Tajikistan—Supplementary Letter of Intent

December 8, 2002

Mr. Horst Köhler
Managing Director
International Monetary Fund
700 19th Street, NW
Washington, DC 20431

Dear Mr. Köhler:

1. This letter supplements my letter, the Memorandum of Economic and Financial Policies (MEFP), and Technical Memorandum of Understanding (TMU), dated November 13, 2002 that was sent to you in support of our request for a new three-year PRGF arrangement from the Fund.

2. We are scheduled to sign a debt restructuring agreement with Russia on December 10, 2002. As part of that agreement, we have agreed that the amount of the credit that the National Bank of Tajikistan (NBT) has with the Central Bank of Russia is US$49.8 million. This credit is in recognition of the Russian rubles that were returned by the NBT to Russia several years ago. As part of our debt restructuring agreement with Russia, we have agreed to allocate US$23 million of the credit balance to finance interest arrears as of end-2001 and the remaining US$27 million for interest payments due during 2002-2006. The use of the NBT's credit balances will, in turn, give rise to claims on the government by the NBT. Finally, the terms of the debt restructuring will result in a somewhat lower pace of reserve accumulation than had been envisaged earlier. To reflect these changes it is necessary to adjust the quantitative performance criteria (specified in paragraph 47 and Annex I of the MEFP, and Tables 3, 4, and 5 of the TMU) on net international reserves, net domestic assets and net credit of the banking system to general government. The adjusted performance criteria are provided in Annex I to this letter.

3. Further, we would like to clarify that the performance criterion on short term external debt applies to the contracting or guaranteeing of new non-concessional short term external debt.

Very truly yours,

/s/

Annex I

Tajikistan: Quantitative Performance Criteria for the First Annual Program Under the Proposed PRGF Arrangement, October 2002-September 2003
(In stocks; unless otherwise indicated)
	2002		2003
	End-Dec.		End-Mar.	End-Jun.	End-Sep.
	Indicative		Performance	Indicative	Performance
	targets		criteria	targets	criteria
	(In millions of somoni)
1. Ceiling on net domestic assets of the NBT	106.8		104.6	108.4	79.9
2. Ceiling on net credit of the banking system to general government	12.9		25.6	28.4	11.2
3. Ceiling on the cumulative overall fiscal deficit of the general government 1/ 2/ (excluding foreign-financed public investment program)	-25.8		-24.2	-31.1	-37.5
4. Ceiling on general government wage, and nonworking pensioners' pension arrears 3/	0.0		0.0	0.0	0.0
5. Floor on tax collection of the Ministry of State Revenues and Duties 1/	93.3		191.3	302.6	401.0
	(In millions of U.S. dollars)
6. Floor on total net international reserves	19.4		20.4	21.6	34.2
7a. Ceiling on the net disbursement of short-term external debt with original maturity of up to and including one year 4/	0.0		0.0	0.0	0.0
7b. Ceiling on the contracting or guaranteeing of medium and long-term nonconcessional external debt with original maturity of more than one year 4/	0.0		0.0	0.0	0.0
8. New external payments arrears 3/	0.0		0.0	0.0	0.0
	(In millions of somoni)
Indicative target:
Reserve money	165.1		165.8	173.2	182.6
Memorandum items:
Program exchange rate (SM/US$)	3.0		3.0	3.0	3.0
Disbursements of balance of payment support (in millions of U.S. dollars) 5/	26.7		0.0	0.0	12.5
Sources: Tajik authorities; and Fund staff estimates.
1/ Cumulative from October 1, 2002.
2/ On a cash basis, the ceiling will be adjusted downward by 100 percent for any rescheduled interest payments and for any accumulation of arrears.
3/ A continuous performance criterion.
4/ By the government, NBT or any other agency acting on behalf of the government as defined in the Technical Memorandum.
5/ Disbursements in Q4 2002 and Q3 2003 are expected from the World Bank and the European Union.