Press Release No. 10/37

Press Release No. 10/37
February 12, 2010

An International Monetary Fund (IMF) team, led by Mr. Axel Schimmelpfennig, visited Dushanbe February 1–12, 2010 to conduct the combined first and second reviews under a three-year, SDR 78.3 million (about US$116 million) Extended Credit Facility arrangement with Tajikistan (see Press Release 09/136). The IMF mission will now return to Washington to present the policy package discussed with the authorities to the IMF’s management and Executive Board. Upon approval, SDR 26.12 (about US$42 million) would be made available to Tajikistan. This would bring the total disbursement under the arrangement so far to SDR 52.2 (about US$82 million).

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

“Tajikistan has shown strong resilience in the face of sizable external shocks in 2009. Despite the 31 percent decline in remittances, and difficult markets for aluminum and cotton exports, the economy registered real GDP growth of 3.4 percent. This is a reflection of the government’s policies, including efforts to diversify the agriculture sector that have yielded a better domestic food supply.

“In January 2010, the government initiated an equity subscription campaign for the construction of the Roghun hydropower project. Tajikistan needs to develop its energy infrastructure, and Roghun is an important element of the government’s energy strategy. The IMF mission estimates that the equity campaign may temporarily dampen growth in 2010 by up to one percentage point, with households reducing consumption and corporates investment in order to purchase Roghun shares. The government now needs to finalize its financing strategy for the Roghun project. The main challenge is to identify external financing sources to pay for the imports needed for the construction. The mission welcomed the authorities’ commitment to full transparency and good governance to ensure that the funds collected for the Roghun project are used effectively.

“Against this background, the Tajik authorities and the IMF mission discussed economic prospects for 2010. Remittances inflows should recover moderately, contributing to GDP growth of 4–5 percent. Fiscal policy will need to balance social and capital spending needs, which are both equally important to lay the foundation for future growth. Monetary and exchange rate policy should continue to target low inflation, while rebuilding the National Bank of Tajikistan’s (NBT’s) foreign exchange reserves. In the area of structural reforms, the authorities intend to maintain their focus on NBT governance and financial transparency of the largest state-owned enterprises.”