DUSHANBE, March 27, 2009, Asia-Plus – On March 26, the World Bank’s Board of Executive Directors approved the US$20 million Third Programmatic Development Policy Grant to help the Government of Tajikistan mitigate the impact of the global economic slowdown and to help it continue to implement its medium-term reform program, press release issued by the World Bank said.
“This grant will support the government’s program aimed at maintaining macroeconomic stability,” said Chiara Bronchi, the World Bank Country Manager for Tajikistan. “The World Bank grant complements the efforts of other international development partners, with whom we are coordinating, while supporting the government’s efforts to maintain essential public services, including health, education, and social safety nets.”
The aim of the grant is to safeguard Tajikistan’s ongoing reform and poverty reduction program by helping to partially fill the unanticipated financing gap created by the global economic crisis. Tajikistan’s growth is expected to fall to 3 percent in 2009, one-third the rate of expansion of 9 percent enjoyed during 2000–2007, due mainly to the drop in remittances from Tajik working in Russia and to a decline in exports of cotton and other commodities. The crisis has put pressure on the government to increase its expenditures on social services to help migrant workers returning to Tajikistan and others who have lost their jobs. Yet, state revenues needed to deliver critical social services have fallen as economic activity slows. The drop in export revenue is also putting pressure on the balance of payments, reserves, the exchange rate, and the current account.
Motoo Konishi, World Bank Country Director for Central Asia, said “Although we are glad to provide this much needed support for Tajikistan, it is clear from current unfolding global economic crisis and its implications for Tajikistan in the short- to medium-term that there is need for additional donor support and government actions in the coming months.”
The grant will also help sustain the confidence of investors by supporting policies to promote macroeconomic stability, to encourage private investment, and to create a professional public service – essential if the economy is to modernize and grow. Specifically, the grant helps the authorities to reduce the regulatory burden on business, to ensure that privatization of state owned enterprises is carried out transparently and fairly, to create the basis for competitive aviation, energy, and agricultural sectors, to reform the public administration, and to improve delivery of health and education services.
“With this grant, the Bank is supporting Tajikistan to deepen its reforms,” said Sudharshan Canagarajah, World Bank Lead Economist for Tajikistan and Team Leader for this project, adding that “these measures will help the country to recover from the current slowdown, and to again attain the high growth rates that have been so important in reducing poverty during the past decade.”
The grant will be provided as direct budget support. It is the third such operation supporting the government’s reform program laid out in Tajikistan’s first and second poverty reduction strategies. The resources are critical to support Tajikistan’s efforts to promote growth, improve governance, and reduce poverty.
