Deeper economic reforms needed in Tajikistan — IMF

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DUSHANBE (TCA) — An International Monetary Fund (IMF) mission, led by Mr. Paul Ross, visited Tajikistan from May 17−30 and met with the country’s First Deputy Prime Minister Davlatali Said, Finance Minister Abdusalom Qurboniyon, Economy Minister Negmatullo Hikmatullozoda, and National Bank Governor Jamshed Nurmahmadzoda.

Tajikistan’s authorities and the IMF team held constructive discussions on Tajikistan’s recent economic developments, the economic outlook, and policy actions and structural reforms needed to support an inclusive growth agenda, Mr. Ross said in a statement issued at the conclusion of the mission. The IMF team commended the authorities for reforms implemented in the past two years and stressed that deeper reforms are needed.

“Since late-2014, Tajikistan’s economy suffered from external shocks, which affected economic confidence, reduced fiscal space and external buffers, and increased vulnerabilities. In 2017, with subdued external and domestic demand, fiscal consolidation and lower credit to the private sector, the IMF team projects real economic growth to slow, while the authorities project somewhat higher growth. Strong and sustained reforms are needed to lift growth over the medium term,” the statement said.

“Tajikistan’s authorities and the IMF team agreed on the importance of generating inclusive and job-rich growth to increase incomes and reduce poverty. The authorities and the mission agreed that generating inclusive growth will require prudent macroeconomic policies to lift economic confidence in addition to strong and sustained structural reforms. Regarding macroeconomic policies, Tajikistan’s 2017 budget appropriately targets a decline in the deficit. The authorities and the IMF team agreed that the deficit should gradually narrow over the medium term to assure debt sustainability. Also, the team welcomed the recent efforts to unify the official and market exchange rates and noted that a flexible exchange rate policy and supporting monetary policy — with greater sales of National Bank of Tajikistan (NBT) notes — would control inflation, restore confidence in the somoni, and help rebuild the reserves buffer.

“Banking reform is critical to reduce macro-financial vulnerabilities, support economic growth, and financial inclusion. The team supported the improvements made in banking regulation and supervision, monitoring of systemic banks’ asset quality and implementing resolution plans for two of them. Also, it welcomed the increase in financial inclusion. Further, it urged early action to strengthen the bank resolution and emergency liquidity assistance frameworks, measures to assure sustainable viability of the two systemic banks, and to develop strategies to address non-performing loans and improve transparency in this sector,” the statement concluded.

Sergey Kwan

TCA