IMF Announces Staff-Level Agreement with Tajikistan on Fourth Review of the Extended Credit Facility

Press Release No. 11/61
March 2, 2011

An International Monetary Fund (IMF) team, led by Mr. Todd Schneider, visited Dushanbe February 17–March 2, 2011 to hold discussions for the fourth review under a three-year, SDR 104.4 million (about US$165 million) Extended Credit Facility arrangement with Tajikistan (see Press Releases No. 09/136 and No. 10/351). The IMF mission reached a staff-level agreement with the Tajik authorities on the measures needed for completion of the fourth review. This agreement requires approval by the IMF’s Executive Board, which is expected to consider Tajikistan’s request for completion of the fourth review in April 2011. Upon approval, SDR 13 million (about US$20 million) would be made available to Tajikistan. This would bring total disbursements under the arrangement to SDR 78.2 million (about US$122 million).

At the conclusion of the visit, Mr. Schneider made the following statement:

“Tajikistan’s economic recovery continues to take hold. Real GDP growth reached 6.5 percent in 2010 on the back of higher hydroelectric power production, growth in industry and construction, beneficial increases in aluminum and cotton prices, and a strong recovery of inward remittances. Inflation began to rise from August, however, reflecting increases in international commodity prices-particularly food and fuel. Headline inflation reached 9.8 percent by end-2010, but core inflation was roughly constant over the year.

“Looking ahead, we project real GDP growth of at least 5.7 percent in 2011, particularly if prices for key exports remain high, and regional partners continue to grow. Inflation is a concern, however. Food and fuel prices continued to rise in the first two months of the year, and there is the risk that inflation expectations could become entrenched. In this context, the mission welcomes the authorities’ commitment to implement a prudent fiscal and monetary policy, so as not to contribute to the rise in prices, and to tighten policies should pressures on core inflation emerge. The mission advises the authorities to develop and utilize targeted social programs to provide social assistance to the poor.

“To bolster the financial system, the mission advised the government to formulate a plan aimed at addressing non-performing loans in the banks, and to strengthen accounting and supervisory standards. Over time, this should help to bolster public confidence in Tajikistan’s banks, create additional room for private sector credit, and thus help support greater employment growth. To further strengthen prospects for private sector growth, the mission urged a comprehensive review of the tax policy regime. The IMF is ready to provide technical assistance in this area.

“The mission also welcomed the government’s commitment to increase transparency. Particularly welcome have been quarterly reports on the operations of the Roghun OJSC, and the commitment to hold a shareholder’s meeting in the near future.”



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