IMF Wraps 2025 Article IV, Policy Review With Tajikistan

• Tajikistan's strong growth performance has continued into 2025, accompanied by well-contained inflation, a favorable external position and a further reduction in public debt to GDP.
• Tajikistan's favorable economic performance creates an opportunity to implement needed reforms to address structural vulnerabilities and support domestic job creation. Broad-based governance and transparency reforms are key to strengthening the business climate to foster more diversified private sector-led growth.
• The Second Review under the Policy Coordination Instrument with Tajikistan was completed, with all but one of the quantitative targets for the second review met and the reform targets broadly implemented.

Washington, DC – The Executive Board of the International Monetary Fund (IMF) completed the 2025 Article IV Consultation¹ and the Second Review of the Policy Coordination Instrument (PCI)² with Tajikistan on June 23, 2025. The authorities have consented to the publication of the Staff Report prepared for this consultation.³

Tajikistan's twenty-two-month program under the PCI was approved in February 2024. The PCI aims to anchor macroeconomic policies and support structural reform implementation to maintain macro-financial stability and foster more sustainable and inclusive growth. Program implementation remains broadly on track, with all but one of the quantitative targets for the second review met and the reform targets broadly implemented.

Tajikistan's strong growth performance has continued into 2025, accompanied by a steady improvement in macroeconomic fundamentals. Large financial inflows have contributed to a favorable external position, with FX reserves amounting to 7 months' import coverage, while prudent fiscal policy has anchored a continued reduction in public debt to 25 percent of GDP at end-2024. Inflation remains well-contained at 3.6 percent (y/y) in April 2025. The near-term outlook remains positive, but subject to considerable regional uncertainty that could result in a less favorable external environment.

Tajikistan's favorable economic performance creates an opportunity to implement needed reforms to address structural vulnerabilities and support domestic job creation. Improving revenue mobilization and spending efficiency is critical to increasing space for development priorities. Monetary policy should remain vigilant and manage liquidity proactively in the context of large foreign exchange inflows and strong credit growth. Broad-based governance and transparency reforms are key to strengthening the business climate to foster more diversified private sector-led growth.

At the conclusion of the Executive Board's discussion, Mr. Okamura, Deputy Managing Director, and Acting Chair, made the following statement:

"Tajikistan's strong growth performance in recent years has continued into 2025, accompanied by a steady improvement in macroeconomic fundamentals. Large financial inflows have contributed to a favorable external position, while prudent fiscal policy has anchored a continued reduction in public debt. The medium-term outlook remains positive, but subject to considerable regional uncertainty that could result in a less favorable external environment.

"The authorities' economic program under the Policy Coordination Instrument focuses on policies to anchor macroeconomic stability and strengthen resilience against shocks while advancing governance reforms to foster more diversified and inclusive growth. Program implementation remains broadly on track, with most of the quantitative targets for the second review met and the reform targets broadly implemented.

"The fiscal deficit target of 2.5 percent of GDP remains an important anchor to keep public debt on a favorable medium-term trajectory. Improved revenue mobilization and spending efficiency are key to increasing fiscal space for social and development projects. The authorities have taken steps to strengthen oversight of state-owned enterprises, but greater efforts are needed to reduce quasi-fiscal losses in the electricity sector.

"Inflation remains well contained, but strong credit growth in the context of large financial inflows requires continued vigilance. Greater exchange rate flexibility and proactive liquidity management are essential to help manage financial inflows. The banking system has strengthened its balance sheet in recent years, supporting financial deepening, but strong lending to households warrants careful oversight to ensure prudent lending standards.

"Tajikistan's favorable economic performance creates an opportunity to deepen reforms to address structural vulnerabilities and support domestic job creation. Broad-based governance and transparency reforms are key to foster more diversified private sector-led growth. Reform efforts should focus on enhancing anti-corruption frameworks, improving extractive sector transparency, and strengthening institutional oversight.

Executive Board Assessment⁴

Executive Directors agreed with the thrust of the staff appraisal. They welcomed Tajikistan's continued strong economic performance and positive medium‑term outlook. At the same time, amid considerable regional and global uncertainty, the country remains vulnerable to a less favorable external environment, given its reliance on remittances and narrow export base. Against this background, Directors stressed that Tajikistan's favorable economic performance creates an opportunity to deepen reforms under the PCI to support job creation and improve resilience.

Directors welcomed the authorities' commitment to a fiscal deficit anchor of 2.5 percent of GDP to keep public debt on a favorable medium‑term trajectory. They noted that improved revenue mobilization and spending efficiency are key to building buffers and increasing fiscal space for social and development projects. In that context, Directors encouraged the authorities to streamline tax expenditures, strengthen project oversight to enhance the efficiency of public investment, and improve targeting of social assistance. Directors welcomed the authorities' efforts to develop the domestic debt market and expand the investor base to further deepen the market.

Directors noted that inflation remains well contained but cautioned that strong credit growth in the context of large financial inflows requires continued vigilance. Stressing the importance of exchange rate flexibility and proactive liquidity management to help manage these inflows, they encouraged continued efforts to deepen the FX market and strengthen liquidity absorption and monetary policy transmission. Directors also emphasized that strong lending to households warrants careful macroprudential oversight and sound financial sector regulation and supervision.

Directors welcomed the authorities' focus on improved transparency and governance of state‑owned enterprises and noted recent steps to strengthen financial oversight and monitor fiscal risks. While welcoming the corrective measures to address the sizeable accumulation of arrears of the public electricity company, Directors emphasized that greater efforts are needed to improve collection rates for the largest electricity consumers and cost controls to strengthen its financial performance and reduce quasi‑fiscal losses.

Directors emphasized the importance of broad‑based governance and transparency reforms to foster more diversified private sector‑led growth. They welcomed the authorities' focus on strengthening the investment climate and noted that reform efforts should continue to focus on enhancing anti‑corruption and AML/CFT frameworks, improving extractive sector transparency, and strengthening institutional oversight. It will also be important to close data quality gaps.

It is expected that the next Article IV consultation with Tajikistan will be held on the current 24‑month cycle.

¹ Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.

² The PCI is available to all IMF members that do not need Fund financial resources at the time of approval. It is designed for countries seeking to demonstrate commitment to a reform agenda or to unlock and coordinate financing from other official creditors or privateinvestors. (see https://www.imf.org/en/About/Factsheets/Sheets/2017/07/25/policy-coordination-instrument).

³ Under the IMF's Articles of Agreement, publication of documents that pertain to member countries is voluntary and requires the member consent. The staff report will be shortly published on the www.imf.org/Tajikistan page.

⁴ At the conclusion of the discussion, the Managing Director, as Chair of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm .