Press Release No. 10/351

Press Release No. 10/351
September 24, 2010

An International Monetary Fund (IMF) team, led by Mr. Todd Schneider, visited Dushanbe September 13-24, 2010 to hold discussions for the third 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. 10/37). The IMF mission reached a staff-level agreement with the Tajik authorities on their 2011 economic program.

This agreement requires approval by the IMF’s Executive Board, which is expected to consider Tajikistan’s request for the completion of the third review at end-November 2010. Upon approval, SDR 13 million (about US$20 million) would be made available to Tajikistan. This would bring the total disbursement under the arrangement to SDR 65.2 million (about US$103 million).

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

“As with many countries in the region, economic growth in Tajikistan has rebounded and an incipient recovery seems underway. Despite disruptions in rail traffic, real economic growth through the first eight months of 2010 was in the range of 6 percent while inflation was at 5.6 percent. Reflecting the economic recovery in Russia and other countries, inward remittances have also rebounded—growing by 28 percent during January-August 2010.

For the year as a whole, we project that the economy will expand by at least 5.5 percent in real terms. Year-end inflation may reach as much as 9 percent, however, due in part to higher international prices for wheat and grains.

The outlook for 2011 is optimistic. Our current projection is for GDP growth of at least 5 percent—based on relatively conservative assumptions. And barring new external shocks, we expect inflation to decline to about 7 percent.

Risks to the outlook stem from the uncertainty regarding the strength and sustainability of the rebound in remittances, exports, and growth—which depend in large part on economic recovery in the rest of the world. Uncertainty regarding regional rail traffic also cloud the outlook. Financial sector indicators have also worsened in recent months, potentially making it more difficult for banks to provide credit

The program seeks to ensure continued macroeconomic stability, contribute to poverty reduction, and engender high and sustained economic growth. In this context, the government will seek to target a fiscal deficit equivalent to about 1 percent of GDP in 2011, which should allow for a rise in social spending. Monetary policy will continue to target reserve money, with a view to containing inflation. The NBT will also continue to build foreign exchange reserves while maintaining a flexible exchange rate regime. Structural reforms will focus on enhancing the transparency and accountability of the NBT and state-owned enterprises, bolstering government revenues and public financial management, and addressing weaknesses in the financial system.”