debt is over 100 percent of GDP, and the country’s debt service burden is becoming fiscally unsustainable, equal to 44 percent of government revenue in 2000. The PRC converted Tajikistan’s bilateral debt to a grant in 2000.

Domestic policies: The authorities continued to pursue tight monetary and fiscal policies in 2000. Although Tajikistan’s three-year IMF reform program went off track in early 2000 because of loose monetary policy, strong corrective measures were taken by the middle of 2000, and the third year of the program was approved in October. Tax collection improved and fiscal targets were restored. The Government has committed to reducing poverty, and in October completed an interim national poverty reduction strategy that incorporates employment promotion, economic growth, and social safety net reforms.

The structural reform process, including privatization, accelerated in 2000.

ADB operations

Operational strategy: ADB’s interim operational strategy for Tajikistan, endorsed in 1998, aims to facilitate the country’s transition to a market economy, assist in the postconflict rehabilitation and reconstruction, and support natural disaster rehabilitation. The strategy focuses on agriculture and agroprocessing; infrastructure rehabilitation, especially road and power; and education. After a detailed social sector review, support in the third area was broadened to include health and social protection.

Policy dialogue: Policy dialogue with the Government continued on reforms begun under the Postconflict Infrastructure Program, particularly in the energy and transport sectors. ADB supported the Government in preparing new energy and transport laws that established the Ministry of Energy and the Ministry of Transport in 2000, and worked with the Government to produce an environment profile of Tajikistan that will help guide ADB’s future support. Policy dialogue in the agriculture and social sectors is ongoing. ADB will continue to assist in strengthening the legal system. ADB initiated its poverty reduction strategy for Tajikistan in April 2000, in close coordination with the World Bank, International Monetary Fund, and United Nations Development Programme. Based on a government request and on discussions with major stakeholders, ADB will assist the Government in drafting a national poverty reduction strategy; a poverty partnership agreement with ADB will follow.

Loans and technical assistance: In 2000, ADB approved two project loans totaling $54 million. The Power Rehabilitation Project will improve power supply to poor communities in the war-damaged Khatlon and Dushanbe regions and will rehabilitate the Nurek Hydropower Plant and Central Hydropower Plant. The Road Rehabilitation Project will improve transport infrastructure in the Khatlon region. Both loans received cofinancing—a first for ADB operations in Tajikistan. The OPEC Fund committed $4.0 million cofinancing for the road project; and the Islamic Development Bank and Switzerland scheduled cofinancing of $9.3 million and $6.0 million, respectively, for the power project. ADB also approved 10 technical assistance grants totaling $4.8 million.

Project implementation: Since joining ADB in 1998, Tajikistan has received five loans. Contract awards totaled $13.7 million, bringing the cumulative figure to $23.6 million. The contract award ratio was 18.4 percent, lower than the ADB-wide average of 21 percent. Disbursements during the year totaled $12.3 million, bringing cumulative disbursements to $22.2 million. The disbursement ratio was 35.5 percent, higher than the ADB-wide average of 20.5 percent.

The second tranche ($10 million) of the Postconflict Infrastructure Program loan, approved in 1998, was released in December 2000 after reforms in the transport and energy sectors were implemented.

Tajikistan’s capacity to implement projects is limited by the Government’s tight fiscal position and the resulting scarcity of counterpart funds; weak administrative structures; and limited experience with ADB policies, procedures, and practices. In 2000, implementation delays were experienced in satisfying loan effectivity conditions and fulfilling program loan conditions. Government officials and executing agency staff participated in a regional project implementation seminar in Tashkent, but more work will be required to raise implementation skills to an acceptable level. All ADB projects are accompanied by substantial technical assistance for capacity building.

   

Back Kyrgyz Republic	Next Turkmenistan