DUSHANBE, May 26, 2015, Asia-Plus — The spring 2015 edition of biannual Tajikistan Economic Update, released by the World Bank on May 25, says Tajikistan’s fiscal and debt positions are not only fragile, they are subject to significant risks.
The risks reportedly arise from the country’s consumption-driven growth model, narrow export base, high dependence on concessional financing, and acute infrastructure needs, especially in social sectors. Amortization of existing foreign debt is also increasing sharply. This all makes the country vulnerable to external shocks just when its ability to mitigate the shocks is limited by low external buffers as well as weak institutions, according to the report.
Domestic policies, including the soft budget constraints of state-owned enterprises (SOE) and directed lending, create substantial quasi-fiscal risks and may undermine fiscal consolidation efforts. Public spending must be managed more efficiently and transparently so that government revenue can be used to support growth, reduce poverty, and boost shared prosperity.
The report notes that government debt fell by the end of 2014, largely because of loan repayments. The ratio of Tajikistan’s public and publicly guaranteed external debt to GDP went down from 25.4 percent of GDP in 2013 to 22.6 percent on January 1, 2015, mainly because of repayments of loans from the Chinese, the Asian Development Bank (ADB), and the Islamic Development Bank. The Chinese Export-Import Bank is still Tajikistan’s largest creditor; its loans represent about 43.1 percent of total external public debt as of January 1, 2015. The next largest creditors are the World Bank (15.6 percent) and the ADB (13.3 percent).
