Press Release No. 24/361

IMF Staff and Tajikistan Authorities Reach Staff-Level Agreement on the First Review of the Policy Coordination Instrument (PCI)

October 9, 2024

• IMF staff and the Tajikistan authorities have reached a staff-level agreement on the first review under the Policy Coordination Instrument (PCI). The PCI aims to maintain macroeconomic stability, strengthen the authorities’ policy frameworks, and support their efforts to foster more sustainable and inclusive growth.
• Macroeconomic performance remains favorable with real GDP growth at 8.3 percent during January-August 2024, and twelve-month inflation slowing to 3.6 percent in August. The current account remained in surplus in the first half of 2024, with international reserves at comfortable levels.
• Policy priorities are to enhance revenue mobilization, rationalize tax exemptions, modernize FX and public debt markets, enhance banking supervision and macroprudential oversight, and improve governance and transparency of SOEs and other entities to strengthen the favorable business climate.

Dushanbe, Tajikistan: An International Monetary Fund (IMF) team led by Mr. Matthew Gaertner held discussions with the Tajikistan authorities during September 23-October 4, 2024, for the first review of the Policy Coordination Instrument (PCI) [[1]].

At the conclusion of the mission, Mr. Gaertner issued the following statement:

“The IMF mission held productive discussions with the Tajikistan authorities and reached staff-level agreement on the policies needed to complete the first review under the PCI. The successful completion of the review is subject to approval by IMF management and the IMF Executive Board. Consideration by the Board is expected in November 2024.

“Real GDP continued to grow at 8.3 percent during January-August 2024, supported by strong growth in services and construction. Inflation declined to 3.6 percent in August from 3.8 in December, remaining below the lower bound of the National Bank of Tajikistan’s target range. The current account remained in surplus during the first half of 2024 with strong financial inflows supporting comfortable levels of FX reserves. The authorities recorded a fiscal deficit well below the program’s target in the first half of the year, anchoring a continued reduction in public debt. The banking system is stable, with robust growth in deposits and credit. Strong GDP growth and low inflation are expected to continue in 2025 but geopolitical and climate risks create uncertainty over the medium-term outlook.

“Program implementation has remained on track, with most of the quantitative targets for end-June 2024 being met and all reform targets being observed. The quantitative targets on net international reserves and the fiscal deficit were met comfortably. Improvements in revenue mobilization and debt management remain central to program objectives. Fiscal reforms have focused on quantifying losses from inefficient tax exemptions and implementing a Medium-Term Revenue Plan aiming to increase fiscal space for priority social and development spending. In line with the updated Debt Management Strategy, the Ministry of Finance (MOF) has started issuing government securities at market-based rates to diversify financing sources.

“Under the PCI, the authorities have improved monitoring of fiscal risks from state-owned enterprises (SOE), bringing all companies with state ownership of at least 20 percent under the monitoring of the MOF. Monetary and exchange rate policy reforms have centered on improving the functioning of the FX market by rationalizing the system supporting remittances and money transfers through the banking system and improving the mechanism for executing government FX transactions to better reflect prevailing market rates.

“Looking ahead, the authorities will aim to continue to rationalize tax exemptions and tax administration, modernize FX and public debt markets, improve banking supervision and macroprudential oversight, and enhance governance and transparency of SOEs and other public and private entities to support a favorable business climate and foster more sustainable and inclusive growth. Enhanced exchange rate flexibility is essential to strengthen resilience to shocks and support the transition to an interest-rate based framework. The authorities have proposed to expand the fiscal reform agenda through new measures aiming to develop a plan to streamline tax exemptions and including all companies with a minimum of 20 percent state ownership in the 2024 Statement of Fiscal Risks.

“The IMF team would like to thank the authorities for their excellent cooperation and constructive discussions.”

[[1]] The IMF’s Policy Coordination Instrument (PCI) is designed for countries that do not need balance of payments financial support. The PCI helps countries design effective economic programs that, once approved by the IMF's Executive Board, signal to donors, multilateral development banks, and markets the Fund's endorsement of a member's policies.