Press Release No. 19/369

IMF Staff Concludes Article IV Consultation Visit to Tajikistan

October 9, 2019

• Macroeconomic stability has been maintained, despite widening fiscal and external deficits, in a challenging global environment. Energy sector reforms have helped mitigate contingent fiscal risks.
• Fiscal consolidation, greater exchange rate flexibility, a stronger monetary policy framework, and continued financial sector reforms are needed to ensure continued macroeconomic stability.
• Structural reforms are essential to improve the business environment and boost the prospects for strong, sustainable and inclusive growth.

An International Monetary Fund (IMF) mission led by Ms. Padamja Khandelwal visited Dushanbe from September 23^rd to October 4^th to conduct the 2019 Article IV Consultation. The discussions covered recent economic developments, the near- and medium-term outlook, risks to the economy, developments in the financial sector, and economic policies needed to restore stability and build the foundations for strong, sustainable, and inclusive growth.

At the end of the visit, Ms. Khandelwal issued the following statement:

“The IMF team has had productive discussions with the Tajik authorities, noting that macroeconomic stability has been maintained despite a widening of the fiscal and external deficits, and financial sector reforms have continued. Reforms to the state-owned energy company, including annual increases in tariffs for residential consumers, have helped reduce losses in this sector.

“The team recommends four main policy actions: (i) fiscal consolidation to ensure fiscal sustainability and reduce the risks of debt distress; (ii)allowing greater exchange rate flexibility and improved operations in foreign exchange markets to support external adjustment to a weaker global environment; (iii) a stronger monetary policy framework to support the transition towards inflation targeting; (iv) and further financial sector reforms (including a resolution of insolvent banks) to restore confidence.

“A growth-friendly fiscal consolidation can be achieved through a mix of revenue and expenditure measures, while strengthening the social safety net to protect poor and vulnerable groups. Priority structural reforms to boost growth include improving the efficiency and oversight of public investment, especially on large infrastructure projects, and creating a more equitable and predictable tax code; strengthening the independence of the National Bank of Tajikistan (NBT) and developing domestic debt markets; and strengthening the financial sector through enhancements of the macroprudential policy framework, the AML/CFT regime, and bank governance.”

“During its visit, the team met with the First Deputy Prime Minister, the Chairman of the NBT, the Minister of Finance, the Minister of Economy Development and Trade, the Minister of Energy, the Minister of Industry and New Technologies, and other senior officials. The mission also met with representatives of the Parliament, the banking sector, civil society and the development partner community. The team would like to thank the authorities for their warm welcome, hospitality, and productive discussions.”