We discussed it with Bakhrom Ziyaev, the World Bank Senior Economist in Tajikistan.
Where does Tajikistan’s economy stand today? How would you describe the country’s economic performance and the main drivers of its growth?
The World Bank has recently published the 2025 Tajikistan Economic Update. In this report, we look at how Tajikistan’s economy is doing and suggest ways to help the country grow and improve people’s lives. According to this report, the Tajikistan’s economy is growing quickly. Real Gross Domestic Product (GDP) grew by 8.4% in 2024 and kept growing strongly with 8.1% growth in the first half of 2025. This growth is mainly because people in Tajikistan are consuming more, thanks to a big rise in remittances sent home from abroad, which helps families buy essential goods and invest in improving living conditions.
Growth has been particularly strong in services—most notably in transport and trade—as well as in industries such as mining and food processing. A construction boom, especially in residential housing, is also adding heft to output. However, not all parts of the economy are doing well. Agriculture, which still employs a sizeable share of the population is growing more slowly. The sector’s underperformance reflects chronic underinvestment in technology, weak extension services, degraded soils, and mounting pressure from climate change—all of which continue to weigh on sector’s productivity.
Remittances are important
You mentioned that remittances are driving household consumption and better living conditions. Can you please explain a bit more on how remittances are affecting the livelihoods of Tajik families?
Remittances surged by more than 45% last year, reaching a level equivalent to nearly half of Tajikistan’s GDP. According to the World Bank’s Listening to Tajikistan survey, over 90% of Tajik migrants are employed in the Russian Federation. This substantial rise in remittances was fueled largely by wage growth in Russia and a firmer Russian currency ruble. A tightening Russian labor market has created more opportunities for Tajik workers, particularly as domestic job creation within Tajikistan remains slow and inadequate to absorb the country’s youthful, fast-growing population.
ИЗОБРАЖЕНИЕ
In addition to rising wages within Tajikistan, remittances have been playing a crucial role in reducing poverty in Tajikistan. Over the past decade, the national poverty rate has fallen sharply—from over 55% in 2010 to under 20% today. Much of this income is channeled directly into household essentials, with families spending primarily on food, healthcare, and home improvements.
Inflation Dynamics
Let’s discuss inflation. How have prices levels changed recently, and what role has the National Bank of Tajikistan played in managing inflation?
Inflation in Tajikistan remains well contained. Official figures show that consumer price inflation remained modest, at around 3.6% by the end of 2024 and remained at the same level through the first half of 2025. Food products constitute a significant part of the average consumer basket in Tajikistan and lower global food prices have helped contain inflation. On the other hand, the exchange rate has stayed steady in 2024 and even has been appreciating this year. A stronger somoni is also helping families by making imported goods cheaper.
A lot of credit for this goes to the National Bank of Tajikistan (NBT), which has managed the country’s money carefully, even though there has been a strong flow of remittances. By withdrawing excess money from the economy, the central bank has managed to keep inflation under control. Now, inflation is low and within the NBT’s target range, showing that people trust the central bank’s policies more and have greater confidence in the local currency – the Tajik somoni. This is supported by the observed decline in the dollarization of both credits and deposits. At the same time, the NBT has carefully started to lower interest rates to help the economy grow but is doing so slowly to avoid stoking inflation. This careful approach suggests that the central bank is making progress in managing the country’s money in a smarter way.
Access to Finance
How is the financial sector faring?
The financial sector in Tajikistan showed signs of improvement in 2024, but structural challenges continue to limit its effectiveness and depth. Banks posted strong profits, with a return on equity of 20.7%, and nonperforming loans (NPLs) declined significantly—from 12.7% in 2023 to 6.8% in the first half of 2025. The capitalization levels of the banking industry and liquidity indicators are also strong. Despite such positive trend, the financial intermediation remains shallow in Tajikistan. Deposits and private sector credit each hover just above 10% of GDP—well below regional and international benchmarks. For example, private credit to GDP ratio stands at 23% in the Kyrgyz Republic and over 33% in Uzbekistan.
ИЗОБРАЖЕНИЕ
Interest rate spreads remain high, reflecting operational inefficiencies, elevated credit risk, and limited competition. Only 14.7% of private firms had access to bank loans in 2024, compared to a regional average of 42.1%. While reforms since the 2016–2017 banking crisis have improved financial stability, deeper reforms are needed to enhance competition, reduce intermediation costs, and expand access to finance. In terms of financial inclusion, Tajikistan has exhibited significant progress over the past few years, yet the country still trails behind others in the region. Currently, just around 55% of adults in Tajikistan have access to a formal financial account – according to the Global Findex Report for 2025. This compares to around 60% in Uzbekistan, over 70% in the Kyrgyz Republic, and nearly 90% in Kazakhstan. Tajik banks have also been facing restricted access to corresponding relationships with foreign banks. In this regard, the recently adopted new Law on Anti-Money Laundering and Countering the Financing of Terrorism and ongoing alignment of relevant regulations should help bring Tajikistan closer to international standards and ease the current challenges.
