2.1. Poverty in Tajikistan: current status, dynamics and principal problems

2.1.1. The status of poverty, dynamics and key tasks

Regardless of the method chosen to calculate this indicator, the overall poverty rate is clearly on the decline. Available data (from a calculation of the overall rate of absolute poverty in terms of income level and extreme poverty based on purchasing power parity (PPP) of US$2.15 and US$1.08 per day, respectively) show that the poverty rate declined from 83% in 1999 to 64% in 2003, and according to some preliminary data, to 57% in 2004. Extreme poverty was cut in half, from 36% in 1999 to 18% in 2003. In view of the growth trends, there is a strong likelihood that the poverty rate fell even further in 2005 and 2006. We will be able to determine the exact amount of the decline based on the results of the standard of living survey that is scheduled for 2007. The decline in poverty in 1999-2004 was driven in large degree by economic growth, which resulted from the achievement of macroeconomic, social and political stability in the country. In spite of these gains, however, Tajikistan is still the poorest country in the region, with a per capita GDP of US$337.5 in 2005.

Official payments (wages and pensions) were not always enough to lift households out of poverty. In connection with this, growth in household income from private farming plots, the raising of goats, sheep and other small livestock and remittances from abroad was an important factor contributing to the decline in the poverty rate in Tajikistan. The available data show that households whose income depends solely on official payments are more vulnerable to poverty than those whose income sources are somewhat diversified.

The decline in poverty did not occur uniformly at either the inter-regional or sub-regional levels. At the regional level the decline in poverty ranged from 12% to 26%. The Region of Republican Subordination (RRS) experienced the most rapid decline in poverty (26%), while the rates in other regions of the country were close to half that, with Dushanbe posting the lowest indicator at 12%. The sharpest drop in extreme poverty indicators occurred in Gorno-Badakhshan Autonomous Region (GBAO), which reported a decline of 33%.

Table 1

Dynamics of Poverty Reduction

Table 1

Dynamics of Poverty Reduction

Region	Population (2003)	PPP poverty rate in 2003 (US$2.15)	Proportion of total population living in poverty (2003)	Decline in poverty between 1999 and 2003	PPP extreme poverty rate in 2003 (US$1.08)	Decline in extreme poverty between 1999 and 2003	Inequality (2003)
GBAO	197,000	84%	4%	−13%	36%	−33%	0.30
Sogd	2,123,000	64%	32%	−15%	16%	−11%	0.32
Khatlon	2,169,000	78%	40%	−13%	27%	−22%	0.35
Dushanbe	630,000	49%	7%	−12%	12%	−1%	0.37
RRS	1,553,000	45%	17%	−26%	9%	−16%	0.31
Total	6,672,000	64%	100%	−18%	18%	−18%	0.35

View Table

Table 1

Dynamics of Poverty Reduction

Region	Population (2003)	PPP poverty rate in 2003 (US$2.15)	Proportion of total population living in poverty (2003)	Decline in poverty between 1999 and 2003	PPP extreme poverty rate in 2003 (US$1.08)	Decline in extreme poverty between 1999 and 2003	Inequality (2003)
GBAO	197,000	84%	4%	−13%	36%	−33%	0.30
Sogd	2,123,000	64%	32%	−15%	16%	−11%	0.32
Khatlon	2,169,000	78%	40%	−13%	27%	−22%	0.35
Dushanbe	630,000	49%	7%	−12%	12%	−1%	0.37
RRS	1,553,000	45%	17%	−26%	9%	−16%	0.31
Total	6,672,000	64%	100%	−18%	18%	−18%	0.35

The nature of the regional differences is based primarily on the different income levels, the cost of living and the overall level of socio-economic development of the various regions. There are also significant differences within individual regions of the country, which can be explained by the geographical features of the regions (low-lying areas, mountainous terrain), the proximity to borders, large cities or industrial centres, agricultural trends and so on. The revival of certain industrial enterprises had an impact on poverty reduction in Sogd Province; in GBAO, which is a remote, mountainous and sparsely populated region, humanitarian assistance, development of the private sector and an increase in private remittances played a role; in the RRS (where an aluminium plant is located), the development of industry, an increase in employment and expansion of the non-cotton sector of agriculture were important factors.

In terms of absolute indicators, however, the majority of poor people live in Khatlon and Sogd provinces, which account for 65% of Tajikistan’s total population. These regions have 72% of the total poor population and 75% of the population living in extreme poverty, and this highlights the importance of focusing poverty-reduction efforts on these two provinces, which are the country’s most densely populated areas.

In spite of the fact that poverty reduction in rural areas is proceeding at a faster pace than in urban areas, poverty continues to be a predominantly rural phenomenon. In 2003, 65% of the rural population was living on less than US$2.15 per day in terms of PPP, while in the cities this figure was 59%. Between 1999 and 2003, however, there was a greater decline in the poverty rate in rural areas, by 19%, than in urban areas, where it fell by 14%. In 2004 the gap between urban and rural poverty continued to shrink, and the difference is now negligible (estimates show an urban poverty rate of 58% and a rural poverty rate of 57%). Poverty in urban areas is tied more to a lack of jobs and the wages earned in the formal economy, while rural poverty is linked to low income levels, particularly in agriculture, as well as inadequate access to basic social services (education, health care, water supply, etc.).

The effect of economic growth on poverty is greater in rural areas. More than 70% of Tajikistan’s population and a large share of the poor population lives in rural areas. The elasticity of the poverty rate with respect to economic growth is higher in rural areas than in urban areas, with figures of −0.71 and −0.61, respectively. On the whole, this would indicate that the influence of structural transformations in agriculture, particularly in cotton production and land reform, has a potentially greater impact on poverty.

Demographic indicators have a direct effect on the poverty rate. Indicators such as household size, the number of children and the gender and age of household members can sometimes be key factors in determining the incidence of poverty. While the average poverty rate for the country as a whole is 64%, the risk of poverty in large households is twice as high as in households with two or fewer children. Rapid population growth (10% over the past seven years) puts strains on the education, health care and social welfare systems, which are already overburdened. The demographic factor also has a major impact on the labour market, where there are already signs that supply is outstripping demand.

In addition to improving the gender equality situation, there are still pressing issues related to equal access for men and women to education and land use, to the decision-making process and to employment. Recent research shows that there are no significant differences between households that are headed by men and women. This is true for both urban and rural households. At the same time, participation by women in the labour market, particularly the formal labour market, remains low, especially in rural areas. In connection with this, in 2004 employment among men was twice as high as among women. On average, in 2004 income earned by men was almost 1.5 times higher than women’s income. There is also a serious gender gap in school attendance: in rural areas girls drop out of school at twice the rate as boys, and in urban areas at three times the rate. By the age of 18, for example, only 40% of boys and 10% of girls are still in school.

2.2. PSRP: lessons learned

The main goal of the Strategy that was adopted for 2002-2006 was to increase the population’s real income and to provide for a fair distribution of the results of economic growth. The key directions of the PRSP were: (1) the promotion of rapid, socially equitable, labour-intensive and export-oriented economic growth; (2) fair and effective delivery of basic social services; (3) targeted support for the poorest segments of the population; (4) good governance; and (5) improved security.

Overall, the results of the implementation of the PRSP are unequivocal. Despite some progress in macroeconomic management and the development of legislation, structural reform measures were not fully implemented. The PRSP did not manage to produce high-quality results in a timely manner. For example, public access to basic social services, as one of the factors of successful poverty reduction, remains quite limited.

The maintenance of macroeconomic stability was a key aspect of the poverty reduction process within the framework of the PRSP. The goal of the Strategy was to achieve growth in real GDP of 6% per year in 2002-2005, while lowering inflation to an annual rate of 5%. The sustainability of external debt servicing was a focus of particular attention in the PRSP.

There was dynamic economic growth during the period covered by the PRSP, averaging 9.5% per year. Starting in 2003, the dependence of economic performance on cotton and aluminium production eased somewhat thanks to output in the non-cotton agricultural sector, as well as growth in the share contributed by the service sector to GDP. Economic growth was also linked in part to an increase in domestic demand resulting from remittances from citizens working abroad. In spite of fiscal constraints, the government increased spending on the social sector, and in particular on education, health care and social welfare. Although the funding allocated was insufficient, the social sphere accounted for 40.5% of the budget in 2005, which represented 8.7% of GDP. In addition, the decline in external debt to 31% of GDP in 2005 helped reduce the budget deficit.

The main lessons learned from the PRSP were that: (1) the process of the drafting and implementation of the PRSP was somewhat isolated from other activities; (2) the fundamental principles and methodology of the PRSP were not defined clearly enough; and (3) there was not enough coordination and harmonization of donor activities.

1. The isolation of the PRSP process. In spite of the fact that the PRSP was adopted as one of the country’s fundamental strategic documents, the process of its implementation was not integrated into the activities of government bodies in institutional, organizational and financial respects. Another important lesson is that the PRSP was frequently viewed as a document that called for one-time measures, rather than one that described and reflected an ongoing process aimed at achieving the poverty reduction goals that had been set.

From an institutional standpoint, the function of PRSP implementation and progress assessment was not fully identified within the functions and structure of government bodies at all levels. Instead of the gradual integration of this function, new bodies were frequently created that were financed by funds from one donor or another and that were not sustainable from either an institutional or financial standpoint. The establishment of the PRSP Monitoring and Assessment Division within the Executive Administration of the President of the Republic of Tajikistan can be viewed as the first step towards providing institutional backing for the PRSP implementation process. The “injection” of the PRSP process, however, needs to be viewed from a comprehensive perspective, taking into account adequate financial support for implementation of the process and a clear division of labour among the governmental and non-governmental structures that are involved in the process. Frequently the priorities, goals and tasks of sectoral and regional programmes or strategies did not correspond to the provisions of the PRSP.

The status of the PRSP was not sufficiently clear in legal respects, and this resulted in different readings regarding the implementation of its provisions. The legal status of the PIP and Medium-Term Budget Framework (MTBF), which should serve as a sort of link between the PRSP and government spending, is also in need of clarification.

In the organizational context, the legislative and other regulatory legal acts that have been adopted are not focused enough on achieving the PRSP goals and on its monitoring and assessment. Furthermore, gains in the implementation of the PRSP were not utilized to shift the focus of the policies being pursued or as criteria for evaluating the performance of government bodies.

It turned out to be virtually impossible to achieve the financial integration of the PRSP with the state budget due to differences in the principles that form the foundations of the PRSP and the budget system. The PRSP, as an instrument of government policy, was designed according to the sectoral principle, while the country’s budget system is organized on a regional basis. The public investment sphere, which is financed by both external sources and the country’s own budget funds, could have been integrated more successfully with the PRSP, since the process of planning and implementation of both the Public Investment Programme and the Centralized State Investment Programme was based for the most part on a sectoral approach. One of the obvious facts pointing to a “gap” between the PRSP and the PIP, which is financed primarily by multilateral donors, is that the process of surveying project implementation, which is performed by the government on a regular basis in conjunction with such international financial institutions as the World Bank and the Asian Development Bank, is not coordinated with the process of evaluating progress in the implementation of the PRSP, which also receives a significant amount of funding from external sources.

2. PRSP principles and methodology. One of the key unresolved issues concerning the PRSP is the lack of methods for identifying interconnected and interdependent general and sectoral goals and priorities, and insufficient clarity in defining the principles for the development and implementation of the PRSP and other sectoral and regional programmes. The definition of poverty and its statistical infrastructure also need to be coordinated. For example, the poverty line recognized by the government needs to be defined, along with the methodology for conducting statistical surveys of the standard of living, including the identification of the most vulnerable segments of the population. The methodology and process for the drafting and implementation of the PRSP are also in need of coordination, in particular with regard to such important aspects as the methodology for prioritization and calculating the cost of measures, consulting with the public, providing for independent progress assessments and feedback, etc.

