Tajikistan Business Economy - The Times Of Central Asia

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Finance

Tajikistan Nears Full Transition to Ruble in Trade with Russia, As Bilateral Trade Surges

Tajikistan has nearly completed its transition to ruble payments in trade with Russia, with over 90% of transactions now conducted in Russian currency, according to Firdavs Tolibzoda, head of the National Bank of Tajikistan. This marks a significant shift from 2021, when trade between the two countries was evenly split between the ruble and the U.S. dollar. Tolibzoda highlighted that Tajik banks are working to minimize financial risks by primarily cooperating with Russian banks that are not subject to international sanctions. The shift away from the dollar in Tajik-Russian trade began after Western sanctions were imposed on Russia following its invasion of Ukraine. Over the past three years, Tajik exchange offices have no longer faced periodic shortages of U.S. currency, a problem that was common before the transition to ruble payments. In 2024, bilateral trade between Tajikistan and Russia is expected to reach $1.98 billion, reflecting a 15.6% increase from 2023. However, trade remains highly imbalanced. Russian imports account for 95.2% of total trade, with Tajikistan purchasing oil products and essential goods, while Tajikistan’s exports to Russia amounted to just $96 million, primarily consisting of vegetables, fruits, and mineral products such as ores and concentrates. Despite Russia’s dominant role as Tajikistan’s largest trading partner, China is rapidly catching up. In 2024, Russia accounted for 22.1% of Tajikistan’s total foreign trade turnover, while China’s share reached 21.8%. Trade with China grew by 30.1% over the past year, almost double the growth rate of trade with Russia, indicating a shifting dynamic in Tajikistan’s economic partnerships.

Sanctions

U.S. Urges Tajikistan to Enforce Sanctions on Russian Firms Amid Ongoing Compliance Review

The Tajik government has received an official letter from the United States requesting compliance with sanctions against several Russian companies operating in the country, Chairman of the State Committee on Investment and State Property Management Sulton Rakhimzoda announced at a press conference on February 11. According to Rakhimzoda, the U.S. has requested clarification on what measures Tajik authorities plan to take regarding the sanctions. “This is a sensitive topic, and it is currently under consideration,” he stated. He added that sanctions against Russian companies are not a new phenomenon and that businesses affected by the restrictions should already have mechanisms in place to adapt. “It is clear that sanctions impact companies to varying degrees. However, as far as I know, they have already developed strategies to operate under these conditions. These issues are also being discussed in negotiations with the government,” Rakhimzoda said. He noted that the Investment Committee does not oversee this sector directly, but that the relevant government agencies are handling the matter. Following the start of the conflict in Ukraine, the U.S. and the European Union imposed strict sanctions on several Russian enterprises. In January 2025, the U.S. Department of the Treasury sanctioned Gazpromneft Tajikistan along with its parent company, Gazprom Neft. Tajik authorities have stated that the sanctions will not affect oil product imports into the country. However, experts warn that the restrictions could eventually impact other companies cooperating with Gazpromneft Tajikistan.

Regional Cooperation

Tajikistan and Russia Discuss Resuming Rail and Bus Routes

Tajikistan and Russia are in discussions to resume passenger train service between Dushanbe and Moscow, as well as bus routes between cities in both countries. These services were suspended due to the COVID-19 pandemic. Tajikistan’s Minister of Transport, Azim Ibrohim, shared this information at a press conference in response to a question from TASS. He said the issue was discussed in Moscow during a meeting between the Tajik delegation and Russian Transport Minister Roman Starovoit at the CIS Coordination Transport Conference. “We addressed many transport-related issues and reached a full understanding. There were no unresolved matters, but some require time, including the Dushanbe-Moscow railway route,” Ibrohim stated. He added that discussions are ongoing, with a final decision expected soon. The minister also noted that rail service between Bishkek and Moscow resumed late last year. In addition to rail services, Tajikistan and Russia are working to expand bus connections. In mid-January, bus routes from Khujand to Novosibirsk, Tyumen, and Surgut were restored. Currently, passenger trains from Tajikistan — departing from Dushanbe, Kulyab, and Khujand — only operate to Volgograd. If negotiations succeed, the resumption of direct rail and bus links will further facilitate travel and trade between the two countries.

