Recent Economic Developments
Economic developments in 2008 were positive, despite a severe winter, a prolonged drought, and electricity shortages. Real GDP growth reached 8 percent in 2008, mainly driven by remittance-financed demand in the services and construction sectors, and non-cotton agricultural production. Inflation receded from its mid-2008 peak to 10 percent year-on-year in March 2009, helped by the recent retrenchment in international commodity prices.
The authorities achieved an overall fiscal surplus of 1 percent of GDP (excluding externally financed investment) in 2008, compared to a target of overall balance under the SMP. Revenues were buoyant, mostly reflecting high nominal GDP and import growth, as well as some administrative gains. At the same time, the authorities maintained strict expenditure control.
Helped by the inflow of remittances, the National Bank of Tajikistan (NBT) strengthened its net international reserves position to $181 million at end-December 2008. However, gross international reserves of $199 million covered only 1.2 month of next year’s imports. Since the beginning of the year, remittances inflows have declined absolute terms, and the Tajik somoni has depreciated by over 10 percent against the U.S. dollar.
The authorities have also taken important first steps to address the problems that were at the root of misreporting to the IMF that was revealed in late 2007. Specifically, they ended the NBT’s involvement in cotton financing and submitted legal amendments to parliament that would strengthen governance at the NBT and prevent future conflicts of interest. The authorities also retained an external auditor to conduct a special audit of the NBT. As a signal of the authorities’ commitment to transparency, the Executive Summary of the special audit report was recently published on the NBT’s web site. Moreover, they prepared an action plan to follow up on the auditor’s recommendations. The IMF will monitor implementation of this action plan under the PRGF. Lastly, the NBT has appointed an external auditor to conduct an audit of its financial statements for the fiscal year ending April 30, 2009, and they have conducted an external audit of Tajikistan’s net international reserves position at end-2008.