The increase in money supply in circulation is one factors accelerating inflation processes in Tajikistan, says The Macroeconomic Review prepared by the Chief Economist Group at the Eurasian Development Bank (EDB) .
Money supply in circulation in Tajikistan has reportedly increased by 62 percent. This factor has also strengthened pressure on the exchange rate in the country. In early March, the exchange rate of the Tajik national currency, the somoni, against the dollar increased from 7.9:1 to 8.2:1, according to the Review.
To stabilize the currency market Tajik central bank has reportedly increased the refinancing rate from 12.5 to 16.0 percent. The required reserve rate has also been raised.
The high level of bad debts and increased rate will require that the Central Bank toughens prudential regulation of the banking sector, the report said.
The Eurasian Development Bank expects the year-end inflation in Tajikistan for this year to stand at 5.9 percent.
Meanwhile, the Tajik government expects the year-end inflation for this year to stand at 7.0 percent.
Eurasian Development Bank (EDB) is an international financial organization founded by Russia and Kazakhstan in 2006. The members of the Bank are Russia, Kazakhstan, Armenia, Tajikistan and Belarus (2010). Other states or international organizations can become members by joining the Agreement Establishing the EDB. The Bank has authorized capital in exceeds US$1.5 billion, which was formed of contributions by its member states: Russia (US$1billion), Kazakhstan (US$500 million), Armenia (US$100,000), Tajikistan (US$500,000) and Belarus (US$15 million). The authorized capital may be increased by resolution of the Bank’s Council. The Bank has the status of an international organization, and is subject to international law.
