IMF Staff Completes Virtual Visit to Tajikistan

IMF News, September 14, 2020

Source details

An International Monetary Fund (IMF) mission led by Ms. Padamja Khandelwal visited Tajikistan virtually from August 18 to September 3, 2020.
Objective: discuss macroeconomic developments, the government’s policy response to the coronavirus shock, and policies to maintain macroeconomic stability and build foundations for strong, sustainable, and inclusive growth.
End-of-mission press release clarifies: "End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board."

"The health impact of the pandemic has been well-contained, but trade and transportation challenges with key trading partners have affected economic activity and remittances."
"The external position has deteriorated."
"On the fiscal side, revenues have dropped sharply, posing challenges for the implementation of the revised budget for 2020."
The mission notes support from international partners has been mobilized.

Fiscal measures:
- The revised budget incorporates higher allocations for health and social spending and cuts to lower-priority spending.
- The authorities have implemented temporary tax relief measures.
- The Targeted Social Assistance program has been expanded nationwide.
- One-off social transfers to vulnerable households and financial support to SMEs are underway.
- "Health and social spending are expected to be further stepped up in the second half of the year to alleviate the poverty and social impact of the pandemic."
- Authorities committed to publish quarterly reports on COVID-related health and social spending.
Monetary and financial sector measures by the National Bank of Tajikistan (NBT):
- Easing reserve requirements and lowering the policy rate.
- Recommendation: "ensuring strong supervision will be important to maintain confidence in bank balance sheets."
- Recommendation: "An effective fiscal backstop for the Deposit Insurance Fund is recommended and the two formerly systemic and insolvent banks need to be liquidated."
- Foreign exchange shortages "also need to be addressed."

"Over the medium-term, policies to achieve fiscal and external consolidation, in line with the Rapid Credit Facility (RCF) commitments, remain important to ensure macroeconomic stability."
Address the large decline in revenues in 2020 to build fiscal space for needed spending on health, education, and infrastructure.
Tax policy:
- The mission "welcomes the authorities’ commitment to tax reform and urges a gradual and phased revision of the tax code to support the business environment and fiscal consolidation."
Exchange rate policy:
- "Greater exchange rate flexibility is needed to strengthen the credibility of the monetary policy framework."
Governance and transparency:
- The authorities’ commitment to publish quarterly reports on COVID-related health and social spending is "strongly welcomed."
- To further strengthen good governance practices, "transparency of borrowing by state-owned enterprises also needs to be enhanced."

The mission met with:
- First Deputy Prime Minister D. Said
- Chairman of the National Bank of Tajikistan, J. Nurmahmadzoda
- Minister of Finance F. Qahhorzoda
- Minister of Economy Development and Trade Z. Zavqizoda
- Other senior officials, representatives of the banking sector, and the development partner community.
Closing remark from the mission: "The mission would like to thank the authorities for their close cooperation and candid discussions."

Source: IMF press release dated September 14, 2020.