The $50 million grant will support key reforms aimed at improving the business environment, strengthening public sector governance and enhancing resilience to shocks
WASHINGTON, January 12, 2023-The World Bank's Board of Executive Directors approved today $50 million in grant financing from the International Development Association for the Tajikistan Development Policy Operation (DPO). The DPO will support Tajikistan's reform program, aimed at accelerating sustainable and resilient economic growth to support poverty reduction and improvements in the quality of people's lives.
In line with the reform priorities of the Government of Tajikistan, the DPO will support the resilience and sustainability of economic growth by: (i) improving the business environment and the integrity of the financial sector; (ii) strengthening the efficiency, transparency, and accountability of the public sector, including state-owned enterprises; and (iii) enhancing social and environmental resilience to shocks, such as a recent one caused by the COVID-19 pandemic.
"Tajikistan is committed to undertaking critical reforms to strengthen its economy and develop local drivers of growth by improving the enabling environment for private sector growth, strengthening the governance and sustainability of public finance, and enhancing government systems to protect the poor from shocks," said Ozan Sevimli, World Bank Country Manager for Tajikistan. "I am glad that the World Bank can support this reform program through the new development policy operation, the first one in ten years between the Government of Tajikistan and the World Bank. These reforms aim to support Tajikistan's efforts to create an environment for better and more productive jobs domestically and raising the living standards of the population, as spelled out in the National Development Strategy up to 2030."
Despite two decades of steady economic growth and poverty reduction, Tajikistan still struggles to overcome structural bottlenecks to enable productive job creation and remains highly exposed to external shocks. The private sector accounts for only 15 percent of total investment (3-4 percent of GDP), 30 percent of industrial output, and about 13 percent of formal employment.
The recent COVID-19 shock led to a substantial slowdown in economic activity and fewer job opportunities both inside and outside the country. Russia's war on Ukraine has also significantly increased uncertainties and risks for Tajikistan through remittances and trade channels. This new operation will help the Government respond to these challenges by providing financial support and enabling reforms in areas critical to mitigating the negative impacts of the external environment, and helping Tajikistan enhance its resilience to shocks.
The reforms supported by this DPO will also improve the Government's ability to develop the Rogun Hydropower Plant Project with sounder governance, financial and macro-fiscal framework and contribute to the socio-economic development of Tajikistan.
This DPO is a financing instrument used by the World Bank to support policy and institutional reforms to help countries achieve sustainable growth and poverty reduction. The last DPO financed by the World Bank in Tajikistan was approved in 2012.
Currently, the World Bank is financing 22 projects in Tajikistan totaling $1.47 billion. Since 1996, the World Bank has provided over $2.65 billion in IDA grants, highly concessional credits, and trust funds for Tajikistan. The World Bank is committed to continuing its support as the country strives to improve lives and meet the aspirations of its young and growing population.
