Tajikistan Business Economy - The Times Of Central Asia

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Aviation

The State of Civil Aviation in Central Asia Post-Pandemic and Amid Russia Sanctions

The pandemic of 2020-21 took a toll on civil aviation worldwide, and Central Asia was no exception. However, since then and post-February 2022, the region’s leading economies - Kazakhstan and Uzbekistan - have improved passenger air transport through low-cost carriers and made themselves more attractive for air cargo. In addition, Russia is steadily exiting the market due to sanctions, whilst Beijing is looking to fill the void. Air cargo: Kazakhstan and Uzbekistan Less than a month ago, the Silk Road in the Sky—Kazakhstan Cargo Hub regional forum on cargo transportation and logistics took place. It was held under the auspices of the International Air Cargo Association (TIACA) with the support of Kazakhstan’s Ministry of Transport and the country’s Aviation Administration. The forum hosted talks between various organizations, with documents signed between Astana, Karaganda, and Aktobe airports with MNG Airlines, MSC Air Cargo, Coyne Airways, and Alpha Sky (Kazakhstan). Memorandums of cooperation were also concluded between TIACA and the airports of Aktau, Aktobe, Astana, Karaganda, Uralsk, and SCAT Airlines, as well as between TIACA and the Joint Authorities for Rulemaking on Unmanned Systems (JARUS). More than 300 participants from 30 countries attended the forum, representing organizations across the freight transport chain, including shippers, forwarders, ground service providers, airports, airlines, manufacturers, and IT service providers. According to the Civil Aviation Committee under Kazakhstan’s Ministry of Industry and Infrastructure, the cooperation of local companies with the international community, as well as their use of advanced technologies, is expected to boost Kazakhstan’s trade with the other countries of Central Asia by 2.4 times – from $6.3 billion to $15.0 billion – amid a $560 million increase in Kazakhstani exports. The Government of Uzbekistan, meanwhile, began looking into the idea of making the country a regional transshipment hub back in September 2022, when Central Asia was seeing an influx of emigrants from Russia, especially Russian men fleeing mobilization. The lion's share of Uzbekistan Airways cargo traffic represents China-Europe deliveries transiting through Uzbekistan. For these deliveries, the company has operated routes such as Tianjin–Athens, Hong Kong–Amsterdam, and Shenzhen–Chalons-Vatry (Paris), with plans to increase freight volumes with the routes Tashkent–Guangzhou–Tashkent (currently being implemented), Tashkent–Lahore–Tashkent (to be launched in 2025-26), Tashkent–Xi'an–Tashkent (launch scheduled for this year), Tashkent–Chengdu–Tashkent (planned for 2026), and Tashkent–Dhaka–Tashkent (to be launched in 2027). Foreign players have shown increased interest in Uzbekistan’s transit potential, as well. For example, Poland’s SkyTaxi has launched cargo transportation from China through Uzbekistan to Europe. The first plane landed in Tashkent back on June 11, 2022. Indeed, Tashkent Airport has gained importance as a transfer point for technical stops and refueling. On July 7, 2022, Azerbaijan’s Silk Way West cargo carrier made its maiden flight on the Baku–Navoi–Hong Kong route. The company delivers goods from Europe to Asia, as well as from the U.S. to Africa. In 2020, an open skies policy was introduced across all regions of Uzbekistan, giving international airlines access to the country’s airports and ground services. Meanwhile, Kazakhstan’s open skies policy was extended last year until...

Eurasian Development Fund: Funding for Rogun HPP Jeopardizes Other Projects

According to a report by the Eurasian Fund for Stabilization and Development (EFSD), the financing of the Rogun HPP is one of the main risks for Tajikistan's budget and debt sustainability. The report states that the possible increase in the construction cost for the hydroelectric power plant may lead to reduction of financing to other important infrastructure projects and social spending. Analysts emphasize that “in the face of uncertainty regarding funding sources, starting in 2025, the government of Tajikistan may have additional needs for budgetary support from international financial organizations.” As mentioned in the report, the share of investments in electricity, gas, and water networks increased from 33.5% in the first quarter of 2023 to 42.4% in the first quarter of 2024, due to the increased activity in the construction of the Rogun HPP. The Times of Central Asia previously reported that about 70% of the electricity will be exported to other Central Asian countries after the Rogun hydroelectric power plant (HPP) in Tajikistan reaches full capacity. Construction of the Rogun HPP began in 1976, but it was suspended in 1991 after the collapse of the USSR. In 2016, Tajikistan continued constructing 600 MW hydroelectric power stations, as outlined in the project, using its own resources as well as support from international funds and organizations. Two of the six aggregates are working now, and the third will start working in 2025.