3. The coordination and harmonization of donor activities has turned out to be a difficult task for both the government and donors. For example, the Donor Coordination Council has been in operation in Tajikistan only since 2006. The coordination of donors at the level of country assistance strategies, policies and projects began to improve only toward the end of the implementation of the 2002-2005 PRSP. In spite of the fact that donor programmes on the whole were not inconsistent with the PRSP, at the project level the alignment with PRSP goals and priorities was still insufficient. In the majority of cases this is due to internal requirements or conditions imposed by the donors themselves. To some degree, this is the result of objective factors, such as an improvement in the overall situation in the country, the development of major investment projects, as well as a change in external factors that have led to an increase in donor activity in the country.

The harmonization of procedures employed by donors, in particular international financial organizations, at the country level has still not produced the desired result. The adoption of the Paris Declaration on Aid Effectiveness (March 2005) provided a needed impetus for this process, however. At the same time, lack of clarity from the standpoint of identifying a government body responsible for dialogue with donors on harmonization issues was also a factor contributing to slow progress in this area.

The government has analyzed the conclusions, deficiencies and lessons learned from the 2002-2006 PRSP and it has prepared relevant comprehensive approaches to addressing these issues within the context of the new PRS, as outlined below:

1. Isolation of the PRS process. In view of the Public Administration Reform Strategy (2006) that is being implemented, it is important to focus particular attention on the structural and functional integration of the PRS process into the activities of governmental bodies that have undergone reorganization, at both the central and local levels. Special attention will be given to functional, regulatory and legal and personnel support for the State Statistics Committee in the regular collection and analysis of poverty and employment data. Ministries (departments) and local government authorities should ensure timely and proper participation in the PRS implementation monitoring process, and the drafting and implementation of the relevant sectoral and regional programmes should be carried out in strict compliance with the provisions of the PRS.

With a view to establishing a more clearly defined legal status for the PRS, the advisability of making amendments and additions to the national legislation needs to be considered, in particular with regard to laws on socio-economic programmes, government finance, the state budget, local government, state statistics, etc., and the relevant sublegal acts need to be adopted as well. A permanent executive group of national and international experts needs to be established under the National Development Council (NDC) to provide for the organization and performance of these tasks, adjustments to the existing medium-range socio-economic programme and the elaboration of new programmes.

The political decision-making process and the adoption of significant measures and activities need to be focused in the future on the PRS as one of the key government policy documents. It would also be advisable, for example, to study the feasibility of evaluating the activities of the government, sectoral ministries and departments and local government bodies on the basis of their achievement of the PRS goals that have been set, in addition to other criteria.

It should be possible to overcome financial isolation in stages. First the process of the compilation and implementation of the PIP and CSIP needs to be oriented entirely toward the goals and priorities of the PRS. It will also be important to ensure that the drafting of the PIP and CSIP is an open and clearly defined process, with a view toward their future consolidation. Over the medium term, and as a pilot programme, it would be advisable to introduce MTBF principles, which shift the budget process to a sectoral basis. It will also be necessary to link the process of tracking the performance and effectiveness of government projects financed by donors to the PRS monitoring and assessment process. Over the short term, this can be achieved through the participation of government bodies, which are responsible for the monitoring and assessment of the PRS in the relevant sector, in the portfolio management process for projects financed from external sources. The monitoring and assessment systems that are in place at the project level also need to be consolidated according to the sectoral principle, with a focus on achieving PRS goals.

2. The PRS principle and methodology. In view of the practically unlimited needs and the limited resources available to the country, it would make sense to adopt the principle of focusing the goals and measures of future Poverty Reduction Strategies on the NDS and the available internal and external resources. It would also be advisable to direct the PRS above all toward ensuring sustainable economic growth, taking into account the socially optimal distribution of the results of this growth among the population. Within the context of the implementation of the initial stage of the national statistics system reform, it will be necessary to specify and approve a definition of poverty and employment, their signature characteristics and methodologies and processes for conducting surveys. Within the framework of a medium-term survey of PRS implementation, a PRS methodology that corresponds to the realities of Tajikistan, as a document and a process, needs to be presented to the government and all of our development partners for review.

3. Coordination and harmonization of donor activities. With a view to improving the effectiveness and productivity of donor coordination, the government will focus its attention on strengthening the dialogue with the Donor Coordination Council on the top priorities and the areas that lend themselves most easily to coordination, such as implementation, monitoring and assessment of the NDS and PRS, the implementation of reforms in the energy and cotton sectors, land reform, development of the private sector and education, health care and social welfare reform. A partner from the government will be identified to maintain a regular dialogue with the Donor Coordination Council.

Efforts to harmonize the activities of donors both at the level of country assistance strategies and programmes and at the level of various types of project implementation assessments, surveys and procedures, will be continued. For example, we would welcome the adoption of general country assistance strategies by international financial institutions. Donor assessments of the status of national procurement systems, financial reporting, government spending, the investment climate and so on, should become joint efforts. Procurement and financial management procedures will also be harmonized within the context of projects financed by international financial institutions. Measures will be undertaken to employ common structures for project implementation, while the establishment of separate structures created solely for specific projects will be avoided, and an effort will be made to gradually shift responsibility for the implementation of investment projects to the appropriate government bodies. A partner from the government will be identified to carry out harmonization measures.

4.1. Public administration reform

1. This sector encompasses tasks and measures set forth in Decree No. 1713 of the President of the Republic of Tajikistan “On Approval of the Strategy for Reform of the Public Administration System of the Republic of Tajikistan”.

Certain issues concerning financial management and institutional improvements are also reflected in measures outlined in the “Macroeconomic Development” section and other sectors of the PRS.

2. The Republic of Tajikistan government has undertaken certain measures to bring the public administration system into line with democratic principles and the requirements of a market economy. Effective institutional reforms are not keeping pace with the rapidly changing economic situation, however. The public administration system in place today is not effective enough and does not provide for the proper regulation of market processes.

3. The key problems in the public administration system are:

• the system for the management of national development processes is ineffective, there is not enough coordination of development programmes and plans and there is no clearly defined integration of priorities, goals and results, which also hampers the institutionalization of strategic priorities in state spending;

• the state is too heavily involved in economic activity and it does not perform the proper regulatory functions, which hinders growth in the private sector;

• the system that is in place for the management of government finances is not particularly effective, state spending on investment is fragmented and this spending is not linked closely enough to strategic priorities and development goals;

• the mechanism for the management and development of personnel potential is ineffective, and the level of motivation among public employees is low;

• functions and authorities are duplicated among different levels of government, and their areas of competence overlap; there is no clear distribution of functions related to providing services to the public and, as a result, the quality of these services is poor and they are difficult to access; the administrative and territorial division of the country is not uniform, and this is a barrier to the proper distribution of functions, authorities and resources;

• local self-government is poorly developed.

4. Historical experience shows that the process of fostering conditions conducive to economic development is linked to more active government involvement. Without establishing an effective public administration system and conditions that promote economic activity, it is not possible to achieve significant results in the promotion of sustainable economic growth and development, and as a result, a reduction of poverty in the country.

Therefore, the goal of reform is to raise the effectiveness of central and local branches of government, accompanied by the establishment of a professional civil service, an optimal system for the elaboration and implementation of development policies and programmes, with enhanced management potential and accountability, and the development of effective local self-government with a clear distribution of functions and authorities, financial resources and property, which will promote the effective delivery of high-quality services to the public.

5. To achieve the goal that has been set, tasks and measures need to be identified in the context of the following activities:

• design and introduction of mechanisms for coordinating development priorities at the national, sectoral and territorial levels;

• close coordination of the development of the public and private sectors with the aim of carrying out top-priority national tasks in close connection with development of the economy as a whole;

• consideration of gradual withdrawal by the state from direct intervention in the economy and the transition to predominantly indirect methods of state regulation;

• coordination of strategies and investment programmes with the budget process;

• streamlining of the mechanism used for the distribution of budget revenue sources among various levels of government, taking into account the redistribution of functions, and identification of their financial authorities;

• strengthening the potential of and increasing motivation in the civil service, including modernization of the human resources management system and development of personnel potential following the principle of the separation of political and administrative positions, strengthening the incentive role of wages and reinforcing professional ethics and professional standards;

• clear distribution of functions and authorities among levels of government and local self-government, coupled with the redistribution of financial and material resources;

• abandonment of traditional centralized mechanisms for the delivery of services to the public and introduction of flexible and effective financing and management methods, to promote higher quality and enhanced accessibility of services provided to the public;

• regulation of the relationship among executive government bodies and local self-government on the basis of legal acts currently in force;

• improvement of the administrative and territorial division of the country, consideration of various concepts for the development of its administrative and territorial division.

6. The following should be key requirements for the implementation of public administration reform:

• identification of an agency that is responsible for implementation of the reforms;

• involvement of all the participants in the reform process, development of effective social partnership mechanisms;

• establishment of a function involving the development of administrative and territorial management;

• coordination of public administration reform with reforms in other sectors;

• performance of a cost-benefit analysis of reform;

• a selective approach to drawing on international experience.

7. The implementation of measures planned for 2007-2009 in the area of public administration reform will make it possible to lay the foundations in Tajikistan for an effective national development management system, by ensuring both vertical and horizontal interconnections and interdependence among all of the executive government bodies and the strategic and tactical decisions that are being prepared.

4.2. Macroeconomic development

1. Average annual growth in GDP was 9.2% in 2002-2005 and 7% in 2006. The achievement of political and macroeconomic stability, post-conflict recovery of the manufacturing and service sectors, substantial growth in remittances by labour migrants and favourable world prices for the country’s main exports (cotton and aluminium) were among the factors contributing to strong economic growth. The country managed to achieve stable consumer prices and to lower inflation from 14.5% in 2002 to 7.1% in 2005; in 2006 the inflation rate reached 12.5%. Real unemployment remains quite high: according to a labour force survey conducted in 2004, the rate was 7.4%, although experts believe that the actual figure could be considerably higher. The exchange rate of the somoni against the U.S. dollar stabilized, and the decline in its value eased from an average annual figure of 14% in 2003 to 1.2% in 2004 and 6.3% in 2005.

In 2002-2005 exports and imports grew by 23.5% and 85.2%, respectively, and these figures were partially responsible for a current account deficit equal to 4.9% of GDP in 2005. The strong growth in imports was due primarily to a rise in domestic demand driven by remittances from labour migrants.

The state budget surplus (not including the PIP) was equal to 0.7% in 2002, while a deficit of 0.2% was posted in 2005. When one takes into account the PIP, the state budget deficit was 3.5% in 2005. Taking into consideration recent significant external borrowing for major infrastructure projects, the deficit, including the PIP, reached 2.7% in 2006 and is set at 13.7% for 2007.

The successful restructuring and write-off of debt during the period in question made it possible to achieve a significant reduction in external government debt from 87% of GDP in 2002 to 31% of GDP in 2006.

2. The basic provisions of this sector are aimed at further macroeconomic development, improvement of the country’s fiscal and monetary policies and promoting a stable financial system in accordance with the Millennium Development Goals.

3. The principal goal of the PRS in this sector is to maintain macroeconomic stability in order to achieve strong growth and lower the poverty rate.

4. An analysis of the macroeconomic situation shows that the key problems in the sector are:

• Poorly developed mechanisms for market regulation of the economy, including macroeconomic regulation instruments; lack of consideration of national priorities and actions in the sectoral policy that is being pursued;

• A low utilization coefficient for physical and human capital, which leads to a decline in the country’s potential. Difficulties in the evaluation of planned measure and in the identification of the most important measures;

• Inadequate fiscal policy, both with respect to tax administration and with respect to the management of government finances;

• Inconsistency in the macroeconomic and financial planning methods being employed, inadequate macroeconomic planning, forecasting and statistical methods;

• Insufficient monetary policy instruments and poor development of the money market and securities market.

5. Proceeding from the PRS goals and NDS priorities, and bearing in mind the problems in macroeconomic development that have been outlined, the tasks of the Strategy in this sector consist of: 1) improvement of fiscal policy; 2) improvement of monetary policy; and 3) implementation of institutional reforms.

