Tajikistan hoped to receive financial support from the IMF already in the second half of the year, however, the fund still clarifies some details..
The expected launch of a new support program for Tajikistan by the International Monetary Fund is postponed indefinitely. The Fund clarifies the details of the agreement.
The head of the IMF mission in Tajikistan, Pajama Handelwal, on the results of her last visit to the republic, stated that she had “fruitful discussions with the authorities about a possible financial agreement of the IMF".
«There is good will and partnership between the authorities and the IMF team. Need to clarify details», – said in a statement Handelwal following the mission.
She noted that she would be in close contact with the authorities of Tajikistan to promote the possibility of financial support of the IMF.
«As always, the IMF is ready to support Tajikistan and its people», – said Pajama Handelwal.
Note that negotiations between the IMF and the government of Tajikistan to resume concessional lending to the country took place at the end of last month as part of the last mission of the Foundation.
During their visit, the team met with First Deputy Prime Minister Davlatali Said, Chairman of the National Bank of Tajikistan Jamshed Nurmahmadzoda, Finance Minister Faiziddin Kahhorzoda, Minister of Development and Trade, Economy Minister Nematullo Hikmatullozoda and other officials.
Unfulfilled hope
Tajikistan hoped to receive financial support from the IMF already in the second half of this year..
“Almost all the prerequisites put forward by the Foundation for obtaining a soft loan under the new program “Extended Credit Facility” are fulfilled”, – the first deputy head of the NBT, Jamoliddin Nuraliev, told reporters at the end of July this year.
He noted that in July last year, a working group was created from among the staff of relevant ministries and departments, which was engaged in the implementation of the IMF preconditions.
Nuraliev stressed that until now almost all conditions have been met, in particular, new legislation has been adopted in the banking sector, the Ministry of Finance’s fiscal policy and other measures.
He expressed the hope that in September of this year, another IMF mission to Tajikistan will be held, during which specific agreements will be reached on a new program of support for the republic.
Prehistory
Negotiations on granting a concessional loan to Tajikistan under the new IMF program have been going on for several years.
Initially, the republic under the new program intended to attract a concessional loan of $ 500 million. Later it was said about $ 300 million.
A new program is planned to be sent to support the country's economic strategy achieving macroeconomic and financial stability and sustainability along with economic growth and poverty reduction, as well as maintaining the balance of payments and the stability of the country's international reserves.
The validity of the previous three-year program, under which the IMF granted a concessional loan of over $ 160 million to Tajikistan, ended in July 2012.
The negotiations of the official delegation of Tajikistan with the IMF on the development of a new program under the above-mentioned mechanism began in October 2015.
Relations between the IMF and Tajikistan were damaged in 2008, when the former NBT leadership provided the IMF with inaccurate financial information about the state of the economy of Tajikistan. After such a case it is very difficult to restore trust.
What is the problem?
Many in Tajikistan associate a delay in granting a loan with the scandal eight years ago, when the Foundation caught the Tajik authorities in providing “inaccurate financial information”.
«Relations between the IMF and Tajikistan were damaged in 2008, when the former NBT leadership provided the IMF with inaccurate financial information about the state of the economy of Tajikistan. After such a case it is very difficult to restore trust. he current leadership of the NBT is making great efforts and is working with all stakeholders in the process to resume the IMF programs for Tajikistan», – said economic observer Nur Safarov.
He considers transparency and accountability of the banking and financial system of Tajikistan to be an important component for continuing cooperation and renewing the IMF credit line.
Some other experts explain the Fund’s lack of readiness to provide a loan to Tajikistan with the country's debt load.
«Tajikistan’s foreign debt last year exceeded 40% of the republic’s GDP. This trait after which the IMF usually will not only refrain from granting a loan, but also recommends this to other international financial institutions», – said economist Saidali Nurulloev.
The IMF Debt Sustainability Analysis, updated at the end of last year, states that debt risk in Tajikistan increased from moderate to high, “as some important indicators exceeded the indicative threshold values”.
Fund analysts then noted a decline in the country's ability to earn foreign currency through the export of goods to service its external debt, which "Began to increase at an accelerated pace".
