Tajikistan economy to rebound in 2021 and 2022, says ADB report

In its Asian Development Outlook (ADO 2021), ADB forecasts Tajikistan’s gross domestic product (GDP) growth to rebound to 5.0% in 2021 and to 5.5% in 2022, up from the 4.5% growth reported in 2020. ADO is ADB’s flagship annual economic publication.

“While we are cautiously optimistic on growth, much will depend on the speed of the vaccination program and the full restoration of regular flights with Tajikistan’s main trading partners,” said ADB Country Director for Tajikistan Shanny Campbell. “Improving performance in major state-owned enterprises (SOEs) will also help to enhance Tajikistan’s fiscal sustainability.”

Inflation, which reached 9.4% last year, is projected to fall slightly to 9.0% in 2021 with more stable global food prices despite greater exchange rate flexibility, currency pressures from ruble depreciation, possibly faster monetary expansion with the celebration of 30 years of Tajikistan’s independence, along with expected increases in pensions and stipends, and higher electricity tariffs. In 2022, inflation is projected to be 8.0% as domestic demand tapers, but this could go higher if currency depreciation accelerates or domestic financing needs exceed expectations.

The report highlights the need to improve the performance of SOEs which play an important role in public services, job creation, and socioeconomic development. Tajikistan has more than 1,000 SOEs but most have incurred losses for decades, posing serious loan default and insolvency risks. In 2020, 12 of Tajikistan’s 27 largest SOEs incurred combined losses equal to 8.2% of GDP.

While the government has made progress in strengthening SOE oversight, transparency, and operational efficiency, more reforms are needed, says the report. These include introducing corporate governance principles and merit-based recruitment of top managers including from external sources, and applying key performance indicators to evaluate management performance. Introducing performance-based contracts and compensation could also improve SOEs’ operational efficiency.

Tajikistan joined ADB in 1998. Over 23 years, ADB has become the country’s largest multilateral development partner, supporting a diverse range of sectors – from strategic road and energy infrastructure to food security and social services – totaling over $2.1 billion in cumulative sovereign assistance including more than $1.6 billion in grants.

Established in 1966, the Asian Development Bank is owned by 68 members—49 from the region.