6. Improvement of fiscal policy (task 1 in the sector) will be carried out by means of: improving the budget process, introducing a medium-term budgeting mechanism and restructuring the budget process, primarily in education and health care. At the initial stage the connection between the PRS and the budget will be effected through the PIP and the CSIP, and widespread introduction of the MTBF will begin simultaneously. Proposals will be elaborated with regard to ensuring the optimal level of public debt and internal state financial controls. Measures will be undertaken to improve tax and customs administration.

7. With a view to addressing tasks related to the improvement of monetary policy (task 2 in the sector), there are plans over the medium term to implement measures aimed at broadening the range of monetary policy instruments, improving the payment system, developing the financial and currency markets, increasing the resource base of financial institutions, making credit more accessible and also strengthening banking supervision. Problems related to long-term lending by banks to small and medium-sized businesses and to the utilization of instruments to control inflation will be analyzed.

8. Implementation of institutional reforms in the sector (task 3) entails the performance of a functional survey of government bodies responsible for the implementation of macroeconomic policy. Measures will be taken to update and review regulatory legal acts previously adopted, as well as those that are under development, including strategies, programmes and conceptual frameworks. There are plans to account for all financial resources, including foreign aid, attracted and used for the implementation of sectoral measures. There will also be an annual estimate of expenditures, including foreign aid, and results from the implementation of PRS measures. There are plans to provide for the establishment and functioning of a central body, as well as sectoral and territorial bodies, for the monitoring and assessment of progress in the implementation of NDS and PRS processes. Macroeconomic and financial planning methods that are employed will be improved, and the development of the national statistics system will be enhanced. Efforts to increase the potential of government bodies responsible for the implementation of macroeconomic policy will also be continued. Ongoing efforts will be made to improve the regulatory legal base aimed at promoting macroeconomic stability.

4.3. Improvement of the investment climate, development of the private sector and entrepreneurship

1. Expanded access to the market through improvement of the business and investment climate in Tajikistan is a key factor that can promote strong economic growth in the future and improve the scope and quality of social services provided. Enhancement of the business and investment climate can help foster a competitive environment and the conditions for employment of the unemployed population, including self-employment, and it can help stabilize tax revenues.

In view of the objective difficulties associated with doing business in Tajikistan, as well as the high poverty rate, the environment for entrepreneurial activity and investment in Tajikistan needs to be significantly more favourable than in other countries.

The high level of unemployment, the limited nature of the domestic market and a lack of investment expand the role played by such forms of entrepreneurial activity as sole proprietorships and small business.

The priority assigned to the development of the private sector and the attraction of investment by the NDS/PRS also means the gradual commercialization of social sectors of the economy and an increase in the proportion of services provided on a private basis. This will not only increase the quantity and quality of social services, but will also make it possible to concentrate more budget funding on providing social services to the poorest segments of the population.

2. In the post-Soviet period, there has been a marked decline in fixed capital and human potential for both objective and subjective reasons, although at present their status is still considerably better than in other poor countries with similar GDP figures (US$337.5 per capita in 2005). This indicates that the available resources are not being used effectively enough.

The interest of foreign investors in Tajikistan remains limited and is concentrated in traditional sectors (energy, light industry, processing of agricultural produce and manufacturing with low investment levels).

On average Tajikistan has approximately one small business per 1,000 people, while Russia has six and countries in the European Union have at least 30. In terms of the sectoral structure, commercial activity that does not require significant investment dominates small and medium-sized business and individual entrepreneurial activity (accounting for as much as 60%).

Entrepreneurial activity is limited by a shortage of electricity (particularly in the winter) and natural gas, as well as problems in the processing of products and transportation, both among various regions of the country and abroad.

Investment policy does not take depreciation deductions into account. The availability of credit resources for entrepreneurial activity is limited due to high bank lending rates (24-36% per annum). Approximately 82% of small and medium-sized businesses do not use bank accounts in their business operations and limit themselves to cash transactions. Insurance companies and banking institutions, which do not have enough capital, operate as monopolies, which limits the use of their services.

Simplified forms for regulating small and medium-sized business, including home-based businesses, have not yet been put into place, and the legal protections provided for their employees are inadequate. Serious problems involving protection of ownership rights, including those related to the use of land and actual relations involving the purchase and sale of land, have not been fully resolved, and there are difficulties associated with the enforcement of contracts (due to weaknesses in the legal system) and corporate governance.

3. An analysis of the business and investment climate in Tajikistan reveals serious and significant problems and the need to carry out fundamental institutional and economic reforms. The main problems in the investment and business sector are:

• delays in the implementation of serious institutional and economic reforms, weaknesses in the motivation system for productive labour in the real sector of the economy and low labour productivity, an inadequate administrative structure and a decline in the level of production and human capital;

• continuing difficulties in enforcing contractual relations, protecting ownership and other related rights, ineffectiveness of the legal system;

• excessive barriers to entering the market (complicated registration procedures; limited information support; poor development of trucking, air freight and hotel services; cumbersome visa requirements);

• the high cost of doing business (insufficient access to financing, insurance and leasing services; difficulties with electricity, gas, water and heating supply (especially during the winter months); a large number of audits; and serious limitations in connection with certification and inspections);

• insufficient state support for business and investment (a low level of knowledge, lack of market research, high taxes, unprofitable cotton production operations, poor job skills among labour migrants and school graduates).

4. Proceeding from the NDS/PRS goals and priorities, and in view of the problems that have been outlined above, the following key tasks have been identified for the sector in 2007-2009: 1) implementation of institutional reforms; 2) reduction in overall investment and business risks; 3) lowering of barriers for investors and entrepreneurs to enter the market; 4) a reduction in the costs associated with entrepreneurial and investment activity; 5) state support for business and investment.

5. Within the framework of the institutional changes that have been outlined (task 1), there are plans to identify specific government bodies responsible for the implementation and monitoring of PRS measures. There are also plans to strengthen the potential of these bodies, to develop (adapt) methods for calculating the ratings of the country’s attractiveness from an investment and business standpoint and to improve the relations between these bodies and business people and investors. At the same time, there are plans to strengthen the potential of other bodies as well with regard to the attraction of investment and support for the private sector. With a view to creating favourable conditions for recruiting the private sector to help address government tasks, there are plans to draft proposals on the basic principles and approaches for public-private partnerships.

6. With a view to reducing overall investment and business risks (task 2), there are plans, first of all, to improve mechanisms for the protection of ownership and other related rights. The plan calls for the development of proposals concerning accounts payable, property disputes and contract rights. At the same time, there are plans to draft proposals on improving the extra-legal confiscation of property, the mortgaging of property and securing the rights of minority owners. Certain measures involve providing for more effective management of property complexes. Special attention has been given to simplifying procedures and reducing the number of different licenses, permits, approvals, etc. that are issued, taking into account amendments to the legislation on licensing, among other things.

7. Task 3 concerns reducing the amount of time required to enter the market and the costs incurred by investors in doing so. There are plans to reduce costs and simplify state registration procedures. Serious attention is being given to reforming the state registration system as a whole. A separate set of measures concerns improvements in making information available to potential and existing entrepreneurs and investors.

8. A long list of measures is planned to reduce costs associated with entrepreneurial and investment activity (task 4). The measures have been organized into subtasks and relate to the implementation of legislation on administrative procedures, reducing the number and duration of audits, cutting the number of mandatory standards and easing certification procedures. Improved access to financial resources for businesspeople and investors is to be provided by making the process more competitive, which will include the establishment of a credit bureau, simplifying security procedures and proper organization of the registration of personal and real property. Measures are also envisaged to simplify procedures involving the closure of a business, including bankruptcy proceedings.

At the same time, with a view to reducing business costs given the shortage of energy and other resources, there are plans to establish a transparent schedule for electricity, gas, heating and water supply. In order to ease access to general infrastructure services (in addition to measures undertaken in other sectors), there are plans to expand access to the domestic market for foreign transportation firms, to promote conditions that will encourage the construction of hotels and to ensure further simplification of visa procedures.

9. In order to improve the investment and business climate in the country (task 5), there are plans, first of all, to provide assistance in the training of entrepreneurs, which will include legal training. Support for the establishment of business associations will, on the one hand, lead to the development of civil society, and on the other hand, through their involvement in the decision-making process, will help increase the focus and effectiveness of activities that are being planned.

With a view to supporting business and investment, there are plans to study the relative advantages of various types of entrepreneurial activity in Tajikistan and to convert them into competitive advantages, and also to prepare programmes to attract foreign direct investment. A separate set of measures involves providing direct support to business, which will include the simplification of taxation procedures, the establishment of quotas for small business in government procurement and efforts to promote tourism.

10. It is anticipated that the implementation of these measures will make it possible to raise the contribution of the private sector to the GDP to 55% by the end of 2009 (compared to 43% in 2005).

4.4. Development of regional cooperation and integration into the global economy

1. Greater integration of the country’s economy into the global economy and ensuring its proper participation in the international division of labour and in international trade, creation of an environment for the inclusion of domestic enterprises in international production processes, incentives to stimulate export and investment activity, the systematic participation of domestic businesses in determining the rules of international trade and the achievement of sustainable human development are the principal goals of the country’s foreign economic policy and the basis for the formation of a global partnership for development (MDG 8).

2. The flexible regionalism process is a defining feature of Tajikistan’s foreign economic policy. This approach entails participation by the Republic of Tajikistan in regional and bilateral trade agreements with a view to stimulating trade and the rational use of available resources and factors of production based on recognition of and compliance with the rules and regulations of the multilateral trade system.

3. An analysis of the situation shows that the key problems in the area of regional cooperation and integration into the global economy are:

• lack of the necessary potential for effective implementation of trade and investment policy measures, an underdeveloped legislative and legal framework governing relations in this sphere, as well as a weak mechanism for the implementation of existing regulatory legal acts;

• an unsuitable business environment and investment climate as a result of a lack of transparency in the application of trade and investment policy instruments, as well as high transaction costs;

• poorly organized and under-diversified exports, which are heavily dependent on prices in a limited number of unstable raw materials markets. Not enough attention is given to the development of the cluster option for the diversification of exports, taking into account all of the parameters;

• the country is a long distance away from seaports and there are transportation and transit problems. At present, the country’s transportation and transit policies depend heavily on the conditions in neighbouring countries with regard to the transit of goods and vehicles across their territories;

• inadequate marketing. There is not a single company in the country today that has effective operations in this area;

• the absence of healthy competition in the air transport services market and the weak material and technical base of the Tajik Air State Airline;

• an underdeveloped transportation infrastructure and a lack of healthy competition in the transportation services market;

• the absence of a transparent and effective mechanism for border and customs control of the movement of goods, work, services and capital; a complicated mechanism for entry and temporary visits by foreign nationals; visa problems and difficulties with the migration of labour resources.

4. Proceeding from the goals of the PRS and the priorities of the NDS, and bearing in mind the problems that have been mentioned in the area of regional cooperation and integration into the global economy, the tasks of the Strategy in this sector are: 1) to improve the system for the management of foreign economic activity; 2) to strengthen the participation of the Republic of Tajikistan in global trade; 3) to develop regional cooperation; 4) to diversify the commodity and sectoral structure of trade and simplify trading procedures; 5) to develop tourism; and 6) to regulate labour migration processes.

5. Improvement of the system for the management of foreign economic activity (task 1 in the sector) will be achieved by means of: development of the institutional foundations for the regulation of foreign economic activity, including the elaboration of policies in this area and harmonization of the country’s legislation with the norms of international law; enhancement of the investment and business environment and providing access to regulatory legal acts concerning foreign economic activity; the establishment of information and marketing centres; the improvement of measures for the non-tariff regulation of foreign trade activity.

