Republic of Tajikistan
Staff-Monitored Program

The proposed Staff-Monitored Program (SMP) in Tajikistan includes a balanced budget objective with a view to securing the inflation goal. While public financial management has improved, there is an agreement that monitoring and corporate governance of state-owned enterprises should be enhanced. Monetary policy will aim at containing inflation by targeting reserve money while building up official foreign exchange reserves. To mitigate risks of future debt problems, the program includes a well-defined and cautious debt strategy. The authorities are taking steps to reinvigorate their cotton sector reform efforts.

Abstract

The proposed Staff-Monitored Program (SMP) in Tajikistan includes a balanced budget objective with a view to securing the inflation goal. While public financial management has improved, there is an agreement that monitoring and corporate governance of state-owned enterprises should be enhanced. Monetary policy will aim at containing inflation by targeting reserve money while building up official foreign exchange reserves. To mitigate risks of future debt problems, the program includes a well-defined and cautious debt strategy. The authorities are taking steps to reinvigorate their cotton sector reform efforts.

I. Introduction and Background

1. On March 5, 2008, the Executive Board met to discuss the recent misreporting episode.1 Directors agreed that the provision of inaccurate data to the Fund—involving the level of international reserves and net domestic assets of the National Bank of Tajikistan (NBT), and the issuance of directed credit by the NBT—over the past six years had seriously undermined the credibility of the authorities with IFIs and other donors. They supported the Managing Director’s recommendation that Tajikistan repay early the three noncomplying disbursements (amounting to SDR 29.4 million) that were not discharged under MDRI relief. Moreover, Directors noted that the authorities would need to take decisive actions to restore credibility and resume the path of policy reforms, with most supporting the idea of putting in place a Staff-Monitored Program (SMP) to run in parallel with a proposed special audit of the NBT. The Executive Board did not require any further remedial action be taken by the Tajik authorities with respect to the breach of obligations under Article VIII, Section 5 as a result of the misreporting.

II. Recent Economic Developments

2. While growth accelerated in 2007, inflation also surged to its highest level since 2003. Although real GDP grew by 7.8 percent in 2007 (compared to 7 percent in 2006), driven mainly by remittance-financed demand in the services and construction sectors, it slowed sharply in the first quarter of 2008 (to 3.2 percent year-on-year) as the country was hit by harsh winter conditions and related shortages in electricity supplies.2 As of end-March 2008, inflation remained stubbornly high at about 20 percent, mostly reflecting a surge in international food and energy prices, but also a loose monetary policy stance in 2007. More recently, reflecting a surge in remittances inflows and tighter financial policies in early 2008, the somoni has come under pressure to appreciate, allowing the NBT to replenish its reserves to some degree.3 Nevertheless, the reserves of the NBT are now largely encumbered (see paragraph 5).

3. Budget targets were met with some margin in 2007. With a strong tax revenue performance—mostly reflecting rapid import growth and higher than planned inflation—and spending in line with the budget, the budget recorded a surplus of about 1½ percent of GDP in 2007 (excluding the externally financed Public Investment Program (PIP)), compared to a deficit target of 1 percent of GDP.4 While the fiscal overperformance led to a significant accumulation of government deposits at the NBT, reserve money growth remained high as the NBT issued large amounts of credit to the cotton sector.

4. The strong revenue performance appears to have spilled over into early 2008, mostly reflecting very high consumption-related tax revenue collections linked to remittances inflows. The 2008 budget approved last November is moderately expansionary, to allow for more transparent financing of the cotton sector, support payments to farmers, and a 40 percent increase in the wage bill. While the original aim of the authorities was to target a deficit of ½ percent of GDP (excluding the PIP), the strong revenue performance so far could allow for a tighter stance.

5. The misreporting episode shed light on a number of serious external vulnerabilities and structural weaknesses. As part of the misreporting assessment process, staff learned from the authorities that, in order to obtain financing for the cotton sector, the NBT issued written guarantees to foreign creditors and also pledged its reserves as collateral by depositing its reserves at the creditor banks. As of March 2008, the NBT had issued about $70 million in the form of written guarantees, while total NBT pledges amounted to about $240 million. This compares to gross foreign assets, as reported to the Fund, of about $385 million. Therefore, import reserve coverage is now very low, at about half a month of imports. Moreover, these previously unreported debt obligations ($310 million) carry a short maturity (between three and six months) and thus require frequent rollovers.5 6

6. Progress in structural reform has been uneven:

  • While the banking sector appears well-capitalized and liquid, last year’s FSAP missions noted that the supervisory framework is highly susceptible to political influence. Moreover, even before misreporting came to light, the FSAP team stressed that the NBT was insolvent and that its autonomy and governance required significant strengthening (Box 1).

