Tajikistan’s external debt has risen 0.06 percent (2 million U.S. dollars) in three months to March 31, 2022, reaching little more than 3.3 billion U.S. dollars, according to the Agency for Statistics under the President of Tajikistan.
Tajikistan has neared a troubling psychological threshold by having its external debt reaching 37.7 percent of gross domestic product (GDP), thereby nearing the 40 percent many international economists deem sustainable for developing economies.
The Export-Import Bank of China (Eximbank) remains the largest creditor of Tajikistan over the past 12 years – 1.1 billion U.S. dollars.
Tajikistan’s large-scale borrowing from China started around 2006. According to Eurasianet, Dushanbe and Beijing signed their last major loan deal in 2014, with the project – Stage 2 of the Dushanbe-2 combined heat and power (CHP) plant completed in 2016. Despite extensive Chinese FDI in mining and other ventures with commercial potential, there is reportedly no major project currently under construction in Tajikistan directly financed by Eximbank.
Tajikistan pleaded for relief from its international creditors and has already received positive feedback from China. China has suspended debt repayments from Tajikistan.
Debts due to placement of government bonds (Eurobonds) in international financial markets amount to US$500 million.
There are also comparatively large debts to the World Bank, (357 million USD), the Asian Development Bank (291 million USD), the International Monetary Fund (190 million USD), and the Islamic Development Bank (184 million USD).
International financial organizations had earlier advised the government of Tajikistan to refrain from attracting non-concessional loans .
Despite a considerable amount of debts accumulated, the Tajik government is not going to discontinue the practice of foreign borrowing, and is planning to borrow 459.7 million USD this year and 246.8 million USD dollars in 2023.
A joint debt sustainability analysis released by the World Bank and the International Monetary Fund in February this year assessed Tajikistan’s debt-carrying capacity as medium and determined that it is at high risk of debt distress for both external and public debt.
Tajikistan’s high risk of debt distress reportedly reflects several factors: chronic fiscal deficits that, if measured by international standards, would count loans as financing rather than revenue; past heavy use of non-concessional borrowing, including $500 million in eurobonds with a 7.125% interest rate; failure to conduct economic assessments when selecting investment projects; and the decision to undertake the Roghun hydroelectric project, whose initial cost of $3.9 billion has risen thus far to $4.8 billion and required considerable external financing. Losses from natural disasters and the cost of pandemic response have added to the debt burden.