6. With a view to expanding Tajikistan’s participation in global economic relations and completing the process of the country’s accession to the WTO (task 2), there are plans to carry out a package of measures aimed at: reducing the negative impact of globalization; providing access to the domestic market, taking into account the country’s economic interests; fulfilling the conditions of WTO agreements on the protection of intellectual property rights, reducing the use of technical barriers to trade, and sanitary and phytosanitary standards; the training of highly qualified specialists in the area of international trade and law; the establishment of a Tajikistan representative office at the WTO Secretariat in Geneva, with the aim of participating more fully in the process of the drafting and adoption of decisions on international trade; obtaining preferential terms for exports of goods within the framework of the universal system of preferences of WTO countries.

7. The development of regional cooperation (task 3) entails: improvements in the regulatory legal framework for regional cooperation; the development of transportation and transit cooperation within individual regions, with a view to resolving regional transit problems and offering a way out of the transportation dead-end; the development of cooperation to provide for the effective use of water and energy resources and hydrocarbon reserves; the development of regional trade and the adoption of measures to simplify trade procedures within the region; acceleration of processes involving the creation of a Customs Union and Common Economic Area within the Eurasian Economic Community (EurAsEC); more active participation in relations within the Shanghai Cooperation Organization (SCO); development of relations within the framework of the Economic Cooperation Organization (ECO); development of transportation corridors; creation of an International Energy Consortium and increasing the potential for the transmission of electricity to countries in the region through the construction of electric power lines.

8. One of the most challenging tasks in the sector is the diversification of the commodity and sectoral structure of trade and the simplification of trade procedures (task 4). Given the limited resources available, primary attention will be focused on: increasing the volume of the country’s foreign trade turnover through the rational implementation of a policy to develop export-oriented sectors of the economy; the drafting of sectoral programmes for the development of exports, taking into account the country’s relative advantages in international trade; improving tariff and customs policies, establishing a Consultative Committee on Trade Procedures and eliminating the requirement that a deposit be paid for the transit shipment of goods across the territories of Kazakhstan, Uzbekistan and Russia; improving the mechanism for issuing licenses for the production, handling and sale of alcohol products; improving the insurance system for legal entities and individuals; and resolving the question of establishing free economic zones.

9. The development of tourism (task 5) is of considerable importance in achieving the Strategy’s goals. The development of tourism entails the implementation of the following measures: elaboration of an effective mechanism for the implementation of policies and planning in the sector, as well as the creation of the proper institutional base for development of the sector; strengthening advertising and public information work through the production of television and radio programmes for broadcast in foreign countries; publication of various advertising and public information materials; more active participation by domestic tour operators in international tourism exhibitions and trade fairs abroad through the organization of a single exhibit to promote the country; the organization of activities by tourism offices abroad that perform advertising and public information functions; the promotion of Tajikistan’s tourism opportunities in countries with the potential to send tourists to our country; development of the tourism infrastructure, including a network of hotels and other facilities that encourage the development of tourism, among other things.

10. Regulation of labour migration processes (task 6). Export earnings, foreign direct investment and remittances by migrants are now among the most important and relatively stable sources of foreign private financing. In this context, steps need to be taken to improve the mechanism for the regulation and organization of external labour migration, to step up the political dialogue with the aim of providing protection for the rights and interests of Tajik migrants in foreign countries and to create the conditions for simplified entry and exit, as well as the conditions for visits to and movement within these other countries, and the development of civilized methods and forms for the delivery of services in the markets of foreign countries through the establishment of a commercial presence, among other things.

11. The implementation of these measures in the area of regional cooperation and integration into the global economy will make it possible to boost the country’s foreign trade turnover by 25% by 2009 compared to 2005.

At the same time, favourable conditions for the formation of a global partnership for development will be created (MDG 8).

5.1. Development of infrastructure, energy and industry

1. The development of infrastructure (transportation and communications), energy and industry in Tajikistan will make it possible to establish the material foundations for the country’s stable, strong economic growth and thereby to reduce the poverty rate. At the same time, the development of these sectors will create the conditions for a rise in domestic employment, and it will expand access to and the quality of both these and other social services (water supply, sanitation, health care, social welfare, environmental protection), which is linked directly to the fulfilment of all of the MDGs in Tajikistan.

2. Infrastructure. The most important components of Tajikistan’s infrastructure are rail transport (accounting for more than 80% of the total foreign trade turnover, approximately 50% of the travel by labour migrants to Russia and more than one-third of total freight shipments), road transport (with more than 95% of domestic shipments) and air transport, as well as the communications sector.

In the post-Soviet period the operations of Tajik Railway underwent negligible reforms, and the system is in need of substantial investment for its restoration and modernization. According to the available data, in 1995-2002 the productivity of Tajik Railway fell by 60% owing to a 50% decline in shipments and a 20% increase in personnel. Productivity per worker in the Tajik Railway system is lower than in other Central Asian countries.

Consumers are suffering from the poor quality of services provided, which is related to the aging rolling stock, the poor sanitary condition of the railcars, the overburdening of routes and a shortage of routes to meet demand. Due to their poor condition and use beyond their normal service life, a large number of locomotives and railcars need to be retired. Some 85% of freight shipments handled by Tajik Railway are carried on railcars owned by foreign companies. Major repairs are overdue on a total of 142 km of track of the existing 950.7 km in the system and therefore, despite the losses, the speed of trains on some sections is down to 15-20 kmh. The signalling, communications, centralization and shunting systems are aging and badly in need of repair and upgrading. There are no communications and electric power lines between the Kurgan-Tyube and Kulyab stations.

Because of Tajikistan’s specific geographical conditions, road transport plays a key role in domestic shipping operations, and it also is a major consumer of petroleum products.

Tajikistan’s mountainous landscape divides the country’s small market into even smaller markets. The domestic railway network is not well developed, and road transport handles the bulk of domestic shipping. It is particularly difficult to reach the country’s mountain regions during the winter months.

The country has more than 30,000 kilometres of roads, which were built between 1960 and 1990, with local roads and roads managed by various government agencies accounting for 16,000 kilometres of this figure. All of the roads are in need of major repairs, but the funds available for this purpose are not sufficient to carry out all of the needed work.

International road transport is of particular importance in the shipping of small-scale freight over short and medium distances, and also on routes not served by railways. Road transport currently accounts for less than 5% of the total volume of international shipping, and this is due in part to the limited amount of freight being exported. To a certain extent, however, the utilization of international road transport services is low because of the high tariffs. Shipments by road transport from Khujand to the Benelux countries takes two days longer and costs $50 per tonne more (including unofficial payments) than shipments from Tashkent.

Intergovernmental transportation agreements that have been signed by Tajikistan are not being implemented in full, and therefore almost any agreement that improves the conditions for shipping through transit countries would be welcome. Problems concerning transit in the Central Asia region have not been fully resolved, including those related to technical requirements for trucks and unofficial payments.

Tajikistan’s air freight operations are dominated by Tajik Air State Unitary Aviation Enterprise, which is burdened with an aging aircraft fleet, substandard auxiliary services (maintenance and repair facilities, flight simulator and training systems) and airport infrastructure, as well as an outdated air traffic control system and ground facilities. The utilization of aircraft is relatively low due to high fuel consumption and costs, and therefore measures are being taken now to replace the aircraft with planes manufactured in the West.

In spite of the steps that have been taken to limit the monopoly on air freight operations, Tajik Air charges higher rates than other airlines in the region, even though some of these companies are also operating with Soviet-era planes. Labour migrants are faced with additional costs due to a shortage of airline tickets, which leads to corruption. Insufficient competition and poor regulation contribute to a lack of transparency in transactions among air carriers, airports and air traffic control services, which means a heavy debt burden for the company. Rates on domestic routes do not cover the company’s direct costs, which results in operating losses.

The communications sector offers a great deal of promise in terms of development because of low transportation costs, high labour-intensiveness and the expectations for strong growth in this sector in the global market. The modernization of the majority of the country’s telephone networks has now been completed, and more than 70% of the capacity of outdated analogue automatic telephone exchanges has been replaced with digital equipment. The percentage of the country’s urban telephone network that has been converted to digital hardware is now 80%.

The national television broadcasting system currently reaches 98% of the population. The postal service has a far-flung network of outlets, although it is subsidized by the state because it operates at a loss.

3. The main infrastructure problems are:

• the country is far away from the sea and it is broken up into individual regions, which limits economic accessibility both among regions and in terms of the external market;

• institutional and economic reforms have not been fully implemented and there are deficiencies in the public administration system;

• there are significant administrative barriers to development of the private sector and transportation and expediting organizations offer limited services;

• rising prices for energy resources, and a poor material and technical base, which is in need of significant financial resources for its restoration and development, while budget funding is limited.

4. In view of the problems that have been outlined above and the NDS/PRS goals, the main tasks in infrastructure development (apart from transportation and communications) for 2007-2009 are: 1) to implement institutional reforms; 2) to make more effective use of the available resources; and 3) to promote existing and new investment projects.

5. The implementation of institutional reforms (task 1) entails a package of measures to strengthen the legal foundation for the operation of central and local executive government bodies in the infrastructure sector, to increase their potential and also to lower administrative barriers. Granting independent status to the Association of International Trucking Carriers and creating incentives for easing access to the domestic market for foreign transport companies will limit the state’s interference in the international transportation services market and will make it possible to increase the scale and improve the quality of these services. In view of the vast government expense associated with creating new transportation facilities, the consideration and possible establishment of tolls for the use of certain sections of various highways would make it possible to recoup part of the state’s costs.

6. The task of making more effective use of the available infrastructure resources (task 2), given the state’s limited funds, is aimed at organizing better accounting and more efficient use of state property. This task includes measures to take an inventory of (provide official records for) transportation facilities and to clearly establish ownership rights to these facilities, involving above all the restructuring of agricultural enterprises and the existence of roads that are not under the supervision of any authority. At the same time, the Privatization Strategy calls for the development and implementation of individual plans for the restructuring of the largest infrastructure enterprises, such as Tajik Railway, Tajik Air, Tajiktelecom, and Teleradiocom.

7. The task of promoting existing and new investment infrastructure projects (task 3) is an important one. It involves tracking progress in the construction of roads that both provide for internal inter-regional accessibility and offer the country a way out of its transportation dead-end. There are plans to improve the supply of fuel for transportation operations in connection with higher prices for petroleum products by converting vehicles to alternative energy sources. Support will be provided for efforts by Tajik Railway and Tajik Air to improve their material and technical base. The question of building highways to Afghanistan, which would provide access to Iran and Pakistan, is being considered. A separate set of measures involves the promotion of projects in the communications sector.

8. Energy. Tajikistan’s future development and poverty reduction in the country depend to a large extent on the country’s ability to make effective use of its energy resources. Development of the energy sector will make it possible not only to increase the quantity and quality of services for other production sectors, which are currently functioning at less than their full capacity due to a shortage of energy resources, but also to increase the availability and affordability of energy services for the population.

9. The country’s electricity system essentially consists of three separate subsystems: one in Sogd Province, one in the south (including Khatlon Province, the city of Dushanbe and the RRS) and one in GBAO. With 55% of the water resources in the Central Asia region, Tajikistan has considerable hydroelectric power reserves. The country’s total potential hydropower reserves are in the neighbourhood of 527 billion kWh per year (primarily in the southern part of the country). The current level of electricity generated represents just 6.5% of the technically feasible potential. Hydropower resources account for over 90% of the country’s fuel and energy balance. Tajikistan’s significant hydropower potential could be used to increase exports and develop energy-intensive production operations.

The country at present generates between 16.5 billion and 17 billion kWh of electricity per year, with hydroelectric generating facilities accounting for approximately 99% of this output. The lion’s share of this hydropower is generated at the Nurek Hydroelectric Power Plan (HPP). It has a small reservoir, which means that the existing capacities cannot be utilized to the full extent. The principal advantage of the electricity generated at the Nuerk HPP is its low cost (0.3 U.S. cent), which is due to the fact that investment costs were already covered back during the Soviet era.

The Tajik Aluminium Plant (TadAZ) is the largest industrial consumer of electricity, followed by pumps used to supply water for agricultural needs, accounting for some 40% and 15% of the total load, respectively.