Economy

Kazakhstan Leads Central Asia in Average Salaries

Kazakhstan continues to hold the top position in terms of average wages among Central Asian countries, according to a study conducted by analysts at Ranking.kz. Wage Comparisons Across Central Asia Data from the Interstate Statistical Committee of the CIS reveals that as of September 2024, Kazakhstan's average nominal monthly salary stood at $817.20. This figure is nearly twice as high as in Uzbekistan ($437.80) and Kyrgyzstan ($411.20). Tajikistan trails significantly behind, with an average salary of just $242.80 - 3.4 times lower than Kazakhstan’s. Notably, the wage gap between Kazakhstan and Tajikistan would have been even greater if not for a significant increase in Tajik wages. Over the past year, nominal salaries in Tajikistan rose by 24.9%, while real wages increased by 21.1% - the highest growth rate in the region. In comparison, wage growth in Kazakhstan, Kyrgyzstan, and Uzbekistan was more moderate. Data on salaries in Turkmenistan remains unavailable as the country has not updated its wage statistics since 2023. Minimum Wage Comparison Kazakhstan also leads the region in terms of minimum wages. In 2024, the minimum wage in Kazakhstan is 85,000 KZT ($181.10). By contrast: In Uzbekistan, the minimum wage is $89.40. In Tajikistan, it is $54.90. In Kyrgyzstan, it is just $28.30. In Turkmenistan, the official minimum wage is reported as $402.90, based on the fixed exchange rate of 3.5 TMT per dollar. However, due to the country’s reliance on a "black market" exchange rate (approximately 19 TMT per dollar), the actual minimum wage is estimated to be much lower, around $74.20. Sectoral Analysis When analyzing nominal salaries by economic sector, the highest wages in the region are found in finance and insurance. In Kazakhstan, the average salary in this sector exceeds $1,700 - three times higher than in Tajikistan ($561.90). Workers in Kazakhstan's mining industry also enjoy high incomes. In Uzbekistan and Kyrgyzstan, the financial sector and IT industry offer the highest salaries. Meanwhile, in Tajikistan, relatively high wages are reported in the manufacturing and service sectors. Inflation and Its Impact Inflation remains a key factor affecting the real purchasing power of wages across Central Asia. According to the CIS Interstate Statistical Committee, the most significant price increases in 2024 occurred in the economically developed countries of the region - Kazakhstan and Uzbekistan. Uzbekistan: Inflation reached 7.7% in October 2024. Kazakhstan: Inflation stood at 6.6%. Kyrgyzstan: Inflation was lower at 4.2%. Tajikistan: The region’s lowest inflation rate was recorded at 3.2%. These inflation rates directly influence the population's purchasing power, even in countries with higher nominal salaries like Kazakhstan and Uzbekistan. Kazakhstan’s leadership in wages and minimum income underscores its position as the most economically advanced country in Central Asia. However, inflation and significant disparities in income distribution between sectors and regions remain challenges. While countries like Tajikistan are showing progress in wage growth, the overall gap in earnings between Central Asian nations continues to highlight economic inequalities within the region.

Economy

Central Asia’s Economic Growth to Reach 5% in 2025

The World Bank’s Global Economic Prospects report offers projections for economic growth, risks, and challenges across Europe and Central Asia (ECA), highlighting mixed outcomes for the region as a whole. Regional Outlook Economic growth across ECA is projected to slow to 2.5% in 2025, with a modest recovery to 2.7% expected in 2026. This deceleration is largely attributed to weaker economic activity in Russia and Turkey, two key regional economies. Excluding these two countries and Ukraine, growth in the rest of the region is forecasted to average 3.3% in 2025-2026. The recovery in these areas will primarily be driven by private consumption and investment, as inflationary pressures ease and monetary policies gradually become less restrictive. Despite these projections, significant risks remain. Global policy uncertainty and potential changes in trade policies could negatively affect trade flows, capital investments, and economic growth. Geopolitical tensions - particularly stemming from Russia’s invasion of Ukraine - and persistent inflation in the region could also pose serious challenges to stability. Central Asia: A Bright Spot Central Asia is expected to outperform the broader ECA region, with growth projected to accelerate to 5% in 2025 before softening to 4.2% in 2026. This growth will be driven by increased oil production in Kazakhstan, which will serve as a critical engine of recovery for the region. Remittances will also continue to play a key role, particularly for Kyrgyzstan and Tajikistan. These inflows provide vital support to household consumption and help improve current account balances. However, international sanctions on Russia and financial restrictions on cross-border transfers could push some remittance flows into informal channels, potentially limiting their economic impact. Long-Term Challenges While short-term recovery appears promising, the ECA region’s long-term growth potential remains subdued. Between 2022 and 2030, annual growth is projected to average just 3.0%, down from 3.6% in the previous decade. Several factors contribute to this slowdown, including labor shortages caused by low workforce participation rates, aging populations, and significant emigration, particularly from the Western Balkans. Education remains a critical area for improvement. Although ECA boasts relatively strong educational systems, issues such as declining quality in higher education and ongoing brain drain have hindered human capital development. Addressing these issues and improving education systems could help the region move closer to high-income economies in the long term. Conclusion While Central Asia’s projected growth for 2025 presents an optimistic outlook, the region - and ECA as a whole - faces significant headwinds. Structural challenges, geopolitical instability, and demographic pressures will require governments to adopt forward-looking policies to sustain growth and promote resilience. As inflation cools and monetary policies ease, targeted investments in education and workforce development could unlock new opportunities for long-term economic stability.

