The Asian Development Bank (ADB) is expected to return to financing Tajikistan’s economy only on the basis of grants. The main reason for this move is the country’s debt burden.
“During this year, ADB plans to provide some 150 million U.S. dollars to Tajikistan,” Mr. Pradeep Srivastava, ADB Country Director for Tajikistan, told reporters in Dushanbe on February 28.
In addition to these funds, the Bank will allocate another 10 million U.S. dollars to support reduction of disaster risk in the country, Mr. Srivastava noted.
According to him, the International Monetary Fund (IMF) and the World Bank are assessing debt sustainability of low-income countries, including Tajikistan.
“The latest data show that Tajikistan most likely will not be receiving loans from ADB and will get financing only in a form of grants in 2018. These are still expectations. We will have official information within the next two weeks,” ADB country director for Tajikistan said.
He noted that Tajikistan’s debt liabilities can lead to debt distress. Mr. Srivastava agreed that Tajikistan debt sustainability had been affected by attraction of investments through the sale of Eurobonds.
“But it was not the only thing that was taken into consideration,” he stressed, noting that the analysis took into account not only the amount of the debt but also the debt-to-GDP ratio and future growth prospects.
On the funds attracted due the sale of Eurobonds, Mr. Srivastava said that it was a very large loan for the country with 8-billion economy.
This loan is provided at a high interest rate – 7.1 percent, that is annual interest payment alone will be 35 million USD, ADB country director for Tajikistan said.
Recall, Tajikistan's 10-year bonds were placed on September 7 last year with a yield of 7.125%. The bankers handling the deal had originally signaled a yield of 8% but demand was strong, with bids exceeding $4 billion. S&P Global Poor's gave the bond a B- rating while Moody's Investor Service put it as B3.
Tajikistan joined the Asian Development Bank in 1998 and to date, ADB has approved over $1.5 billion in concessional loans, grants, and technical assistance to the country. ADB and Tajikistan’s development partnership, which began in 1998, has restored and built the country’s new transport and energy infrastructure, supported social development, expanded agricultural production, and improved regional cooperation and trade.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members—48 from the region.