The proven reserves of oil, gas and condensate in the country represent less than 1% of the total resources, which are estimated at 1,033 million tonnes of standard fuel. Projected coal reserves are estimated at 4.5 billion tonnes, of which a tiny amount is being mined (just 100,000 tonnes were extracted in 2005).

The low cost of electricity also leads to a decline in the technical quality of production operations, an increase in shortages and losses and higher demand for electricity, especially on the part of households. During the winter months these factors, combined with the seasonal surge in demand for electricity, lower water levels in the Vakhsh River and a drop in output at the Nurek HPP, result in frequent power outages.

A reduction in gas deliveries and coal production, as well as higher prices for imported energy resources, led to higher electricity consumption by households and seasonal restrictions (limits) on the consumption of electricity and gas to 6-8 hours per day (the shortfall in electricity available during the winter months is in the range of 3 billion to 3.5 billion kWh). The energy shortage, particularly in the winter, has meant that educational and medical institutions, particularly those in rural areas, are not able to operate full-time and pumping stations that supply drinking water are shut down, and this has led to an increase in infectious diseases. Industrial production in the country has become seasonal as a result of these disruptions in the power supply.

10. In connection with this, the main problems in the development of the energy sector are:

• incomplete implementation of institutional and economic reforms in the energy sector;

• low rates, which do not support expanded reproduction; a significant quasi-fiscal deficit;

• growth in electricity as a proportion of household energy consumption;

• significant energy losses;

• the high cost of the construction of new and renovation of existing energy facilities.

11. In view of the NDS/PRS goals and NDS priorities, and taking into consideration the energy problems that have been enumerated, the following key tasks in the sector have been identified for 2007-2009: 1) implementation of institutional reforms; 2) more effective use of available resources; 3) promotion of new and existing investment projects in the energy sector.

12. The first task, implementation of institutional reforms, entails the assignment of functions to and enhancement of the potential of agencies responsible for the drafting and implementation of energy policy, as well as regulation in the energy sector. Special attention should be given in this process to promoting electricity exports to potential buyers in neighbouring countries that are experiencing shortages (Iran, Afghanistan, Pakistan, India). With a view to creating the conditions for expanded reproduction in the energy sector and increasing investments, there are plans for a steady rise in energy rates starting in 2007, bringing them up to 2.1 cents per kW by 2010. Mechanisms to offer protection to the most vulnerable segments of the population will be put into place at the same time. A conceptual plan for the development of the energy sector up to 2025 will be drafted, which takes into account the establishment of industrial-energy and water-industrial complexes (clusters), as well as regional energy consortiums. At the same time, in light of Tajikistan’s status as a water source in the region, issues related to charging a fee for water use will be studied.

13. With a view to making more effective use of available resources (task 2), measures are planned to restructure the largest energy enterprises, the Barki Tochik power company and Tajikgas. Implementation of a programme to build small hydropower plants will make it possible to improve the electricity supply in remote regions of the country with a high poverty rate. Special attention is being given to reducing energy losses, and well as losses at the consumer level.

Expanded access to the Barki Tochik distribution networks will make it possible to improve the availability of electricity to new consumers. The construction of new power-generating facilities (the Sangtuda HPPs 1 and 2, the first phase of the Rogun HPP) as part of existing investment projects will make it possible to achieve a significant improvement in the availability of energy to consumers (particularly in the winter), and also to create the conditions for summer exports of surplus power. There are plans to study the possibility of converting heating plants to coal, and also to promote an investment project to build one coal-fired electric power plant.

14. Special attention is being given to the promotion of new and existing investment energy projects (task 3). The measures being planned involve not only modernization of existing hydroelectric power installations and a corresponding increase in their efficiency, but also the construction of new HPPs and the reconstruction of coal-powered plants. The construction of the South-North electric power transmission line will reduce the dependence of Sogd Province on imported electricity, and the promotion of investment projects involving the construction of power lines for the export of electricity to other countries in the region will make it possible to expand the market for surplus electricity that is generated.

15. Industry. Growth in industrial output will speed up the creation of new jobs and will thereby help resolve problems associated with poverty. Tajikistan has sufficient potential for this type of growth (relatively low wages, the availability of various mineral resources and the production of significant quantities of agricultural raw materials).

16. Following independence, the country’s diverse industrial sector experienced a significant slump: in 1996 industrial output in the country declined to 34.2% of the 1991 level, while the figure in 2004 was 63.6%, which certainly had an impact on the poverty rate. Industry is focused more now on the raw materials sector, which accounts for 58.0% of output. The TadAZ aluminium plant dominates industrial output, accounting for 40% of the total, and its exports are dependent on electricity rates, transportation costs and the price of alumina and aluminium in the global market. The contribution made by mining is not consistent with the existing potential due to the low level of investment, significant costs associated with developing mineral deposits, the narrow profit margin of existing enterprises, a lack of technical equipment, a weak institutional and legal base and limited access to information for investors.

At the same time, in recent years growth in industrial output has been quite rapid due to the low starting point. The main sources of growth were quite varied: while at first growth was linked to the restoration of peace in Tajikistan, growth now is tied to migrants’ remittances and higher domestic demand. Tajikistan has significant resources for industrial processing (agricultural raw materials, medicinal herbs, coal, gold, precious stones and other mineral resources) and an infrastructure for the development of new production operations at the regional level (in the future, after energy supply problems have been resolved).

17. The main reasons behind the slump in industrial production and the slow pace of reviving production are:

• the domestic market is small, former cooperative ties have been broken, there is no clearly defined industrial policy and the level of regulation is quite high;

• the country has limited experience and knowledge in the area of industrial management and the productivity of the labour force is too low (it is approximately 45% of the level in China and half of what it is seen in Poland and India);

• the sector is using aging equipment and obsolete technologies, access to capital is difficult and the quality of the goods produced is substandard;

• there has been a deterioration in transportation conditions and in the supply of gas, water, heat and electricity.

18. Proceeding from the NDS/PRS goals and the NDS priorities, and in view of the problems in the industrial sector described above, the following main development tasks have been identified for 2007-2009: 1) institutional reform in the industrial sector and 2) support for the development of priority sectors of industry.

19. The implementation of institutional reforms in the industrial sector (task 1) is aimed not only at increasing the potential of government bodies, but also at improving the management system. An inventory of existing industrial capacities and an analysis of industrial enterprises that have been privatized (restructured) will make it possible to improve the information base and to devise methods to make more effective use of state-owned property.

Improvement of the legislation pertaining to mining and better access to information for potential investors could help encourage participation by direct investors in this capital-intensive sector of industry. The country needs to have better opportunities to attract more private investors in this arena, including the updating of tax legislation and property laws; a system needs to be put into place to provide information about existing mineral deposits to potential investors; the system for the registration and transfer of mineral rights needs to be modernized; and national personnel need to be trained.

The fostering of favourable conditions for small industrial businesses will not only promote effective employment, but will also contribute to overall industrial growth and diversification of the economy.

20. A package of measures is planned within the framework of the “support for the development of priority sectors of industry” task to exploit Tajikistan’s production advantages. These measures involve above all the promotion of major investment projects in the food industry and light industry, and in particular the construction of enterprises with an integrated production cycle for the processing of cotton and other agricultural raw materials. Special attention is being focused on the building materials industry due to the anticipated growth in demand for building supplies resulting from the construction of energy, road and other projects, and also increased demand from private individuals. Serious efforts are planned to attract investments earmarked for the processing of aluminium and precious metals and stones, as well as investments in mining. In view of the steady demand on the part of agriculture, there are plans to promote projects to set up plants for the manufacturing of spare parts and for the assembly of new agricultural equipment. The implementation of projects to produce equipment for generating alternative energy (wind and solar power), and for the production of biogas, which is linked directly to poverty reduction in remote regions of Tajikistan, could help improve the availability of energy for small businesses, as well as for households.

21. In view of the importance of transportation and energy in supporting strong economic growth and ensuring access to social services for the population, new investment projects that are being promoted in these spheres have been included in the PRS sectoral activity matrix for 2007-2009.

22. The implementation of these measures will make it possible in 2009:

• in the infrastructure sector – to increase freight and passenger turnover by 12.6% and 4.7%, respectively, and to increase the contribution of the communications sector as a proportion of GDP to 38%;

• in the energy sector – to extend the average daily availability of electricity for all consumers from 16 hours to 20 hours, to reduce the quasi-fiscal deficit from 20.5% to 0% and to introduce a concrete schedule for the delivery of gas, electricity and heating;

• in the industrial sector – to increase industrial output through the restoration and development of enterprises by 25.6%, to boost labour productivity in industry by 16%, to expand industrial exports by 18% and to raise the number of people employed in industry by 20.5%.

5.2. Food security and development of the agricultural sector

1. Development of the agricultural sector will provide for a reliable, stable and balanced food supply for the country through a dynamic and steady increase in agricultural output, higher incomes and employment levels among the rural population, as well as the conservation of natural resources for expanded reproduction, which is directly linked to the achievement of the MDGs (Goal 1).

2. The sector encompassing food security and development of the agricultural sector covers spheres such as agriculture, land and water resources and nutrition. The principal goal of the PRS in this sector is to increase gross agricultural output and labour productivity, which in turn will contribute to the achievement of the overall goal of the PRS, which is to reduce poverty, particularly in rural areas.

3. An analysis of the current situation in this sector identified the following core problems:

• the management system in the sector is underdeveloped and the potential of bodies responsible for the drafting and implementation of sectoral policy is quite weak;

• government agencies interfere in the operations of agricultural enterprises;

• debt to investors in the cotton sector is growing, the technology is inefficient, there are long delays and high costs associated with cotton-ginning and the grading of cotton is not consistent with international standards;

• there is not enough feed due to a reduction in the planting of feed crops, the system of moving of livestock to remote pastures for grazing has been disrupted, productivity has declined and veterinary care is inadequate;

• there are high costs associated with the repair and renovation of irrigation and drainage networks and pumping stations;

• the incidence of food-related illnesses is rising, and the legislative, personnel and laboratory base for ensuring a healthy diet is weak.

4. Proceeding from the NDS/PRS goals and the NDS priorities, and in view of the problems that have been described in the sector encompassing food security and development of the agricultural sector, the following main medium-range tasks have been identified: 1) implementation of institutional reforms; 2) increased efficiency in the cotton sector; 3) providing for guarantees and securing land-use rights; 4) improving the condition and raising the effectiveness of the agricultural and water resource management infrastructure; 5) improvement of the conditions for the development of rural entrepreneurial activity; 6) ensuring a healthy diet.

5. The implementation of institutional reforms (task 1) entails reforming and boosting the potential of bodies responsible for the drafting and implementation of sectoral policy, the attraction of investment and support for entrepreneurial activity, as well as the elimination of administrative barriers related to interference by government bodies in agricultural activity. There are plans to draft and implement multisectoral programmes for food security and for developing the production and export of agricultural goods up to 2015. There are also plans to support efforts to preserve the gene pool of domestic and wild animals (the establishment of sperm banks and data bases).

6. Debts in the cotton sector are a serious obstacle to further development of agriculture. Resolution of this problem entails increasing efficiency in the cotton sector (task 2) through measures such as the progressive resolution of the cotton debt problem on the part of an independent commission, based on legal proceedings at pilot cotton farms and the introduction of bankruptcy procedures for farms that are in debt. With the aim of easing farmers’ access to credit, there are plans to conduct surveys and devise and introduce effective new lending methods for cotton farming. The introduction of international standards for the grading of cotton in Tajikistan, including the establishment of a special entity to do the grading, and a simplification of commodity exchange procedures will allow dekhan (peasant) farmers to increase their income from cotton sales. The performance of surveys and the development of a mechanism to increase competition among cotton mills will help to reduce the amount of time required for cotton processing and to improve the quality of the product. Access to foreign markets for cotton producers will help minimize procedures involved in the export of cotton and the import of fertilizers, equipment and other supplies.