    Tajikistan: Central Bank Autonomy and Governance

    The autonomy and governance of the National Bank of Tajikistan (NBT) require considerable strengthening, including in the areas of:

    • Financial autonomy. The NBT should be appropriately capitalized to ensure its financial independence, but not before its involvement in commercial activities stops. The NBT is currently insolvent, largely the result of undertaking quasi-fiscal obligations, which could grow if the cotton sector defaults on its external obligations.

    • Terms of appointment and removal of board members. The NBT chairman and his deputies should be appointed for fixed terms, which should not coincide with the electoral cycle. Moreover, the reasons for their dismissal should be explicitly outlined in the law.

    • Conflict of interest. Clear provisions covering conflicts of interest should be introduced in the law. Specifically, while the central bank law does state that board members and other NBT employees may not represent any business interest that conflicts with their official obligations, there are no provisions on what constitutes conflict of interest, how the central bank monitors possible conflicts of interest of officials and staff, and which sanctions should be applied in the case of violations.

    • Disclosure of beneficial ownership. The law should require official identification and disclosure of beneficial owners of registered companies, including financial institutions. Lack of public disclosure of significant shareholders of financial institutions and of legal definitions for connected business interests and beneficial ownership are key obstacles to good governance, the prevention of conflicts of interest, and implementation of prudential norms (e.g.; limits on connected party lending).

  • There has been some progress in improving the finances of the energy sector, but a large agenda remains. Gas tariffs are currently at cost recovery levels, and gas and electricity collection rates for most groups of consumers have improved. Nevertheless, electricity tariffs, which have been adjusted considerably in the last two years, are still below levels that would make the electricity sector financially viable, leaving the state-owned electricity company, Barki Tajik, in an uncertain financial situation.7 Moreover, regulatory weaknesses in the electricity sector continue to undermine its significant potential.

  • The recent misreporting episode exposed fundamental shortcomings in land reform efforts. Even though most state and collective farms have been dismantled and a significant number of land share certificates issued to private farmers, restructured farms are still subject to state control over production and harvesting decisions, particularly in the cotton sector. Under the current system, most farmers are forced to grow cotton rather than other crops. Moreover, financing for the cotton sector is provided by politically powerful “investors” that also control the supply of inputs and own most of the cotton ginneries. As a stop-gap measure, in January 2008 the government put in place a cotton financing mechanism that uses budget funds (130 million somoni) to be onlent to farmers through commercial banks with low margins.8

7. While budget reporting has improved significantly, efforts to monitor and enhance the corporate governance of state-owned enterprises are still lacking. As noted in the 2006 fiscal ROSC, the operations of key state-owned enterprises remain beyond the control of the ministry of finance, their owner. Currently, the ministry of finance lacks the appropriate supervisory framework to monitor the financial operations of even the largest state-owned companies. Moreover, these enterprises have no public disclosure requirements and their financial statements are not audited by any of the major internationally recognized auditing firms. Most worrisome is that the financial operations of the aluminum company (Talco), the largest SOE in Tajikistan, remain nontransparent.

III. Program Discussions

8. The authorities agreed with staff that the main objectives of the SMP should be twofold:

  • To reestablish their credibility by addressing the governance and management problems at the NBT. Key policy measures in this area relate to the process of conducting a special audit of the NBT and other involved parties agreed to by President Rakhmon in his letter to the Managing Director dated February 2, 2008 (Box 2). Draft terms of reference for the audit were prepared in consultation with FIN (Box 3) and the authorities agreed them with the mission. The program also includes measures to strengthen the autonomy and governance of the NBT outlined in the recent FSAP aide memoire, including through the introduction of appropriate amendments to the central bank law.9 In addition, in order to improve transparency in other government operations, the authorities agreed to address long-standing shortcomings in the corporate governance and monitoring of the largest SOEs.

    Special Audit of the National Bank of Tajikistan

    In order to address the problems that led to the misreporting, a special audit of the National Bank and other involved parties will be conducted by a reputable international auditing firm. The special audit is expected to:

    • Assess the effectiveness of the governance structure and control environment at the NBT, with a view to making specific recommendations on steps that should be taken to prevent recurrence of misreporting.

