Regions and Countries

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p. 4 of 4 BACK | NEXT I. Development Situation II. Implementation of the Country Strategy and Program III. Portfolio Management Issues IV. Country Performance and Lending Level

Country Strategy and Program Update 2002-2004: Tajikistan

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IV. Country Performance and Lending Levels

A. Proposed Lending Level

28. Starting in 2002, the actual annual lending level will be determined based on Tajikistan's performance within selected parameters in accordance with ADB’s performance-based allocation policy. The assessment of performance for Tajikistan will be linked to (i) security and macroeconomic stability, (ii) social development and poverty reduction, (iii) governance, and (iv) portfolio performance. Under a base case scenario, ADB assistance would be expected to be about $120 million in 2002–2004 (Appendix 4), while a high case scenario could raise lending by up to 20 percent per year, and a low case scenario would lower lending below the base case by the same percentage. The triggers for these lending cases are in Appendix 4, page 7.

29. The low case scenario assumes (i) no major progress and even deterioration in the macroeconomic and social situation, including security and governance; (ii) failure to finalize a national poverty reduction strategy; and (iii) a weak portfolio performance.

30. Under the base case scenario, the Government will need to (i) keep the ongoing macroeconomic program largely on track, (ii) commit to poverty reduction as demonstrated by the finalization of a national poverty reduction strategy, and (iii) sign a poverty partnership agreement with ADB. The base case will also require the Government to fully participate in ADB's governance assessment in 2001, and to ensure that ADB's resources are put to effective use as measured by the number of projects rated "satisfactory" or better under the portfolio performance assessment. The overall security situation should improve in 2001.

31. Under the high case scenario, the following are necessary: (i) full compliance with the macroeconomic program; (ii) reforms in the social sector and governance; (iii) high portfolio performance; and (iv) an improved security situation, as measured by the UN's security phase for the country.

32. During the last quarter of 2001, ADB will determine the lending scenario for 2002.

B. Loan Program

33. An agriculture sector study was conducted in 2000. Based on the study, loans for the agriculture rehabilitation project and the rural financial systems development project programmed for 2001 are being processed. Based on the outcome of the third CG meeting in May 2001, ADB is considering adding a program component to the Rural Financial Systems Development Project to support the ongoing reform agenda related to rural financial systems set up. An emergency assistance to rehabilitate the Yavan water supply system, which was damaged by an earthquake, is being prepared in response to the Government's urgent request in May 2001. Processing of a project for rural poverty alleviation financed by the Japan Fund for Poverty Reduction has been completed.

34. The loan program for 2002–2004, which is based on the IOS and agreed upon with the Government, is in Appendix 4. The project selection briefs are in Appendix 6. Preparatory works for two 2002 loans for the second road rehabilitation project and the social sector development project are underway.

35. In conjunction with the 2002–2004 lending and TA program, ADB and the Government will continue to explore cofinancing mainly from official sources (especially concessional and grant cofinancing) from bilateral and multilateral sources. As appropriate, commercial cofinancing and guarantee opportunities will also be explored for viable projects.

C. Technical Assistance and Economic Sector Work Program

36. Continued assistance through TAs is critical to support structural reform and capacity building, and to prepare investment projects. The 2002–2004 TA program covers 10 TA projects totaling $6.35 million. ADB will reprioritize the future TA program in close consultation with the Government when the TA ceiling for each year is confirmed (Appendix 4).

37. Economic and sector work (ESW) will be the basis for ADB assistance. Since 1998, ADB has completed a social needs assessment, an environmental profile, a country briefing paper (Women in Tajikistan), energy and transport sector studies, and an agriculture sector assessment. In 2001, a study on improving flood management is being implemented and a follow-up social sector study is scheduled under the project preparatory TA for the social sector development project in coordination with WB. A study on the energy sector development strategy is also expected in 2002. The first country economic review was completed in 2000. Appendix 5 provides details on the ESW.

D. Summary of Changes

38. Changes for the 2003 lending program include:

• The basic education project has been dropped from the 2003 loan program because WB is involved in the education sector.
• The loan for water resources development and rehabilitation project has been advanced to 2003 as the improvement of water resources management is urgently needed, as evidenced by the severe drought of 2000.

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