7. In order to provide for guarantees and secure land-use rights (task 3), there needs to be legislative regulation that will help simplify and increase the transparency of procedures for the registration of land-use rights, which will ease the process and reduce the costs associated with obtaining titles. There also needs to be a complete reorganization and subsequent restructuring of farms, which will give dekhan farmers real land-use rights. Proposals need to be prepared for the establishment of a uniform tax on agricultural land depending on the quality of the soil and the appraised value of the land. Measures aimed at ensuring equal rights and opportunities for men and women with regard to access to land will be supported to the greatest extent possible, and this will include public information, educational and promotional measures to inform the population of their equal rights to resources; training in land-use practices; and also the development of a network of microcredit institutions. There will be continued monitoring of the observance of equal rights to land and related guarantees. There are plans to draft proposals to ensure the proper use of agricultural land, while establishing additional sanctions for the improper use of agricultural land.

8. A significant proportion of the rural infrastructure has been left without any direct oversight as a result of reforms (including roads and irrigation systems), and the degradation of these facilities is limiting growth in production. With a view to resolving this problem, there are plans, among other things, to undertake measures to improve the condition and raise the effectiveness of the agricultural and water resource management infrastructure (task 4). There are plans to restore and renovate irrigation and drainage systems (based on preliminary studies), to develop new land and support the establishment of water users’ associations. There will also be an inventory of social service, transportation, irrigation and other facilities that have been left without direct oversight, so that they can be placed under the management of other appropriate bodies. With a view to raising soil fertility and reducing erosion and desertification, there are plans to plant trees and shrubs and to employ crop rotation practices, among other things.

9. Special measures are planned to improve the conditions for the development of rural entrepreneurial activity (task 5). These measures are aimed above all at promoting investment projects, including the attraction of funds from labour migrants to: establish service businesses (leasing, etc.); develop animal husbandry at private farms; support the establishment of dairy farms, sheep farming for meat production, poultry farming, yak and goat herding in mountainous and high-elevation regions, apiculture and fish farming (phase 1); and the organization of private livestock insemination centres in jamoats (rural municipalities). Farms will be given better access to financial resources and support will be provided to ensure that they are supplied with seeds, fertilizers, chemicals and other materials. There are plans to improve the quality of veterinary, seed selection and seed production services through the involvement of the private sector. Research on the food market will be performed and market services will be provided, and a study will be made of the feasibility of simplified regulation and taxation of sole-proprietor, micro- and small agricultural enterprises (including service businesses and cotton sowing operations). It is also expected that economic, legal and consulting services will be provided on issues of land use and private business development in the agricultural sector. With a view to reducing interference in farmers’ production-related activities, there are plans to conduct an experiment in five or six regions, giving farmers the freedom to choose which crops to grow. Measures are planned to strengthen the potential of structures that combat insects (locusts).

10. Task 6, which calls for ensuring a healthy diet, is aimed at reducing the incidence of food-related illnesses and strengthening the legislative, laboratory and personnel base. It contains the following package of measures: drafting of a law on the enrichment of flour; establishment of an alliance (group) to improve nutrition at the government level; development (adaptation) of public health regulations and standards and medical and biological requirements and public health standards for food quality and safety; drafting and implementation of a Strategy for the Prevention and Treatment of Malnutrition among Children; drafting and implementation of a scientifically based Strategy to Ensure Sound Nutrition for Schoolchildren and the performance of research studies; implementation of measures for the prevention and treatment of malnutrition; supplying iron supplements and vitamin A capsules to targeted groups; enrichment of processed flour with nutritional additives; ensuring that all salt is iodized; supplying the National Centre for Nutrition Problems under the Ministry of Health with laboratory equipment; establishment of nutrition departments at the Abuali ibn Sino State Medical University of Tajikistan and the Post-Graduate Training Institute; implementation of a comprehensive programme to raise the level of physical activity among the population; systematic assessment of the nutritional status of the population, and other medical problems related to nutrition. Implementation of these measures will reduce the incidence of food-related illnesses, particularly among vulnerable segments of the population.

11. Implementation of the measures outlined above in the sector encompassing Food Security and Development of the Agricultural Sector will make it possible by 2009 to:

• - boost gross agricultural output by 16.5%;

• - raise labour productivity by 8.2%.

6.1. Development of the education system and science

The problem of holding on to the ground that had been gained in the education and science sector was a critical one during the transitional period, along with further development taking into account the new political and socio-economic conditions, as well as global development and common human values. The ability to address these tasks was complicated seriously by the consequences of the devastating civil war and the high poverty rate, as well as the lag in the implementation of serious institutional reforms and ineffective utilization of available resources.

Government spending on education in 1991 was equal to 8.9% of GDP, or 23.6% of total government spending, while in 2006 these figures were 4.2% and 16.7%, respectively. Estimates show that in order to meet the minimum needs for the maintenance and development of the education system, taking the demographic factor into account, it will be necessary to bring the annual education spending level up to 6-7% of GDP in the future. Insufficient financial support for science is slowing down the development of high-tech production operations. Total budget funding for science in 2005 was equal to US$2.7 million, or 0.1% of GDP.

6.2. Development of the health care system

1. In the new economic environment, the health care system cannot operate effectively without significant reforms. Total government spending on health care fell from 4.5% of GDP in 1991 to 1.3% in 2005. This means that health care is increasingly dependent on unofficial private payments for medical services and on foreign aid, as the following figures show: private payments accounted for 70% and donor assistance for 14% of overall spending on health care, while budget outlays made up 16% of the total.

There is a significant gap in the distribution of material resources and budget funding between primary medical care and hospital care, as a result of which the bulk of the funding goes to secondary health care (hospitals), and the services provided are expensive and out of reach for the poor.

There is evidence of a decline in the qualifications of medical personnel, as well as a shortage of skilled medical staff, especially in rural areas. This is due to imperfect mechanisms for the management of human resources, the low wages paid to medical personnel and the resulting high turnover rate among medical personnel. These problems are aggravated by the fact that the shortage of up-to-date medical equipment and technology at medical institutions is getting worse, and the physical condition of buildings and facilities is deteriorating as well.

The network of private medical institutions, which could help to satisfy part of the unmet demand for medical services, is growing slowly due to serious administrative barriers and inadequate government support.

2. Tajikistan’s health care system is a key sector in meeting the MDGs, since the efforts undertaken to improve public health will promote sustainable economic growth and development of the country’s human potential.

3. In accordance with the generally accepted principles of the NDS/PRS, the main medium-term goal in the health care sphere today is to bring about a gradual reduction in the maternal and infant mortality rate and the burden of infectious diseases, and also to eradicate certain infections that can be controlled by vaccines. The top priority in health care is to strengthen the primary health care system and public health and epidemiological supervision.

4. The main problems in the health care system are:

• deficiencies in the health care management system, which in turn lead to inadequate policy analysis and planning with regard to services, health care economics and human resources, as well as poor management of information systems;

• the slow pace of reform in the health care system and limited participation by the private sector in the delivery of medical services;

• a shortage and inefficient use of available financial resources, as well as the fact that government funds account for too small a share of total health care spending. This has led to a situation in which medical institutions, particularly those in the primary health care system and state public health and epidemiological supervision centres, are significantly weakened in terms of personnel and material and technical resources, which in turn reduces the access to medical care and basic medicines for the poor;

• lack of public awareness of basic guidelines for a healthy lifestyle and a failure to follow these guidelines, which include maintaining reproductive health, protecting maternal and child health and preventing the spread of infectious diseases.

All of the problems mentioned above are associated with higher maternal and infant mortality and an increase in the incidence of infectious diseases, which in turn are “diseases of poverty” (tuberculosis, malaria, parasitic diseases, etc.).

5. In view of the problems we have described here, and the goals of the NDS/PRS, the main tasks in the sector are: 1) to increase the effectiveness of the management system and financing; 2) to expand the role of the private sector in the delivery of medical services; 3) to improve protection for maternal and child health; 4) to combat HIV/AIDS, malaria, tuberculosis and other infectious diseases; 5) to improve personnel training and reinforce the material and technical base of the health care system.

6. In order to increase the effectiveness of the management system and financing (task 1), a package of measures is planned to enhance the utilization and increase the amount of government financing, to attract additional resources and also to create favourable conditions to make better use of the potential offered by the private sector. There are plans to implement the Republic of Tajikistan Health Care Financing Strategy to 2015 (2005). It includes the introduction of mechanisms for the per capita financing of primary health care, a change in the system for the financing of hospital care using treatment-based clinical cost groups, as well as restructuring of the primary care and hospital network.

These measures are aimed above all at increasing the effectiveness and transparency of the utilization of public funds, establishing a close connection between funding and the performance of health care institutions, distributing financial resources based on the number of people enrolled at treatment and preventive care institutions and specific regional/local conditions, as well as allowing health care institutions to redistribute savings to improve their operations and provide incentives. An improvement in the quality of medical services will be achieved through the introduction of a new employee compensation programme, which in turn will prevent the further loss of medical personnel leaving health care institutions to work in other sectors. There are plans to introduce the Basic Programme for the Delivery of Medical Care with a view to carrying out the first task. This programme outlines the types, scope and procedure for the provision of guaranteed medical care within the limits of the funding allocated in the state budget. The programme establishes a payment procedure for medical care, which exceeds the amount of funding provided under the Basic Programme to cover free guaranteed health care, both at the expense of state funds and at the expense of co-financing (co-payments). The programme will be introduced in pilot regions, followed by its introduction throughout the country as a whole.

7. One of the most important tasks in health care is to expand the role of the private sector in the delivery of medical services (task 2). The establishment of tax and other benefits for enterprises in the private sector to the extent possible, combined with the development of private treatment and preventive care institutions and an analysis of the second-tier burden in order to assess privatization prospects in health care, will create the conditions for the influx of private resources into the sector and the re-allocation of government financing to meet the needs of the poorest and most vulnerable segments of the population. Simplification of licensing procedures for medical care will make a valuable contribution to the development of the private sector and health care as a whole.

8. In view of the country’s high maternal and infant mortality rate, measures that are reflected in task 3 (improving protection for maternal and child health) are urgently needed. These measures include raising the qualifications of medical personnel providing health care services to mothers and infants, which includes focusing efforts on heightening public awareness about the care, development and feeding of infants, as well as reproductive health and family planning; improving the availability of medicines, contraceptives and information at primary health care institutions which are needed to provide services related to safe motherhood; the development and introduction of standard protocols for the management of the most common early childhood illnesses, including neonatal care and safe motherhood at all levels of medical care; as well as the incorporation of the basic types of perinatal and neonatal care in the list of guaranteed medical services. Another important issue, which needs to be addressed immediately, involves strengthening the potential of national and provincial reproductive health centres to perform regular monitoring, assessment and improvement of the quality of medical services provided to the public.

Public information and educational measures and the organization of a public dialogue among government employees, health care providers and the population on issues involving the survival of children, safe motherhood, reproductive health and family planning, as well as improved access and better quality urgent obstetrical and neonatal care, have an integral role to play in resolving problems related to better health care for mothers and children.

Issues involving adolescent health are also critical, since this is the most vulnerable segment of the population. The inclusion of family planning, reproductive rights and other issues in the “Healthy Lifestyle” school programme targeted at the upper grades will help raise the awareness of these issues among this age group, and this in turn will lead to an overall decline in problems related to reproductive health in the future.

9. Problems associated with task 4, combating HIV/AIDS, malaria, tuberculosis and other infectious diseases, need to be addressed without delay because there has been a sharp rise in the incidence of infectious diseases over recent years. Measures outlined as part of this effort include heightening public awareness, particularly among high-risk groups, of ways to prevent the spread of dangerous infectious diseases, including HIV/AIDS, malaria, tuberculosis and parasitic diseases; ensuring universal access to HIV/AIDS prevention and treatment measures; as well as reducing the stigma of HIV/AIDS and discrimination directed against high-risk groups, and the promotion of positive public opinion regarding prevention programmes to combat HIV/AIDS.

