IMF Executive Board Approved a Policy Coordination Instrument (PCI) for Tajikistan

IMF News, February 28, 2024

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On February 28, 2024, The Executive Board of the International Monetary Fund (IMF) approved a twenty-two-month Policy Coordination Instrument (PCI) for Tajikistan.
Press Release No. 24/60.
The PCI involves no use of IMF resources.
Program reviews will take place on a semi-annual fixed schedule.

Tajikistan’s favorable post-pandemic economic performance continued in 2023, with strong, broad-based growth and low inflation.
The fiscal deficit has remained anchored within the authorities’ medium-term deficit target, contributing to a further reduction in the public-debt-to-GDP ratio.
The outlook for 2024 appears favorable, although there remains considerable uncertainty over the external environment.
Public debt is judged sustainable but “the risk of debt distress remains high” while sizeable public investment needs reduce fiscal space for critical social and development spending.
The authorities are committed to a medium-term fiscal deficit target of 2.5 percent of GDP.

The PCI aims to:
- maintain macroeconomic stability;
- strengthen the authorities’ policy frameworks;
- support efforts to foster more sustainable and inclusive growth.
A favorable performance under the program would signal to development partners and private investors Tajikistan’s commitment to strong economic and structural policies, catalyzing financing for high-priority social and infrastructure projects.

(i) Strengthen revenue mobilization, spending efficiency and monitoring of fiscal risks related to state-owned enterprises to improve fiscal resilience and preserve debt sustainability while prioritizing essential social and development spending.
(ii) Modernize monetary, exchange rate and financial sector policies to increase their contribution to growth and resilience.
(iii) Advance broad-based structural reforms to foster more inclusive growth through augmented targeting of social assistance, improved governance of the central bank and state-owned enterprises and stronger anti-money laundering and anti-corruption frameworks.

Fiscal:
- Increase revenue mobilization and spending efficiency.
- Strengthen social protection of the most vulnerable.
- Anchor debt sustainability in medium-term revenue and debt management strategies.
- Support electricity sector reforms and domestic debt market development.
Monetary and financial:
- Improve exchange rate flexibility and monetary policy transmission to enhance shock absorption and facilitate a gradual transition toward inflation targeting.
- Expand the use of macroprudential instruments, forward-looking analytical tools and beneficial ownership information in supervision and macroprudential analysis to reinforce financial stability.
Governance and transparency:
- Improve central bank governance.
- Strengthen oversight and management of fiscal risks related to state-owned enterprises.
- Improve AML-CFT and anti-corruption frameworks.
- Enhance extractive sector transparency, financial inclusion and resilience to climate risks.

Tajikistan has returned to strong growth following the COVID-19 pandemic but faces uncertainty in the context of heightened geopolitical risks.
The program, supported by capacity development, “sends a strong signal of the authorities’ commitment to sound policies and reforms, and would help catalyze additional support by development partners.”
The program focuses on anchoring macroeconomic stability, strengthening resilience against shocks, and advancing governance and transparency reforms to foster more diversified and inclusive growth.

Press Release No. 24/60; February 28, 2024. International Monetary Fund.