Fiscal Situation
How would you describe the fiscal performance of Tajikistan in the past year?
Tajikistan has pursued a conservative fiscal stance, even though revenues were lower than expected last year. Revenues were squeezed by a reduction in the Value Added Tax (VAT) rate from 15% to 14%, softer receipts from international trade—exacerbated by import duty exemptions on electric vehicles—and a decline in grant disbursements from development partners. Nonetheless, spending was prudently managed, by reducing spending on big projects or investments, as several large infrastructure projects neared completion. Of note, however, was an increase in social sector spending. Allocations to education, healthcare, and social protection rose from 37% to 42% of total government expenditures, signaling a slight shift toward human capital development. If we also consider expenditure on cultural events and sports, then social spending as a whole accounts for half of the state budget.
Public debt dynamics have markedly improved in recent years. Since peaking at 50% of GDP during the 2020-pandemic, the debt ratio has fallen sharply to 25.4% by 2024—driven by rapid GDP growth and the Ministry of Finance’s commitment to fiscal discipline. According to the latest joint Debt Sustainability Analysis (DSA) by the IMF and World Bank, Tajikistan’s debt remains sustainable. Yet the country continues to face a high risk of debt distress, primarily due to a looming spike in debt servicing obligations between 2025 and 2027, including scheduled Eurobond repayments. The DSA underscores that keeping the fiscal deficit below 2.5% of GDP will be essential to preserve debt sustainability in the medium to long term.
Structural Reforms for Future Growth
What’s the economic outlook for 2025 and beyond and what risks should Tajikistan be watching?
Tajikistan’s economic growth is expected to remain strong in 2025 at about 7.0% before gradually converging to its potential rate over the medium term. But this outlook is not without caveats. Slowing growth and tightening migration policies in Russia—the primary destination for Tajik migrant workers—could reduce remittance inflows, a key driver of domestic demand. At the same time, rising global trade tensions may weaken economic activity in Tajikistan’s key trading partners, including China, Russia, Türkiye, Kazakhstan and Uzbekistan, with knock-on effects on foreign direct investment and exports.
Commodity price volatility presents significant risk. Metals and minerals—chiefly aluminum, zinc, and various ores—make up roughly two-thirds of Tajikistan’s export basket, leaving the country exposed to global price swings. On the positive side, very high gold prices could bring extra income and help increase export earnings. Meanwhile, climate-related shocks—including erratic precipitation, droughts and flooding—are becoming more frequent, posing a growing threat to agriculture, infrastructure, and livelihoods.
To sustain momentum and build resilience against external shocks, Tajikistan will need to press ahead with long-overdue structural reforms. These include improving the business environment, boosting public sector efficiency—particularly in the State-Owned Enterprises (SOEs)—and embracing digital technologies to spur innovation and productivity.
Digital Transformation of Trade
This year’s economic update report has a special focus on the digital transformation of trade in Tajikistan. What key barriers to successful digitalization of trade in Tajikistan do you see today, and how can they be overcome?
The 2025 Tajikistan Economic Update highlights several key barriers to the successful digital transformation of trade in the country—and outlines how they can be addressed.
First, Tajikistan’s digital infrastructure remains underdeveloped. Despite some improvements, internet connectivity is poor, particularly at border checkpoints, and the country lags behind regional peers in digital readiness indicators such as e-participation, online services, and telecom infrastructure.
Overcoming this will require targeted investments in expansion of broadband Internet, especially in trade-critical areas, and stronger regulatory oversight to foster competition and improve service quality.
Second, the legal and regulatory framework for digital trade is fragmented and incomplete. While Tajikistan has foundational laws on electronic documents and e-signatures, it lacks comprehensive regulations on data protection, cybersecurity, and consumer rights. These gaps undermine trust in digital transactions and limit cross-border interoperability.
To address this, the government should fast-track legislation on data privacy, cybersecurity standards, and digital consumer protection, aligning with international best practices.
Third, customs and trade processes are only partially digitalized. Despite progress through systems like Automated System for Customs Data (ASYCUDA) – and the National Single Window, many procedures still require physical presence, and inter-agency coordination remains weak. Full implementation of paperless trade systems, along with integration across border agencies, is essential to reduce delays and costs.
Finally, digital skills and institutional capacity are limited. Both public officials and private traders often need training to effectively use digital tools. Capacity-building programs and awareness campaigns will be critical to ensure adoption and sustainability of reforms.
ИЗОБРАЖЕНИЕ
In short, Tajikistan’s digital trade transformation hinges on a coordinated push across infrastructure, regulations, systems integration, and human capital. With 2025–2030 declared the “Years of Digital Economy and Innovation Development,” the country has a timely opportunity to close these gaps and unlock new trade and economic growth potential.
