Jamshed Nourmahmadov, the head of the National Bank of Tajikistan (NBT) assesses the current state of affairs in the country’s banking sector as positive. Meantime, the president considers that the poor banking system “seriously hampers economic development of the country.”
In a statement delivered at the enlarged meeting of Tajik central bank, Nourmahmadov noted on January 10 that the volume of non-performing loans (NPLs) decreased by 9.7 percent during last year and as of january1, 2018, NPLs made 37.1 percent of total loans.
As of January 1, 2018, deposit balance amounts to 9.2 billion somoni, Tajik central bank head said, noting that the volume of deposits in the country’s banks, with the exception of two failing banks (Tojiksodirotbonk and Agroinvestbonk), rose 30.4 percent (more than 1.7 billion somoni) in a year to December 31, 2017. “This is evidence of people’s trust in the banking system,” Nourmahmadov noted.
According to him, a total volume of loans provided by the country’s banks, with exception of Tojiksodirotbonk and Agroinvestbonk, last year rose 13.1 percent (998 million somoni).
Meanwhile, President Emomali Rahmon notes that the poor banking and credit system serious hampers economic development of the country.
In his address to the joint session of both chambers of parliament, Emomali Rahmon said on December 22 that the current situation in the country’s banking system, improper level of crediting of the national economy and instability require measures.
He ordered to develop an additional plan of actions to improve activities of Tojiksodirotbonk and Agroinvestbonk, because “the previous measures were unsatisfactory.”
The head of state ordered the National Bank of Tajikistan (NBT) to reform the country’s monetary and credit system, using experience of the advanced countries.
Rahmon, in particular, noted that deposits kept in banks have amounted to nearly 9 billion somoni by November 30, 2017, which was 5 percent or 464 million somoni les than in the same period of 2016.
The president noted that total lending decreased by 4 percent last year.
Over the first eleven months of last year, crediting of production entrepreneurship increased by only 4 percent, while crediting of the service sphere over the same period increased by 43 percent, the head of state noted.
“Such a situation has a negative impact on the level of development of the real sector of economy, especially the process of industrialization in the country,” Rahmon said.
Meanwhile, a report by the World Bank, Tajikistan: Heightened Vulnerabilities, Despite Sustained Growth, notes that unresolved banking sector issues have translated into negative spillovers to the economy with total lending contracting by 4 percent year on year in somoni terms (14 percent in U.S. dollar terms) in the first half of 2017.
Similarly, the volume of outstanding deposits fell by 2 percent in somoni terms and 13 percent in U.S. dollar terms, the report said, noting that limits and the inability of banks to meet their operational obligations due to liquidity shortages and continued insolvency constrained deposit withdrawal.
The report says that in the first half of the last year, non-performing loans (NPLs) reportedly remained at more than 50 percent of total loans on average.
