The International Monetary Fund (IMF) Executive Board has completed the first review under the Policy Coordination Instrument (PCI) for Tajikistan. This was concluded on December 12, 2024, in Washington, DC. The Board endorsed the staff appraisal without a meeting on a lapse-of-time basis and approved modifications to certain quantitative and reform targets.
Tajikistan's PCI program, which spans twenty-two months, was initiated in February 2024. It is designed to stabilize macroeconomic policies and support structural reforms aimed at fostering sustainable growth. The program's implementation is progressing well, with most targets for the first review being met.
The country's economy has shown resilience amid challenging external conditions. From January to September 2024, Tajikistan's real GDP increased by 8.4%, driven by investments and financial inflows. Inflation remained low at 3.1% year-on-year in September. The nation's external position remains robust due to strong financial inflows that have maintained a current account surplus and healthy international reserves. Post-COVID fiscal management has led to reduced public debt levels and improved banking sector soundness.
Looking ahead, Tajikistan faces manageable geopolitical risks and climate challenges. Economic growth is expected to moderate slightly to 6.7% in 2025, with inflation staying near the central bank’s target of around 6%. The current account may shift to a small deficit as financial inflows normalize, but fiscal deficits are projected to remain within sustainable limits.
To enhance resilience against external shocks and promote inclusive growth, policies should focus on improving revenue mobilization and spending efficiency. Proactive monetary policy is advised in response to large foreign exchange inflows and credit growth, with greater exchange rate flexibility recommended as a shock absorber.
The IMF Executive Directors praised Tajikistan's economic performance despite geopolitical tensions, noting strong growth and low inflation throughout 2024. They highlighted the importance of governance reforms in improving investment climates and supporting private sector-led growth.
The Directors also emphasized caution regarding inflation due to significant foreign exchange inflows and credit expansion. They recommended enhanced liquidity management through flexible exchange rates and macroprudential tools.
Revenue mobilization improvements are seen as crucial for increasing fiscal space for development projects while maintaining debt sustainability. Efforts should continue towards streamlining tax exemptions and enhancing tax administration efficiency.
Finally, comprehensive reforms in state-owned enterprises (SOEs) are deemed vital for reducing fiscal risks and encouraging private sector growth. Improving SOE governance could boost productivity, unlocking long-term economic potential.