ADB, Tajikistan Agree to New Partnership Strategy Focused on Energy, Transport

News Release | 2 June 2010

MANILA, PHILIPPINES - Tajikistan and the Asian Development Bank (ADB) have agreed on a new Country Partnership Strategy for 2010 to 2014 which will advance the Central Asian nation's drive to strengthen energy supplies and transport links, and to develop a vibrant private sector to help the economy diversify.

Before 2009, economic growth in the landlocked former Soviet Republic averaged around 8% annually, but in 2009 the economy slumped as the global financial crisis hit overseas remittances, and prices for the country's key exports - aluminum and cotton. Nearly half a million workers abroad, mainly in the Russian Federation, were forced to return home, putting a huge strain on the country's fragile public services.

In response to structural weaknesses in the economy, the government has taken a number of steps to improve public administration and expenditure management, and to reduce corruption. Under its 10-year National Development Strategy for 2006-2015, it is targeting measures to strengthen the investment climate, support development of the private sector, and build up energy security, transport links and social services.

The new partnership strategy will aid the government's drive to expand energy supplies, particularly to underserved rural areas. Currently the country suffers from electricity shortages in winter and surpluses in the summer, with just 10% of its considerable hydropower resources in use. ADB, as the largest multilateral development partner in the sector, will focus on rehabilitating existing infrastructure, as well as developing clean, sustainable energy which supports both internal and regional connectivity.

The strategy will target further road improvements, with many of the country's networks in a poor state as a result of civil war and natural disasters. ADB, which is also the largest multilateral development partner in this sector, will focus on domestic and regional road links with the People's Republic of China, Kyrgyz Republic and Uzbekistan, including improved cross border customs and transit procedures. In the private sector, ADB will support public management reforms and measures to improve the business and investment climate for private businesses, including the use of public private investment partnerships.

"The Country Partnership Strategy sets out a roadmap to anchor phased physical and non-physical investments to improve connectivity, energy security and private sector development, with regional cooperation as a binding theme," said Makoto Ojiro, Country Director of ADB's Tajikistan Resident Mission.

ADB will continue to support the government's push to strengthen regional ties through the Central Asian Region Economic Cooperation Program, to tackle accountability and transparency issues in governance, and to address climate change and other environmental concerns. Along with other development partners, ADB will support adaptation and mitigation measures to counter problems such as increasing soil degradation, deforestation and water pollution.

For 2010 to 2012, ADB has earmarked public sector investments of $252 million, up 35% on the previous comparable period. Funding will include two energy projects totaling $142 million, two reform projects of $59 million, and one transport project of $51 million. Technical assistance of around $5.1 million is planned for the same period. Financing is currently confined to grants, but an improvement in debt sustainability would allow the country to access loans.