    • Verify the revised data reported to the Fund and establish a reliable foundation for the future provision of data to the IMF, and in particular, review the transactions involving balances where information was withheld from both the IMF and the external auditor.

    • Make transparent all financial operations of the NBT involving off-balance sheet transactions, such as pledges of international reserves, issuance of guarantees, and extension of domestic credits to Kredit Invest.

    • Review the financing transactions in relation to Kredit Invest, confirm the legitimacy of payments to third parties by Kredit Invest, and ascertain Kredit Invest’s total liabilities.

    • Review the decision-making process at Kredit Invest with a view to determining how financing was allocated to cotton investors and how interest rates and other repayment terms were determined, and verify whether the contractual obligations of the cotton investors to Kredit Invest have been honored.

    The audit is expected to last 6–8 months. Interim reports by the auditors will be shared with Fund staff and the audit’s key findings will be made public.

  • To provide a framework for macroeconomic stability, taking into account existing policy constraints. Given the current low level of reserves and the serious limitations on the flexibility of monetary policy imposed by the insolvency of the NBT, the authorities’ macroeconomic policy strategy relies on a prudent fiscal policy stance to restore stability in the short term. To address medium-term concerns about the increased risk of debt problems, the authorities’ program puts in place a well-defined and cautious debt strategy.

    Status of Safeguards Issues

    A FIN staff team visited Rotterdam and Dushanbe in March to: (i) follow up on the work of PricewaterhouseCoopers (PwC) in their external audits of the NBT, and (ii) determine the terms of reference for the special audit of the NBT and other related parties. Key findings were as follows:

    • The previously misreported domestic credits to the cotton sector had largely been financed through issuance of currency. These loans, and the corresponding increase in currency in circulation, were not recorded in the NBT’s accounting records made available to the internal and external auditors. As of November 2007, these credits amounted to approximately 800 million somoni (US$ 232 million).

    • PwC conducted the external audits of the NBT in accordance with International Standards on Auditing, which require the auditor to obtain third-party confirmation of bank balances and any pledges thereon. The existence of pledges and guarantees were not discovered by PwC because: (i) the relevant information was withheld by the NBT; and (ii) the correspondent banks did not disclose these items during the bank confirmation process. The audit firm has subsequently confirmed these points in writing.

    • It is expected that PwC will finalize the 2006 and 2007 annual audits once the special audit of the NBT is concluded.

    Prior to consideration of a possible new PRGF arrangement by the Executive Board, the special audit of the NBT would need to be completed. An external audit of the financial statements for the year ended April 30, 2008 would need to be completed without delay. A new safeguards assessment of the NBT will also have to be completed by no later than the first review of such an arrangement.

A. Macroeconomic Framework for 2008

9 The program’s macroeconomic framework for 2008 envisages a slow down in growth—to about 5 percent—and targets only a limited reduction in the inflation rate—to 15 percent per annum. The recent weather-related problems are likely to have a negative effect on economic activity and inflation performance during much of 2008. Specifically, the agricultural sector is likely to underperform as it was hit particularly hard by frost. Industrial production growth, after coming to almost a complete halt in the first quarter, is likely to recover with improving energy supplies. Consumer price inflation is targeted to decline, but remain in double digits, largely owing to significant losses in agricultural and food production, further adjustments in electricity and gas tariffs, and the continuing upward trend in international food and fuel prices. Excluding imports of goods and services related to projects financed by China, the current account deficit is expected to stay at around 5 percent of GDP in 2008. The program assumes that the flow of remittances will ease somewhat during the remainder of 2008, but will remain above the 2007 level. Gross reserves are targeted to increase to about $170 million, or about 3 weeks of imports.

B. Fiscal Policy

10. The proposed program includes a balanced budget objective with a view to securing the inflation goal. While the 2008 budget targets a small fiscal deficit, the authorities agreed with staff that, given the limited flexibility in monetary policy, it would be prudent at this point to make use of the revenue overperformance so far in 2008 and aim for a balanced budget. Given the fiscal overperformance in 2007, aiming for a balanced budget will still allow for an increase in real expenditures, including for higher support payments to farmers for the acquisition of seeds, machinery and fertilizers (0.2 percent of GDP); an increase in real wages—from their still very low level—to forestall a persistent exodus of qualified personnel (0.5 percent of GDP); and—for the first time—to provide financing to the cotton sector transparently through the budget (0.9 percent of GDP).

