The COVID-19 pandemic has had significant adverse impacts on Tajikistan's economy, as in other parts of the world, and is amplifying health and social pressures, noted World Bank experts at an online briefing on the Tajikistan Economic Update released today. Growth slowed to 4.2 percent in the first nine months of 2020, compared to 7.2 percent a year earlier.
"Restrictions on labor mobility and economic activity at home and abroad have resulted in lower migrant remittances, weaker consumer demand, and reduced investments," said Bakhrom Ziyaev, World Bank Economist in his presentation. "Unfortunately, a growing share of the population is projected to fall into poverty, undermining the progress made in this area over the past years."
According to the Tajikistan Economic Update: "Economic Slowdown Amid the Pandemic, presented at today's briefing, after a sharp decline in April and May 2020, the labor market began quickly recovering from June to August in the absence of lockdown measures. However, severe vulnerabilities remain. Among those reporting continued work disruptions, a rising share believes that job losses may be permanent. Food insecurity remains seriously elevated and far above the 2019 levels. Over 40 percent of households reported that they had been forced to reduce their consumption of food. Among those households seeking any medical care since the outbreak, 20 percent reported being unable to obtain that care.
Experts noted that with the right policy responses, Tajikistan's economy is expected to gradually bounce back in 2021-22. This scenario assumes availability of the vaccine, strengthened regional economies, and the restoration of remittance inflows and international trade.
"The key to unlocking dynamics with which to respond to Tajikistan's principal policy challenges, now amplified by the COVID-19 pandemic, rests with the ability to provide entrepreneurs and investors with the predictability and perspective inherent in clear and fair rules," said Jan-Peter Olters, World Bank Country Manager for Tajikistan, during the briefing. "The ongoing work on tax reforms, joint with a focus on upgrading the environment for the telecom sector or food production and processing, could help to unleash pent-up investment demand, increase economic self-reliance, foster exports, and contribute to the creation of new enterprises, jobs, and additional budgetary revenues."
Among potential risks to the recovery, experts named intensification of the pandemic with the following prolonged restrictive measures, as well as slow progress in structural reforms, including on business environment and inefficient state-owned enterprises. Tajikistan's public debt is expected to spike over 50 percent of GDP in 2020, and any new non-concessional borrowing will significantly add to the pressure on public debt sustainability. To ensure the soundness of public finances, the government committed to consolidating the budget and updated its Debt Management Strategy for 2021-2023 to guide through borrowing criteria and debt ceilings over the medium term. With support from development partners, the government is expected to continue maintaining healthcare and social protection expenditures.
The Fall 2020 Tajikistan Economic Update is available here.
The World Bank's active portfolio in Tajikistan includes 16 country and regional projects with a net commitment of over US$ 841 million. The World Bank remains committed to supporting Tajikistan as it strives to improve the lives of its people and meet the aspirations of its young and growing population.