EBRD

EBRD Invests Record €2.26 Billion in Central Asia in 2024

The European Bank for Reconstruction and Development (EBRD) reached a record level of investment in Central Asia in 2024, contributing €2.26 billion to 121 projects across six countries in the region. This was nearly double the amount invested in 2023. Additionally, the EBRD attracted €784 million from co-financiers, bringing the total investment in the region’s economy to over €3 billion. Uzbekistan and Kazakhstan Lead in Funding Uzbekistan and Kazakhstan were the largest recipients of EBRD funding, securing €938 million and €913 million, respectively. These two nations ranked as the fifth and sixth largest destinations for EBRD investments globally in 2024. Other countries in the immediate region also benefited from significant funding, with Mongolia receiving €264 million, Tajikistan €88 million, and the Kyrgyz Republic €52 million. Focus on Sustainable Infrastructure and Green Economy The majority of EBRD investments in Central Asia supported sustainable infrastructure projects, accounting for 61% of the total. Another 24% was channeled to local banks to assist small businesses, women entrepreneurs, and youth-focused initiatives, as well as projects promoting climate resilience and resource efficiency. The remaining 15% was allocated to private-sector companies. In alignment with the Paris Agreement, 58% of EBRD investments in the region went to projects promoting a green economy. Milestones in 2024 The EBRD achieved several notable milestones in 2024: Total investments in Kazakhstan surpassed €10 billion. Uzbekistan reached €5 billion in cumulative EBRD funding. Both Tajikistan and the Kyrgyz Republic exceeded €1 billion in total investments since the EBRD began operations in the region 30 years ago. Landmark Projects The EBRD financed several groundbreaking projects in Central Asia during 2024, including: Uzbekistan: €59 million for a renewable hydrogen facility aimed at decarbonizing the fertilizer sector. Kazakhstan: €96.4 million for a new wastewater treatment plant in Aktobe, the largest municipal project supported by the EBRD in the region. Mongolia: €11.3 million to support the first green bond issued by a local bank. Investments in Energy Infrastructure Significant funding was also allocated to improving electricity grids across the region: In Kazakhstan, €252 million was used to construct 600 km of transmission lines. In Uzbekistan, €60.3 million supported the development of a 230 km transmission line in the Navoi region. In the Kyrgyz Republic, €14 million upgraded power infrastructure in Osh and Issyk-Kul. In Tajikistan, €31 million was allocated to improve a transformer in the Sugd region. Investments in Health and Transportation The EBRD also provided substantial funding for healthcare and infrastructure projects: Kazakhstan: €365 million for a hospital project. Uzbekistan: €216 million for a road and bridge project in the Khorezm region. Mongolia: €39.2 million for a hospital in Darkhan. Support for Small Businesses The EBRD continued its efforts to empower small businesses in Central Asia, providing advisory services to more than 450 small and medium-sized enterprises (SMEs). Over 8,000 SMEs benefited from training and mentoring programs. In Tajikistan, the EBRD launched its Star Venture initiative, allocating €28 million to 25 high-growth companies through agreements with local banks. The EBRD’s Legacy in Central Asia As the...