11. While public financial management has improved, there was agreement that monitoring and corporate governance of state-owned enterprises should be enhanced, along the lines of the recommendations of the 2006 fiscal ROSC. Therefore, the program incorporates steps to address some of the existing shortcomings, including through the creation of a special monitoring unit at the ministry of finance and the tendering for external audits of Talco and Barki Tajik, whose operations could be both a major untapped source of tax revenues and hitherto hidden contingent liabilities.

C. Monetary and Exchange Rate Policies

12. Monetary policy will aim at containing inflation by targeting reserve money while building up official foreign exchange reserves. Under the program framework, reserve money growth will be targeted to slow sharply, to around the projected growth rate of nominal GDP, implying no change in velocity. Making room for the accumulation of international reserves will limit the scope for a drawdown of government deposits at the NBT consistent with the fiscal program and will leave no room for any further directed credit from the NBT to the private sector. Moreover, given uncertainties about real money demand, the authorities agreed that, should signs emerge that inflation is accelerating, the NBT will respond by adjusting its reserve money target and tightening monetary conditions through an increase in the sales of its own bills.10 The NBT also committed to supporting the inflation objective by intervening in the foreign exchange market only to limit excessive short-term fluctuations in the exchange rate and to ensure that targeted reserves gains are achieved.

D. Debt Strategy

13. In order to mitigate risks of future debt problems, the program includes a well-defined and cautious debt strategy. This involves:

  • No new contracting or guaranteeing of nonconcessional debt.

  • A commitment that any new concessional foreign debt disbursement over the next three years will be consistent with the government’s borrowing plan already approved by Parliament in January 2008.

  • Strengthening the authorities’ debt data management framework by establishing, with assistance from FAD, a contingent liability reporting regime to cover state-owned enterprises, public institutions and the NBT.11

14. This debt strategy should serve to stabilize the external public and publicly guaranteed debt-to-GDP ratio in the medium-term at about 40 percent. The authorities accepted the need for this limit, but stressed that it would could constrain their ability to finance urgently needed investments in new hydroelectric power plants, which are needed to address persistent energy shortages (which were clearly exposed during the recent severe winter) and eventually allow for electricity exports. While mindful of the need to invest in this critical sector, staff urged the authorities to look first into the possibility of attracting nondebt creating inflows (especially foreign direct investment) to meet these financing needs, and encouraged the authorities to continue to pursue the structural reforms needed to make the sector financially viable in the medium term.

E. Structural Policies

15. The authorities are taking steps to reinvigorate their cotton sector reform efforts. In consultation with the World Bank and the Asian Development Bank, they are in the process of designing and implementing a comprehensive strategy to deal more permanently with the long-standing problems of the sector (Box 4).

F. Program Monitoring and Risks

16. The program will run from June through December 2008 and comprises quantitative indicative targets and structural benchmarks for end-September and end-December 2008. Reaching understandings with staff on the terms of reference for the special audit and launching the selection process for conducting the special audit were prior actions for seeking approval of the SMP from Fund management. There will be two reviews of the program, one in October 2008 and the other in January 2009. The first review will focus mainly on assessing progress in the conduct of the special audit of the NBT.

17. The key risk to the program is the possibility of delays in completing the special audit of the NBT. Avoiding delays will require full cooperation by the authorities with the auditors, to provide a clear signal of their commitment to increase the transparency in the operations of the NBT. Furthermore, while staff welcomed the increased transparency of the new cotton financing scheme, its current design could entail significant risks to the financial position of the commercial banks involved in it, particularly as they are shouldering all of the credit risks in dealing with already financially overburdened farmers.

Cotton Sector Reforms

Tajikistan’s cotton sector has seen a steady decline in productivity and profitability. The incentive structure and lack of efficient regulatory framework allowed cotton processors and traders (investors) to operate as monopsonists in the domestic cotton market and monopolists in providing financing and inputs to farmers. As a result, Tajikistan is faced with two pressing issues: enhancing the viability of the sector and resolving the existing stock of debt.

