The economic outlook is cautiously optimistic, as healthy remittance
inflows will continue to support Tajikistan’s growth in 2013 and 2014,
stimulating private consumption, imports, and budget reven...
diversified industry and agriculture will result in more sustainable
economic growth, which is forecast at 6.5% in 2013 and 6.0% in 2014
(Figure 3.6.6). However, the economy remains vulnerable because of heavy
dependence on remittances.
Although continuing growth is expected, several factors heighten
uncertainty or limit growth prospects. The aluminum industry is likely
to slow further as production facilities continue to deteriorate and power
problems and input restrictions persist. Moreover, the volume of cotton and aluminum exports will remain sensitive to international prices. Growth will also depend on four factors: projected growth in
the Russian Federation; stability in regional trade and cargo transit; the amount of precipitation, which is essential for agriculture and hydroelectric generation; and political and social stability.
In addition, Tajikistan suffers from a poor investment climate and a weak financial sector. Despite improvement in some areas, Tajikistan ranks among the bottom fourth of all countries worldwide in the
World Bank’s Doing Business 2013 , with exceptionally low scores for dealing with construction permits, getting electricity and credit, ease of paying taxes, and trading across borders. When joining the World Trade Organization in March 2013, Tajikistan agreed to improve its trade regime and accelerate reforms to create a more transparent and predictable
environment for trade and foreign investment. Implementing these
reforms is essential to boost private investment. Inflation is expected to stay relatively moderate in 2013 and 2014,
in line with declining international food prices, though inflation could be
higher if food and fuel prices exceed projections. The inflation rate is
forecast to remain at 6.5% in 2013 and reach 7.0% in 2014 (Figure 3.6.7).
Tajikistan’s fiscal stance will be somewhat more expansionary
with planned higher expenditure, mainly for social spending and
infrastructure. The budget deficit is expected to widen to 2.5% of GDP in
2013 and then narrow again to 2.0% in 2014, while the state budget deficit
is projected at 0.5% of GDP in 2013 and 2014. Despite somewhat elevated
public debt, the government is likely to continue borrowing externally for
large infrastructure projects, mainly in energy and transport. The Public
Debt Management Strategy for 2012–2014 reaffirms the government’s
commitment to keep public and publicly guaranteed debt below 40% of
GDP, to ensure that new loans have a minimum grant element of 35%,
and to undertake cost–benefit analyses of large investments.
Monetary policy will need to strike a balance between supporting
Tajikistan’s economic recovery and ensuring price stability. The refinancing
rate is expected to remain between 6.5% and 7.5% in 2013 and 2014.
Money growth is projected to slow moderately, from 23.2% in 2012 to
about 18% a year in 2013 and 2014. The exchange rate is forecast to remain
relatively stable, supported by remittances, despite downward pressure
from weak export performance. Continued exchange rate flexibility and
close coordination with monetary and fiscal policies will be important to
maintain competitiveness and avoid shocks.
Sources: International Monetary Fund. 2011. World Economic Outlook database. September; Tajikistan State Statistics Agency. http://www.stat.tj (accessed 15 March 2013); ADB estimates.
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