Journal Issue

In the news: Sound policies benefit Tajikistan’s economy, but further reforms needed

International Monetary Fund. External Relations Dept.
Published Date:
May 2005
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Civil strife delayed Tajikistan’s transition to a market economy, but reforms and relatively favorable conditions more recently have been reducing poverty. In 2004, the economy again grew strongly, and inflation decreased markedly, the IMF said in its annual economic assessment. The IMF Executive Board praised the authorities’ sound macroeconomic policies but noted that sustaining rapid growth required stronger commitment to structural reform.

Economic activity continued to diversify rapidly into the services sector. Real household incomes have been on the rise, especially from remittances. Pointing to the critical role workers’ remittances have been playing in sustaining growth, the Board encouraged the authorities to take measures to sustain and use more effectively the flow of these remittances. Strengthened fiscal discipline and tighter monetary policy have drastically reduced inflation, and the somoni’s exchange rate has remained remarkably stable since 2002. The Board deemed appropriate the current managed float exchange rate regime with intervention limited to smoothing short-term volatility, and it encouraged the authorities to broaden the range of monetary instruments.

Since 2002, strong growth in tax revenues and continued expenditure restraint have contributed to small fiscal surpluses, and measures to improve the external debt profile have halved the debt-to-GDP ratio. Nevertheless, debt management will need to improve further and private sector external debt, including that of the cotton sector, should be recorded and monitored.

(percent change)
Real GDP10.
(percent of GDP)
General government balance
including Public Investment Program-3.1-2.4-1.8-2.7-4.5
excluding Public Investment Program-0.1-
Total public sector external debt98.484.466.239.738.5
Data: IMF staff report, March 2005.
Data: IMF staff report, March 2005.

Progress on several key reforms in Tajikistan’s poverty reduction strategy has been slow. Weaknesses in the business and governance environment need to be addressed to strengthen the development of the private sector, and obstacles to greater competition removed. Measures are required to improve the financial viability of the energy sector. Local government interference in agriculture needs to be eliminated and access to financial services improved, while the debt overhang in the cotton sector needs to be resolved. Although initial reform measures have been implemented in education and health care, the remaining agenda for public administration reform is substantial.

For more information, refer to IMF Public Information Notices No. 05/56 (Singapore), No. 05/42 (Tajikistan), and No. 05/57 (Cameroon) on the IMF’s website (

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