Tajikistan: Heightened Vulnerabilities, Despite Sustained Growth, a report released by the World Bank on December 28 notes that the level of public and publicly-guaranteed debt (PPG) rose significantly in 2017, to above 50 percent of GDP by the end of September. According to the report, the primary drivers of this rise were loans for public investment projects (particularly from China), the issuance of domestic debt to support the energy sector (TJS 530 million), and the issuance of a US$500 million Eurobond in September.
The World Bank analysts note that the recently updated Debt Sustainability Analysis (DSA) suggests that Tajikistan’s debt distress level rose from moderate to high in the baseline scenario as several important indicators passed indicative thresholds. The latter reportedly reflects the country’s weakened ability to earn foreign exchange for servicing its external debt which started increasing at an accelerated pace.
The report says that despite a substantial increase in the level of domestic debt following the financial sector bailout at end-2016, external debt continues to comprise the bulk of the country’s total debt portfolio.
As of end-June 2017, China reportedly remained Tajikistan’s top creditor, accounting for over half of the country’s total external debt compared to one-third provided by all international financial institutions combined. Tajikistan’s Eurobond debut in September 2017, while significantly increasing the country’s debt burden, also diversified its debt portfolio.
The authorities intend to revise the medium-term debt strategy (MTDS) and relax the domestic fiscal rule on the debt ceiling by increasing it from the current 40 percent of GDP to 60 percent of GDP.
Over 40 percent of Tajikistan’s total debt repayments fall due in the next five years, necessitating the continuation of ongoing fiscal consolidation efforts to accommodate these higher debt service obligations, according to the report.
As of the beginning of October last year, Tajikistan’s externl debt exceeded 2.8 billion U.S. dollars.