Improvement of the epidemiological supervision system is an integral part of efforts to prevent the spread of infectious diseases. Measures are planned to raise the qualifications of specialists in the public health and epidemiological service, as well as those working at centres for combating tropical diseases and tuberculosis, immuno-prevention centres, centres to promote a healthy lifestyle and parasitology divisions of state public health and epidemiological supervision centres. These activities will be directed primarily at strengthening preventive measures to halt the spread and reduce the incidence of infectious diseases.

One of the most important factors in reducing infant and child mortality is to ensure that as many children as possible are regularly covered by vaccination programmes for all infections that can be controlled by vaccines. A gradual transition to government-funded immunization and its integration into maternal and child health protection programmes will be a top priority. A decline in infectious diseases is directly dependent on immunization of the population, a process which should ensure the delivery of safe vaccines for all infections that can be controlled by vaccines. Reinforcement of efforts to promote a healthy lifestyle is a key element in ensuring a healthy population. Activities in this area include public awareness campaigns on family planning, instilling hygienic habits and changing patterns of behaviour. These measures are important building blocks in promoting a healthy lifestyle.

10. Improvements in personnel training and reinforcement of the material and technical base of the health care system (task 5) will be carried out by strengthening the training and retraining system for medical personnel and general practice specialists (family doctors and nurses), through certification, the revision and inclusion in curricula of programmes that are relevant to the country’s needs and improving personnel planning and management policies, which in turn will lead to a steady shrinking of geographical and organizational gaps, as well as the elimination of shortages of certain specialists. The second important issue is the adoption of measures to improve the material and technical base of the health care system. These steps include a package of measures involving the construction and renovation of treatment and preventive care institutions and the purchase of vehicles and the necessary teaching and medical equipment. These measures will be carried out in accordance with a plan for the restructuring of treatment and preventive care institutions, including activities in pilot regions, which have been identified by the government as the poorest and most vulnerable.

11. The implementation of these measures in the health care sector will make it possible by 2009 to reduce maternal and infant mortality and the incidence of infectious diseases and to eradicate some of the infections that can be controlled by vaccines.

6.3. Improvement of social welfare

1. The reform of Tajikistan’s social welfare system will make it possible to carry out a package of socio-economic measures aimed at protecting the population against unemployment, rising prices and the devaluation of labour income. In light of this, the priorities in the social welfare sphere are the same factors that have a direct impact on the standard of living: employment, social insurance, pension security and targeted social assistance.

2. Tajikistan’s social welfare sector includes the state social insurance and pension security system, employment and labour migration, protection of family and children’s rights and targeted social assistance to vulnerable and low-income segments of the population.

3. An analysis of the situation in the social welfare system shows that the key problems in the sector are:

• continued adherence in social policies to the methodology, methods and approaches that were followed in the pre-market period;

• financial unsustainability of the social welfare system, state social insurance and pension security;

• a decline in the proportion of state budget expenditures earmarked for social welfare; lack of transparency in the movement of funds through the system;

• high administrative costs associated with management of the system;

• the complexity of the mechanism for providing targeted social assistance;

• lack of a focused demographic policy;

• inadequate social and legal protections for certain categories of the population;

• limited information support (social statistics) for the social welfare system;

• vital social services for the disabled, elderly and children with learning disabilities that do not meet generally recognized standards;

• existence of a significant shadow sector;

• poor quality and lack of competitiveness of the country’s labour potential.

4. The following tasks have been identified in light of the goals and priorities of the NDS and PRS, and the problems that have been identified in the sector: 1) institutional restructuring of the social welfare system; 2) creation of a financially sustainable state social insurance and pension security system; 3) establishment of a methodological basis for the study, monitoring and regulation of the labour market and labour migration; 4) organization of employment support; 5) creation of an effective system of targeted social assistance; 6) improvement of the quality of social services provided to the public; and 7) establishment of a multi-tiered and unified system to manage the protection of children’s rights.

5. The implementation of institutional reform (task 1) is based on the drafting of two key strategic documents: a conceptual framework for reform and a state strategy for development of the entire social welfare system. These documents should define the government’s targeted social policies, which are intended to foster real conditions that enable citizens to exercise their rights to social protection.

6. The central problem in the reform of the state social insurance and pension security system is achieving its financial sustainability (task 2), while at the same time lowering the tax burden on taxpayers.

The existing pension system provides for a wide range of benefits and concessions, which are granted to various categories of citizens. It does not take into account the personal contribution of each worker, and this makes the social insurance system economically ineffective.

This problem can be resolved by means of:

• modification and modernization of the relevant regulatory and legislative base, to provide for the establishment of a comprehensive, motivation-based mechanism for all beneficiaries of (participants in) the state social insurance system;

• revision of the system of concessions and privileges, the differentiation of these benefits, identification of sources of financing and a reduction in financial resources that are not used for their designated purpose;

• proper recording of the pension rights of insured persons and the introduction of personal accounting technology;

• regular forecasting of the effect (impact) of socio-demographic changes on the country’s state budget.

7. The lack of up-to-date methods and complete and reliable social statistics in Tajikistan is creating enormous difficulties with regard to performing a systematic analysis of the situation in the social sphere (task 3). These deficiencies mean that it is not possible to study the population’s standard of living and living conditions or to forecast the possible course of socio-economic development in the immediate future and over the longer term. These problems mean that there is an urgent need to establish a methodological base for the study, monitoring and regulation of the labour market and labour migration and to set up an information support framework for the social welfare system using up-to-date technologies for the collection, processing, use and storage of information.

Long delays in the payment of wages and arrears on the payment of insurance contributions by insured persons are a serious obstacle to the performance of timely indexing of (increases in) pensions and social benefits. The resolution of this problem is linked to an examination of difficulties associated with wage arrears and arrears on social tax payments, as well as reform of the employee compensation system.

8. While performing regulatory functions, the state should encourage development of the economy by creating the conditions for the able-bodied population to receive free training (or retraining) in competitive occupations with guaranteed job placement. To achieve this goal, a package of measures is planned (task 4) which will help make the management and regulation of the labour market more effective.

Increasing the competitiveness of the unemployed in the labour market after training and retraining at employment training centres requires a reform of the basic vocational education system through the integration of basic, secondary and higher education.

At the current stage of the country’s development, which is marked by rising hidden unemployment and a significant flow of illegal labour migration, a serious problem has arisen with regard to protecting the rights of labour migrants. With the aim of ensuring the safety of labour migrants and their social adaptation when living abroad, measures have been proposed to arrange and hold short-term “survival” courses and to strengthen regulatory and legal norms.

The development of a system for the contractual regulation of social-labour relations according to a tripartite principle (a social partnership of the government, trade unions and employers) has a special role to play in the resolution of problems involving labour relations. Performance of this task will make it possible to provide protection for the rights of workers with regard to the scheduling of working hours, wages, discrimination in hiring and dismissal and social protection.

9. At the current stage of the transition to market relations, we are seeing a complicated process involving the population’s adaptation to new socio-economic conditions. The establishment and development of a new system of targeted social assistance that is consistent with the needs of the market (task 5), which should provide a wide range of socioeconomic, medical, psychological, educational, legal, personal and other social services to citizens who find themselves experiencing difficulties in life, is a problem of the utmost importance.

Given the severe budgetary constraints on providing funding for social support to all citizens in need, a system for the targeting of assistance and verification of real needs will make it possible to resolve the problems of those people who in are in the most urgent need of social assistance.

The development of state standards for social services and organizational-legal mechanisms (methods) for providing targeted social assistance, as well as the establishment of a legal basis for them, are aimed at addressing the following tasks:

• calculation and establishment of the minimum subsistence income;

• providing equal access to a full range of high-quality social services for various categories and groups of people;

• integrating the systems for standardization, certification, licensing, evaluation and quality control in the social services sector;

• fostering mutual understanding and effective cooperation among all participants in the social service system: personnel at social service institutions, regardless of their organizational and legal form, clients of these institutions and administrative and supervisory agencies.

Updating and simplification of the mechanism for providing targeted social assistance will make it possible to reduce the number of different benefits, concessions and beneficiaries and to raise the amount of social assistance provided to a sufficient level.

10. A weakening of government policy with regard to providing high-quality social services (task 6) today could end up costing a great deal in the future. A failure on the part of the government to take proper action due to a lack of funding is false economy, since this sort of social policy leads to social instability, social conflicts, malnutrition, disease and a rise in crime.

Improvement in the quality of social services provided by the government should be aimed, above all, at expanding the range of services offered: medical, psychological, educational, legal and personal assistance and assistance provided by social workers. Among those who are in particular need of this sort of social assistance are large families, single-parent families, families without children, families going through divorce and young families; underage parents; families with disabled members; families with an adverse psychological environment; children in a negative family environment that threatens their health and development; children who have been orphaned or abandoned by their parents; children manifesting anti-social behaviour and street children; single and elderly people; the unemployed; homeless people; young people who were raised in orphanages, and so on.

The implementation of measures to carry out this sectoral task will make it possible to provide for equal access to the range of social services guaranteed by the state, as well as social adaptation and rehabilitation services for disabled persons, families, women and children, individuals with anti-social behaviour, etc. It will also mean that citizens are able to exercise their rights to these services.

11. An analysis of the poverty risk by age and gender indicates that children are at the greatest risk of falling into poverty (task 7). According to sociological survey data, children account for more than one-fourth of the poor population. Child poverty has an irreversible impact on a child’s future: his health, his opportunities to obtain an education and his social status. Children are at risk of poverty even before birth and the risk depends on what sort of medical care and social assistance the future mothers receive. In connection with this, a reduction in child poverty is one of the priorities in the reduction of social poverty.

The implementation of various programmes will make it possible to ease the impact of factors that give rise to the spread of the phenomenon of social orphans, to provide effective support for children and families that are experiencing difficulties in life, to develop a system to protect the rights of juveniles, to expand the forms of childcare within the family and to increase the scope and improve the quality of social services provided to children and families that are experiencing difficulties.

12. The implementation of a range of interconnected priority measures in the social welfare sphere over the medium term (2007-2009) will make it possible:

• to provide for more effective management of state social insurance and pension system funds as a whole;

• to increase the number of insured persons covered by the state social insurance system;

• to promote growth in the insurance contributions received;

• to reduce unemployment;

• to raise the level of social welfare for the population;

• and to increase wages, pensions and social benefits;

which will ultimately contribute to a steady decline in the poverty rate by 10-12% over the forecast period.

6.4. Expansion of access to water, sanitation and housing and municipal services

1. The goal of this sector is to establish economic and administrative mechanisms to implement the first stage in the restoration of existing water supply and sanitation systems and housing and municipal services. Civil society and the business community need to participate in the reform of housing and municipal services. The main task at this stage of the reform is to instil among the public a sense of ownership and interest in the management of the housing stock.

2. Tajikistan uses predominantly surface water and groundwater sources, half of which have elevated hardness and mineralization levels. Overall, 87% of the urban population and 20% of rural residents in Tajikistan receive their water from centralized water systems that do not meet drinking water standards. These problems arise as a result of serious difficulties associated with the delivery of water, public sanitation and housing and municipal services, which exist in both cities and rural areas.

Sewage services are available to 23% of the country’s urban population and 5% of the rural population. The majority of population centres do not offer solid waste collection and recycling services.

In the process of the privatization of agricultural enterprises, some of the water supply, sanitation and housing and municipal services facilities were overlooked and left without any responsible supervision and management. A lack of interagency coordination has led to a situation in which there is little contact and interaction among various structures responsible for the drafting and implementation of policy.

3. The main goal of reforms in this sector is to provide access to the following by the end of 2009:

(1) drinking water that meets government standards, for 96% of the urban population and 51% of rural residents;

(2) basic sanitation and hygiene services for 47% of urban residents and 37% of the rural population.