On March 5, 2007 the Government of Tajikistan issued Decree 111, which addresses distortions in cotton production, including most importantly issues of freedom to farm and ability to use land rights as collateral. Specifically, the decree deals with issues of a) farm debt resolution; b) termination of government interference in cotton production, processing and sale; c) improvements in cotton marketing, pricing and taxation; d) land reform, and e) improved access to rural financing. As regards the outstanding debt stock, they are currently in discussions with Kredit Invest’s external creditors seeking to improve the terms of the obligations that were guaranteed by the NBT, including through the extension of maturities and a reduction of interest rates. As part of the process of resolving Kredit Invest, they are also exploring the possibility of swapping some of its external obligations for assets that were used by domestic borrowers (cotton investors) to collateralize their own obligations to Kredit Invest.

The Asian Development Bank (ADB) and World Bank, as well as bilateral donors, continue to provide support for reforms in this sector:

  • ADB is currently preparing a Sustainable Cotton Program loan that focuses on market reforms that would ensure that farmers, processors and traders have freedom of choice in production and marketing decisions. This should lead to greater competition and improve the sector’s profitability, ultimately addressing the underlying problems that created the debt overhang.

  • The World Bank approved a Cotton Sector Recovery Project in 2007 through which the government is receiving advice on debt resolution options.

IV. Staff Appraisal

18. The authorities’ commitments under the program signal a willingness to break with the past. Specifically, the program provides opportunities to: a) finally create a modern central bank that can conduct effective monetary policy; b) restore the authorities’ credibility by cooperating fully with the special audit of the NBT; c) advance cotton reforms by establishing a more transparent financing mechanism; and d) crucially, open a window into the operations of large SOEs that have been a major drain on national resources.

Nevertheless, while these commitments are welcome and important, the key to the success of the program will be their full implementation. Staff will monitor closely the implementation of not only the letter, but also the spirit of the authorities’ commitments under the SMP.

19. It is important that the authorities follow through in their efforts to establish transparency in public institutions. Full cooperation with the specialist auditor will be paramount in this endeavor. The ToR for the special audit have been drafted with the aim of fully exposing those transactions that not only led to the misreporting to the Fund and put the finances of the country in a precarious situation. Nevertheless, getting to the root of the problem by identifying the governance failures that led to this situation is only the beginning. The staff urges the authorities not only to cooperate fully with the auditor—and disclose publicly all the results of the audit—but also to promptly take up the recommendations of the auditor once the work is concluded. Anything less will fail to restore the authorities’ credibility in the eyes of the international community. In this connection, unwavering political support for bringing more transparency to the operations of the largest SOEs is also critical.

20. Maintaining macroeconomic stability will require a prudent fiscal stance, enhancing the operational independence of the NBT, and a strong commitment to debt sustainability. Given the limited effectiveness of monetary policy, staff believes that the authorities’ commitment to a balanced budget is essential, despite some pressing expenditure needs. Should there be an unplanned overperformance in tax revenue collections, the authorities should save those additional resources with a view to improving inflation performance and facilitating the accumulation of international reserves. Furthermore, to strengthen the framework for monetary policy the authorities should press ahead with the reforms of the central bank legislation with urgency. Improving the legislative framework, including by properly defining the concept of conflict of interest and introducing appropriate sanctions, will go a long way toward establishing the NBT’s operational independence. At the same time, staff welcomes the planned tightening of monetary conditions, but cautions that this will not be achievable unless the policy of directed credits ends. Finally, while staff fully understands the government’s wish to avoid future energy shortages and its need to enhance the country’s electricity export potential, it encourages the authorities to focus on providing proper incentives for foreign direct investment to help meet the sector’s financing needs, and refrain from contracting new foreign debt obligations for this purpose, particularly at a time when debt ratios are worsening.

21. While staff welcomes the transparency of the new cotton sector financing scheme, its possible impact on commercial banks’ balance sheets is a concern. The contracts place the costs of loan default exclusively on the banks, in a situation where lending rates do not fully reflect such risks. To safeguard the financial position of the banks involved in this scheme, staff encourages the authorities to introduce, as soon as possible, performance-based management contracts for banks to provide strong incentives for them to collect the outstanding sums without unduly penalizing them for delinquencies. Moreover, to enhance the profitability of the cotton sector and thus reduce credit risk for commercial banks, the authorities should vigorously resume the path of cotton sector reform with the assistance of the World Bank and the Asian Development Bank, including by addressing the distortions created by the politically powerful investors and effectively granting farmers the freedom to farm.

Figure 1.
Figure 1.

