Press Release No. 10/230

IMF completes Reviews Under Extended Credit Facility Arrangement with Tajikistan, and Approves Request for Augmentation and Waivers

June 7, 2010

The Executive Board of the International Monetary Fund (IMF) today completed the first and second reviews under a three-year Extended Credit Facility arrangement with Tajikistan (see Press Releases No. 09/136 and No. 10/37). The completion of the reviews enables the immediate disbursement of an amount equivalent to SDR 26.12 million (about US$38.2 million), bringing total disbursements under the arrangement to an amount equivalent to SDR 52.22 million (about US$76.3 million).

Additionally, the Executive Board approved Tajikistan’s request for the increase of access under the arrangement to SDR104.4 million (about US$152.6 million) from SDR 78.3 million (about US$114.5 million). The augmentation is justified in view of Tajikistan’s low level of international reserves and domestic and external vulnerabilities. The increase will not materially affect debt sustainability.

Finally, the Executive Board also granted waivers of non observance for the end-December 2009 performance criterion on cumulative flow of net domestic assets of the National Bank of Tajikistan (NBT) and the continuous performance criterion on arrears and wages. These waivers were granted because of the authorities’ corrective action.

Following the Executive Board’s discussion on Tajikistan, Mr. John Lipsky, First Deputy Managing Director and Acting Chair, stated:

“Tajikistan has been severely affected by the global financial crisis mainly through a sharp decline in remittances which reduced the real income of the population. The external environment is expected to improve in 2010, but the level of international reserves remains low. In this context, the Tajik authorities have requested the completion of the first and second review under the three-year arrangement under the Extended Credit Facility and an augmentation of access of 30 percent of quota to a total of 120 percent of quota under the arrangement.

“The authorities’ 2010 program aims to continue making further progress in reducing poverty and raising economic growth. To this end, the authorities intend to increase social and poverty-related expenditures and push forward with infrastructure investments. The program also seeks to safeguard macroeconomic stability by containing the overall fiscal deficit and maintaining the flexible exchange rate regime. The fiscal strategy requires a careful balancing of social and capital spending needs.

“The authorities plan to address the structural energy deficit and achieve energy independence, including by accelerating the construction of the Roghun Hydropower Project. The recent campaign to finance this project through equity sales has curtailed disposable incomes and is estimated to weigh on the growth prospects for 2010. As such, the phasing out of the equity campaign is welcome. The authorities should continue to work closely with the World Bank on the ongoing feasibility study of the project and to form an international consortium to finance Roghun once the feasibility study is completed, taking into account Tajikistan’s debt constraints.

The authorities have made progress in enhancing the governance of the National Bank of Tajikistan (NBT), and should continue to press forward with their reform strategy, including, in particular, strengthening internal audit and controls and recapitalization of the NBT,” Mr. Lipsky said.