|Progress Toward Outcome
||The program results have improved public resource management capacity in Tajikistan. Tajikistan achieved robust economic growth of 7.5% in 2012. Slightly above the 7.4% recorded in 2011, the gain was mainly due to strong growth in remittances and ensuing private consumption. Services, particularly retail trade, remained the key driver of economic growth (expanding by 14.5%). Construction, industry, and agriculture also grew but at a slower pace. Industry expanded by 10.4%, backed by continued growth in mining and light processing. Textiles grew by 30%, as weak external demand and lower international prices for cotton prompted firms to focus on local processing. Fiscal policy tightened in 2012, leaving an overall budget surplus (including all investment spending) of 0.1% of gross domestic product (GDP) that reversed the 2.5% deficit in 2011 (Table 1). The state budget surplus, which excludes foreign-financed investment, rose to 1.8% of GDP from 0.5% in 2011. Revenue performance was on track, reflecting a 22.6% rise in tax revenue and a more than 7.3% increase in nontax revenue as the restructuring of the Tax Committee and better tax administration improved collections. Total expenditure rose by 21.9%, reflecting a 21% increase in spending for social protection. Pensions increased by 30% and social sector wages by 30% 40%, reflecting the government's commitment to improve social services. However, infrastructure spending fell by 10.1% following the completion of projects commissioned to celebrate Tajikistan's 20 years of independence. Public investment including outlays by state enterprises also declined, as investment in energy, transport, and communication fell by 20.2% due to limitations imposed on new projects. Overall, more than half of budgetary spending in 2012 targeted social sectors. The two pilot initiatives in social protection have been implemented as planned and independent evaluation shows that the prospects for better use of public resources in the sector are promising due to better targeting of the poor, improved transparency, and reduced transactions costs. The government's internal audit system has been strengthened. The new internal audit units in several government bodies are now conducting technical audits to ensure the efficient use of public resources. Procedures and instructions have been developed to align the medium-term expenditure framework with the annual budget. After succesful completion of agreed actions, the second (and last) tranche of $13,000,000 was released on 4 October 2013.
|Status of Implementation Progress (Outputs, Activities, and Issues)
1. Selected aspects of tax policy and administration improved:
Tax reforms have remained a high priority area for the government and an important foundation for achieving the country's development goals of reducing poverty and ensuring growth. In line with program objectives, the government's fiscal capacity has continued to expand. With the exception of 2009 during the global financial crisis, the ratio of tax revenues to GDP has grown steadily since 2006. The ratio of tax to GDP increased from 19.4% in 2011 to 21.1% in 2012. During the program period the Tax Committee has shown strong commitment to reforming tax policy and administration. The key improvements include to (i) organizationally restructure the Tax Committee along functional lines, (ii) create a reform and donor coordination division to streamline communication with development partners, (iii) introduce an electronic tax filing (e filing) system for all taxpayers, (iv) prepare an information technology strategy, (v) improve tax policy and the valued-added tax (VAT) regime, (vi) expand the Large Taxpayers Inspectorate to include additional corporate entities, and, (vii) reduce the number of taxes from 21 to 10 with a new tax code approved by the Parliament in September 2012.
2. Social safety net pilots designed, implemented, and evaluated by the Ministry of Labor and Social Protection:
The program supported two initiatives from the Ministry of Labor and Social Protection of the Population (MLSPP) aimed at improving the effectiveness, efficiency, and accountability of public expenditure in social protection. These were (i) the new electronic card-based pension payment system, and (ii) the new targeted social assistance (TSA). The initiatives fundamentally change the pension payment system and targeting of social assistance programs. Since 2009, the state-owned Amonatbank and the State Agency for Social Insurance and Pensions, under the coordination of MLSPP, have introduced noncash mechanisms for payment of pensions. The new system places pensions into special individual bank accounts and enables pensioners to withdraw these from ATMs and POS terminals using plastic bank cards. The system has been gradually implemented and now serves 206,000 pensioners (one-third of the total number of pensioners). The TSA initiative has been in place since 2011. The TSA benefit is unconditionally allocated to poor households based on proxy means-testing. ADB provided critical interim support to the pilots in Istaravshan (Sugd region) and Yovon (Khatlon region) by improving MLSPP's business processes and developing and implementing a new management information system. In 2011, more than 19,000 households applied for TSA. Of these, 10,265 households were eligible and received TSA (4,820 in Yovon and 5,445 in Istaravshan). Totals of TJS3.80 million ($0.83 million) and TJS 4.15 million ($0.91 million) respectively were paid in TSA subsidies in 2011 and 2012. The government is rolling out the TSA initiative to 10 new districts (including Khujand and Kurgonteppa).
3. Selected aspects of public financial management improved:
The program required implementation of a new law on internal audit in the public sector enacted in 2010, as well as enactment and implementation of a new law on public finance to unify the medium-term expenditure framework with the annual budget process. Internal audit units were established in several government bodies, including the Ministry of Finance (MOF), MLSPP, Ministry of Health, Ministry of Education, Ministry of Transport, and the Tax Committee. The internal audit units regularly conduct technical audits of the relevant government entities. The internal audit system has completed a full budget cycle and the internal audit units have submitted 2011 annual reports to the MOF using the approved template. The medium-term action plan for implementation of the new internal audit system in the government foresees a gradual migration (by 2015 2016) from a comprehensive audit approach to a risk-based audit approach. The government also made progress in public financial management reforms in 2012. Clear procedures and instructions (including a budget call circular) have been developed by MOF. These procedures integrate the medium-term expenditure framework with the annual budget process, increasing the transparency and control of public finances. A new public expenditure and financial accountability assessment was prepared in 2012. Areas requiring further support and progress include accounting standards and external audit.