4. The main problems in the water supply, sanitation and housing and municipal services sector are:

• functions related to the development of policy and regulation in the sector are not assigned to a single government body, there is no coordination among agencies responsible for policy development and implementation in the sector and there are not enough comprehensive programmes and plans aimed at the restoration of water supply and sanitation systems and housing and municipal services, among other things;

• the regulatory legal base is insufficient and limited; there are facilities in rural areas for which no one is responsible;

• there is a lack of a stable electricity supply, which hinders the uninterrupted operation of facilities;

• the technical condition of existing water, power and heating supply facilities, sanitation systems and housing and municipal services is unsatisfactory;

• there is no clearly defined and transparent policy for providing targeted social assistance related to payments for water, power and heating, and housing and municipal services;

• domestic and foreign investments are not being utilized effectively enough, there is no rate policy in place that is designed to ensure the profitability of providing these services and the institutional and functional potential of the sector with regard to collecting payment for the services is inadequate;

• the quality of housing and municipal services is declining, while inefficient spending is on the rise;

• measures aimed at development of the social sphere and the public utility infrastructure in rural municipalities (jamoats) are insufficient;

• rural areas have virtually no centralized sewer systems or facilities for the collection and recycling of solid household waste;

• rapid population growth is not leading to the corresponding development of the sector;

• there is a shortage of skilled personnel.

5. In view of the problems enumerated above and the NDS/PRS goals that have been set, the main tasks in the sector at this stage of the reform are: 1) implementation of institutional reforms in the sector; 2) attraction of private business and investment; 3) increased effectiveness and optimal performance of the sector’s infrastructure.

6. Within the framework of the institutional reforms (task 1), there are plans to carry out a functional and institutional survey and to clarify the functions and increase the potential of agencies responsible for the development and implementation of policy and the drafting of the relevant laws, standards, programmes and regulatory documents. This will make it possible to prepare the necessary legislative and other regulatory legal acts and to raise funds for the modernization of electrical power and hydro-mechanical equipment. There are also plans to improve the system for the recording of water use, to install water meters and to renovate key facilities in centralized heating systems in towns and villages. A conceptual plan for the development of housing stock will be prepared, which provides incentives for private construction activity, and an analysis will be performed of the rate system and the mechanism for the collection of payments for municipal services. A conceptual plan for the development of housing will help coordinate efforts in this sector.

7. One of the priority tasks in the “Water supply, sanitation and housing and municipal services” sector is to strengthen private business efforts and attract investment (task 2). In accordance with this task, there are plans to analyze the attractiveness of the sector from an investment standpoint with a view to evaluating the prospects for privatization or restructuring of facilities in the sector, and proposals will be prepared with regard to providing state support for activities in this sphere.

8. Another important task in the “Water supply, sanitation and housing and municipal services” sector is to increase the effectiveness and provide for optimal performance of the sector’s infrastructure (task 3). The following measures are foreseen with a view to fulfilling this task: drafting (or revision) and implementation of general local development plans; development (restoration) of the public utility infrastructure; promotion of public housing construction projects; and increased access to housing and municipal services for low-income and socially vulnerable segments of the population. As a result of these measures, there will be an increase in the income of housing and municipal services enterprises, the technical base of the sector will be restored, there will be a rise in the collection rate for public utility payments and the quality of services provided will improve.

With the aim of doing a better job of addressing the tasks outlined above, measures will be undertaken to restore and rebuild the reservoir for daily regulation of water levels; to protect public health zones; to restore and rebuild heating and water supply networks, interior plumbing systems and the water supply systems of towns, district centres and rural localities; to restore and rebuild sewage treatment plants; to build treatment facilities; and to improve sanitation and hygiene conditions.

9. The performance of these tasks and measures in the “Water supply, sanitation and housing and municipal services” sector will make it possible to increase access by the country’s urban population and rural residents to safe drinking water, sanitation services and housing and municipal services.

6.5. Promotion of environmental sustainability

1. Environmental sustainability issues are tied directly to the tasks outlined under Goal 7 of the MDGs. A group of interconnected government agencies in Tajikistan is responsible for their implementation.

The country’s environmental legislation is fairly well developed, although a majority of the laws lack mechanisms for their implementation and because of limited inter-agency coordination, these laws are not harmonized with the legislation of other ministries and departments.

2. The current situation has a negative impact on both environmental quality control and on the condition of the environment. As a consequence, there has been a decline in soil quality (according to the estimates, as much as 97.9% of the nation’s agricultural land is subject to erosion, and more than 15% of land under irrigation has been affected by salinization and swamping); we are also seeing deforestation, cultivation and overgrazing, and the unauthorized use of steep mountain slopes for open-pit mining. A large number of mountain lakes and reservoirs are vulnerable to breaches, which aggravates environmental instability.

3. The situation involving waste disposal and recycling is a challenging one. Tailing ponds pose a particularly serious environmental threat (there are 22 of these sites in the country, eight of which are in poor condition and are in need of immediate reconstruction). Agricultural activities are polluting the groundwater as a result of the excessive use of fertilizers and pesticides and the dumping of highly mineralized water from irrigation systems. The majority of monitoring stations and installations are not functional. Funds earmarked for the performance of environmental protection activities, which are provided for in all of the investment projects that are being implemented (up to 3% of their value), are not being used for their designated purpose.

4. There are serious difficulties associated with the performance of tasks to bring the country’s environmental policies into line with the existing economic realities, to raise the potential of bodies responsible for the development and implementation of environmental policies, to implement urgent measures to contain and remediate the effects of radioactive and toxic waste burial sites in the country and to bring solid household waste disposal sites into conformity with the requirements of environmental protection legislation.

5. In light of this, the main problems in environmental sustainability are:

• insufficient potential of agencies responsible for the development and implementation of environmental policies and the system of environmental monitoring stations and installations, glacier monitoring stations, dams and reservoirs; the development and creation of environmental data bases in pilot regions;

• the fact that the majority of existing and newly drafted environmental protection laws lack mechanisms for their implementation;

• an absence of measures for the recycling and destruction of particularly hazardous chemical waste, and for the construction of toxic waste storage sites and sites for the burial of poisonous chemicals that are no longer suitable for use or are prohibited;

• inadequate implementation of priority measures aimed at the conservation and sustainable use of water resources, preventing the degradation of land resources, maintaining biodiversity and preventing air pollution;

• the lack of an environmental monitoring system in industry;

• insufficient organization of reforestation activities and inadequate attention to specially protected natural areas and to raising public awareness of the environment.

6. In light of the NDS/PRS goals and priorities, as well as the problems in the sector, the following main tasks have been identified for the “Promotion of environmental sustainability” sector in 2007-2009: 1) implementation of institutional reforms and improvement of the legislative base; 2) promotion of existing and new investment projects.

7. One should bear in mind that environmental sustainability problems cut across multiple sectors in the PRS.

8. The measures that are planned to bring environmental policy into line with the socio-economic situation in the country, to optimize the functions and strengthen the potential of agencies responsible for the development and implementation of environmental policies, and also to reinforce the legislative framework for environmental activities, fall under task 1 “Implementation of institutional reforms and improvement of the legislative base”. Proper accounting of funds earmarked for environmental needs, including those related to the implementation of investment projects, is also foreseen.

9. Task 2 entails the promotion of existing and new investment projects in the area of environmental protection. The measures planned in this arena are aimed at promoting environmental sustainability in Tajikistan and at preventing the release into the environment of hazardous substances that have a negative impact on public health and the natural environment. At the same time, measures are planned within other sectors (energy, industry, agriculture, etc.) to reduce environmental impacts. Special attention is being given to the promotion of eco-tourism in Tajikistan.

10. Implementation of the environmental protection measures planned for 2007-2009 will make it possible to achieve the following goals by the end of 2009:

• a 5% increase in the area of land covered by forests;

• a 3% increase in the area of land set aside for the purpose of preserving biological diversity;

• a 5% reduction in the area of degraded land and pastureland;

• a 7-9% reduction in the discharge of polluted waste water into surface and groundwater sources;

• a 4% reduction in the release of point and non-point air pollution;

• household solid waste disposal sites, garbage dumps and tailing ponds brought into conformity with the requirements of environmental protection legislation;

• restoration and development of the environmental monitoring system.

6.6. Promotion of gender equality

1. As a result of a whole range of social, economic and cultural factors in public life, the gender gap is widening in terms of the basic rights that are actually being exercised (the right to work, the right to education, access to means of production and the right to own property). Policies that are currently being pursued are having a negligible impact on changing the social relationship between men and women. Equality under the law does not guarantee actual equality between men and women. The practical reality is characterized by a clear inconsistency between the government’s stated gender policy and the actual processes occurring in social relations among men and women.

2. A gender-based analysis of the government policy being pursued and actual social processes revealed a wide range of problems that are hindering progress in gender equality and the country’s sustainable development as a whole, and the following key problems have been identified:

• an underdeveloped legislative base and insufficient institutional mechanisms to ensure observance of the norms and principles of gender equality;

• a poor understanding and application of gender-based approaches on the part of public employees at all levels of government;

• inadequate budget funding to support measures to implement gender policy;

• a weak statistical base that does not allow for a sufficient breakdown of data by gender and a data collection system that limits opportunities for gender-based analysis to promote gender equality;

• unequal access to resources, including management resources, and supervision of these resources;

• tolerance of violence against women and children on the part of society;

• an inadequate social partnership between the government, civil society and the business community in addressing gender problems.

3. The PRS is based on goals and tasks set forth in the MDGs and NDS and it calls for a range of measures that are to be carried out in all sectors, including those aimed at achieving gender equality.

It is expected that measures outlined in the gender equality matrix will help shrink the gender gap if they are fully implemented.

4. It should be noted that gender issues cut across a number of different sectors and accordingly are included in a limited way in the matrixes of other sectors in the draft PRS with the aim of taking an integrated approach to resolving the problems described above. For example, ensuring equal access for boys and girls to basic and general education is reflected in the “Education” sector, measures to promote equal access to medical services are found in the “Health care” sector, measures to support entrepreneurial activities undertaken by women are included in the “Improvement of the investment climate, development of the private sector and entrepreneurship” sector, issues concerning employment and social protection for men and women appear in the “Social welfare” sector, and so on.

5. The matrix of measures to achieve gender equality covers problems that are to be addressed on a priority basis and are aimed exclusively at the implementation of government gender policy. The measures are grouped by the problems that are being addressed and consist of the following tasks: 1) improvement of the institutional base for gender policy; 2) creation of effective mechanisms to promote equal access to resources; 3) reduction in the level of domestic violence and violence in society.

6. Improvement of the institutional base of gender policy (task 1) entails a study of the need for amendments to the law on the civil service and the drafting of the relevant sublegal acts. There are plans to establish an inter-agency coordinating body, to perform a functional survey and to define the specific functions and authorities of agencies responsible for the drafting and implementation of gender policy. The introduction of “soft” quota methods for women in government agencies, the strengthening of female personnel potential among civil service employees and the drafting and implementation of a targeted programme to promote women to management positions are also planned.

7. The establishment of effective mechanisms to broaden women’s access to resources (task 2) entails the implementation of information campaigns and expansion of the practice of setting quotas for young women and men from remote regions. Assuming that additional funds can be raised, there are plans to set up education and training centres. In order to overcome traditional stereotypes about women, there are plans to perform expert reviews of curricula and textbooks from a gender standpoint, and to carry out measures to reduce the employment of women in domestic service jobs.

8. A reduction in all types of violence (task 3) is focused on improving the information available to the public, raising the level of gender awareness among law enforcement personnel and establishing a National Analytical Centre under the Ministry of Internal Affairs.

9. It is expected that implementation of the measures outlined for 2007-2009 will make it possible:

• to boost the percentage of women employed in government bodies by 11% (in 2009) compared to 2005;

• to expand the number of women as a proportion of the economically active population from 19% (in 2005) to 25% (in 2009);

• to increase women’s access to financial resources from 19% (in 2005) to 35% (in 2009).