Recent Economic Developments

Citation: IMF Staff Country Reports 2008, 197; 10.5089/9781451837148.002.A001

Sources: Tajik authorities; and Fund staff estimates.
Table 1.

Tajikistan: Selected Macroeconomic Indicators, 2005–09

(Quota: SDR 87 million)

(Population: 7 million, 2007)

(Per capita GDP: US$561; 2007)

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Sources: Data provided by the Tajikistan authorities; and Fund staff estimates.

Private investment and savings are estimates. Investment includes changes in stocks.

2006 overall balance excludes the MDRI debt relief that is reflected in grants. PIP expenditure includes investment financed by loans from China.

Actuals are based on official exchange rates.

Starting from 2005, the export and import figures reflect the transition to tolling arrangement for aluminum exports. Therefore, the export and import figures are lower than earlier years.

Gross reserves are net of the pledged deposits of the NBT.

Table 2.

Tajikistan: General Government Operations, 2006–09

(In percent of GDP; unless otherwise indicated)

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Sources: Tajik authorities; and Fund staff estimates.

2006 grants figure includes the MDRI debt relief of 3.5 percent of GDP.

Includes SM140 mn lending to the cotton sector in 2008.

2006 overall balance excludes the MDRI debt relief that is reflected in grants. The balance also differs from the officially reported outcome due to a difference in recording the conversion of an EU loan into a grant.

The historical financing figures in this table are used on estimated flows, not differences between end-period stocks.

Table 3.

Tajikistan: General Government Operations, 2006–09

(In millions of somoni; unless otherwise indicated)

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Sources: Tajik authorities; and Fund staff estimates.

2006 grants figure includes the MDRI debt relief of 3.5 percent of GDP.

Includes SM140 mn lending to the cotton sector in 2008.

2006 overall balance excludes the MDRI debt relief that is reflected in grants. The balance also differs from the officially reported outcome due to a difference in recording the conversion of an EU loan into a grant.

The historical financing figures in this table are used on estimated flows, not differences between end-period stocks.

Table 4.

Tajikistan: Accounts of the National Bank of Tajikistan, 2005–08

(End-of-period stock; unless otherwise specified) 1/

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Sources: National Bank of Tajikistan; and Fund staff estimates.

Based on accounting exchange rates: SM3.435=US$1, SDR 1 = US$1.65, and gold price of 978.3 per troy ounce (end-March 2008 rates).

Credits to private sector includes credits to the cotton sector.

Table 5.

Tajikistan: Monetary Survey, 2005–08

(In millions of somoni, end-of-period stock; unless otherwise specified) 1/

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Sources: National Bank of Tajikistan; and Fund staff estimates.

Based on accounting exchange rates: SM3.435=US$1, SDR 1 = US$1.65, and gold price of 978.3 per troy ounce (end-March 2008 rates).

Liabilities to cotton financiers related to domestic cotton financing.

Quarterly GDP divided by end-quarter broad money; four-quarter average.

Broad money divided by reserve money.

Table 6.

Tajikistan: Balance of Payments, 2005–2008

(In millions of US dollars)

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Sources: Tajik authorities; and Fund staff estimates.

Starting from 2005, the export and import figures reflect the transition to tolling arrangement for aluminum exports.

Includes accumulation of foreign currency balances by residents of Tajikistan.

Excluding electricity, which is on barter basis, and imports related to projects financed by China.

Data for 2006 exclude $99 million IMF repurchase under MDRI assistance.

Table 7.

Tajikistan: Medium-Term Balance of Payments, 2005–10

(In millions of US dollars)

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Sources: Tajik authorities; and Fund staff estimates.

Starting from 2005, the export and import figures reflect the transition to tolling arrangement for aluminum exports.

Includes accumulation of foreign currency balances by residents of Tajikistan.

Excluding electricity, which is on barter basis, and imports related to projects financed by China.

Data for 2006 exclude $99.2 mln. IMF repurchase under MDRI assistance.

Table 8.

Tajikistan: Medium-Term Macroeconomic Projections, 2005–12

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Sources: Tajik authorities; and Fund staff estimates.

2006 overall balance excludes the MDRI debt relief that is reflected in grants.

Defined as the external current account balance less the overall fiscal balance (including the PIP).

Starting from 2005, export and import figures reflect the transition to tolling arrangement for aluminum exports. Therefore, they show a sudden drop compared to earlier years.