DUSHANBE, September 25, 2010, Asia-Plus — An International Monetary Fund (IMF) team, led by Mr. Todd Schneider, visited Tajikistan from September 13 to September 24 to hold discussions with Tajik authorities on the third review under a three-year extended credit facility arrangement with Tajikistan. The IMF mission reached a staff-level agreement with the Tajik authorities on their 2011 economic program.
On September 24, the IMF head Todd Schneider met with reporters in Dushanbe.
Mr. Schneider reminded that extended credit facility arrangement stipulated providing some 165 million U.S. dollars to Tajikistan.
“To-date, 82 million U.S. dollars have been provided to the country under this arrangement and if the IMF’s Executive Board approves the findings of this survey, the next tranche in an amount of about 20 million will be made available to Tajikistan,” said Mr. Schneider, “This would bring the total disbursement under the arrangement to about US$103 million.”
On the agreement with the Tajik authorities on the 2011 program, the IMF mission head noted that the agreement also required approval by the IMF’s Executive Board, which is expected to consider Tajikistan’s request for the completion of the third review at end-November 2010.
Mr. Schneider noted that as with many countries in the region, economic growth in Tajikistan has rebounded and an incipient recovery seems underway.
According to him, despite disruptions in rail traffic, real economic growth through the first eight months of 2010 was in n the range of 6 percent while inflation was at 5.6 percent. Reflecting the economic recovery in Russia and other countries, inward remittances have also rebounded, rising 28 percent during January-August 2010.
“For the year as a whole, we project that the economy will expand by at least 5.5 percent in real terms. Year-end inflation may reach as much as 9 percent, however, due in part to higher international prices for wheat and grains,” Mr. Schneider said.
He noted that the outlook for 2011 was optimistic. “Our current projection is for GDP growth of at least 5 percent—based on relatively conservative assumptions. And barring new external shocks, we expect inflation to decline to about 7 percent.”
Risks to the outlook stem from the uncertainty regarding the strength and sustainability of the rebound in remittances, exports, and growth—which depend in large part on economic recovery in the rest of the world. “Uncertainty regarding regional rail traffic also cloud the outlook,” said Mr. Schneider, “Financial sector indicators have also worsened in recent months, potentially making it more difficult for banks to provide credit.”
The program seeks to ensure continued macroeconomic stability, contribute to poverty reduction, and engender high and sustained economic growth. In this context, the government will seek to target a fiscal deficit equivalent to about 1 percent of GDP in 2011, which should allow for a rise in social spending. Monetary policy will continue to target reserve money, with a view to containing inflation. The National bank of Tajikistan will also continue to build foreign exchange reserves while maintaining a flexible exchange rate regime. Structural reforms will focus on enhancing the transparency and accountability of the NBT and state-owned enterprises, bolstering government revenues and public financial management, and addressing weaknesses in the financial system.