World Bank Establishes Permanent Office in Tajikistan

The World Bank has opened a permanent representative office in Tajikistan this month. ASIA-Plus reports that Ozan Sevimli, who had been the bank's country manager for Tajikistan since 2021, has been appointed the head of the office. In Tajikistan the World Bank Group works to ensure reliable electricity and water supply, improve roads and transportation infrastructure, improve education and health care systems, increase food security, and create conditions for private sector growth and institutions of good governance and public administration. As part of his role, Sevimli will manage programs in Tajikistan being run by the International Bank for Reconstruction and Development, International Development Association, International Finance Corporation, and the Multilateral Investment Guarantee Agency in Tajikistan. This will provide a single point of contact for access to the full range of World Bank Group products and services. Upon his appointment, Sevimli commented: "Tajikistan faces challenges ranging from institutional challenges and constraints in human capital development to the negative impact of climate change on the economy and people's livelihoods. The combined leadership of the WB Group will enable a more holistic approach to projects."

EDB Identifies Key Risks for Tajikistan’s Economy

Analysts from the Eurasian Development Bank (EDB) have presented a macroeconomic forecast for Tajikistan for 2024-2026. In it they identify the main short-term risks for the country's economy. According to the forecast, the critical risks for Tajikistan come from outside. "High interest rates in developed countries and structural problems in China's economy may lead to a slowdown in global economic growth and lower prices for raw materials," the report says. This could reduce the demand for goods exported by Tajikistan. Another consequence of this scenario will be a reduction in remittances coming into the country, mainly from oil-exporting countries. This would lead to a slowdown in household consumption growth and a decline in non-state investment, pushing GDP growth below the equilibrium level. In such a development, fiscal policy, assistance from international financial organizations, and lower prices for imported food and energy will support the economy. Despite these challenges, EDB analysts forecast high growth rates for Tajikistan's economy: 8.0% in 2024, 8.2% in 2025 and 7.8% in 2026. This growth is due to strong domestic demand, higher-than-expected prices for gold and base metals exported by Tajikistan, and favorable remittance dynamics due to rising wages in the region. Until the end of this year, according to EDB economists' estimates, the slowdown in demand growth in external markets will have a restraining effect on the economy. This will negatively affect real exports and the inflow of remittances and investments into the country. However, as the authors of the forecast note, the growth of prices for metals exported by Tajikistan, especially gold, will balance this negative impact.

Tajikistan and China Tighten Strategic Partnership

On his state visit to Tajikistan on July 5, Chinese President Xi Jinping confirmed China’s unwavering support of the country’s independence, sovereignty, and territorial integrity, and ready to develop a comprehensive strategic partnership between the two countries, engaged in negotiations with Tajik President Emomali Rahmon in Dushanbe. Opening the meeting, Rahmon said that for Tajikistan, strengthening a comprehensive strategic partnership with China is a priority, and added that Dushanbe firmly supports the one-China principle and opposes any form of Taiwan independence. As reported by Rahmon’s press service, the leaders discussed expanding cooperation in trade and economy, as well as Chinese investment in industry, energy, transport, agriculture, digitization of the economy, and artificial intelligence. Today, over 700 of Tajikistan’s industrial enterprises, including mining and mineral processing, are financed by Chinese capital, and looking ahead, the leaders earmarked the joint production of green technologies, and in particular, electric cars, solar panels and smart electric grids, as promising areas for cooperation. Following the talks, the Chinese president told journalists that the two sides agreed to focus on high-quality Belt and Road cooperation, promote the synergy of the two countries’ development strategies, and assist each other's modernization drive. Xi also announced China’s readiness to increase its importation of quality products from Tajikistan and pledged support for boosting the country’s transit potential. Later in the day, the Chinese and Tajik presidents attended the inauguration of new parliament and government buildings in Dushanbe, built with China’s support. As testimony to the strong relationship between the two, Xi Jinping presented President Rahmon with the Friendship Medal of the People's Republic of China; the first time the award has been received by anyone outside China.

Tajikistan and Switzerland Strengthen Cooperation in Banking

A meeting between representatives of the economic bloc of Tajikistan and Switzerland was held at the International Monetary Fund and the World Bank's Constituency Group conference. As reported by Avesta.tj. , the Tajik delegation was headed by First Deputy Prime Minister Hokim Holikzoda, and the Swiss side, by Federal Minister of Finance Karin Keller-Zutter and Chairman of the Swiss National Bank Thomas Jordaan. Both sides expressed satisfaction with their now long-term cooperation. Over the past 25 years, the Swiss National Bank has significantly contributed to Tajikistan's development of essential aspects of its banking system, including managing international resources, monetary policy, and operational risk management. Focused on further cooperation, the agenda included attracting Swiss finance and modern technologies to develop other vital sectors of Tajikistan's economy.