DUSHANBE, December 4, Asia-Plus – The Asian Development Bank will help restore the productivity and profitability of Tajikistan’s cotton industry through a loan and grant package totaling US$12 million, press release issued by the ADB said.
Tajikistan’s cotton industry, which is the main source of farm income, agricultural exports and rural employment, has been underperforming, with yields and profitability on the decline, largely due to the substantial and increasing cotton farmers’ debt. Press release issued by the ADB, in particular, says that this debt, estimated at US$292 million in early 2006, was incurred by cotton farms under a complete system of production credit from intermediaries outsides the formal banking system.
According to the ADB Mission in Dushanbe, the government has responded by developing a comprehensive Cotton farm Debt resolution Strategy, and the project will complement this effort. The project will first resolve cotton farm debt on a pilot scale in four selected districts in Khatlon and Sughd provinces. A team will analyze the debt level and operations in each farm, then work to restructure and settle the debt. Realistic business plans for each farm will also be prepared.
At the same time, the project will make policy recommendations and farm debt resolution options to the government, and support education and awareness measures to provide suitable financing products and services to the restructured pilot cotton farms, the government will re-lend US43 million of ADB’s loan to participating commercial banks.
The project will help develop the cotton market by promoting the adoption of internationally recognized quality standards for cotton fiber. It will also help establish two bonded warehouses to be operated by the private sector that meet international standards to expedite the export of baled cotton.
Neeraj Jain, ADB’s Country Director for Tajikistan said, “Through this project ADB will support the government commitment to genuine development change by addressing the crucial and immediate concerns affecting the agrarian sector.”
ADB’s support comprises a US$5.5 million loan and a US$6.5 million grant from its concessional Asian Development Fund. The loan is repayable over 32 years with an 8-year grace period. The loan carries an annual interest rate of 1 percent during the grace period and 1.5 percent after.
The government and private sector will shoulder the balance of US$3.29 million, to meet the project’s total estimated cost of US$15.28. President’s executive office is the executing agency for the project, which is due for completion in 2010.
