Economy of Tajikistan

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Economy of Tajikistan

Dushanbe

Currency Somoni (ISO code: TJS

abbreviation: SM)

Fiscal year calendar year

Trade organisations IMF, World Bank, CIS, SCO, WTO, CISFTA

Country group Developing/Emerging[1]

Lower-middle income economy[2]

Statistics

GDP  $7.825 billion (nominal, 2021 est.)[3]

 $37.235 billion (PPP, 2021 est.)[3]

GDP rank 149th (nominal, 2021)

127th (PPP, 2021)

GDP growth 7.3% (2018) 7.5% (2019e)

−2.0% (2020f) 3.7% (2021f)[4]
GDP per capita  $810 (nominal, 2021 est.)[3]

 $3,856 (PPP, 2021 est.)[3]

GDP per capita rank 172th (nominal, 2021)

149th (PPP, 2021)

GDP by sector agriculture: 23.3%, industry: 22.8%, services: 53.9%
 (2012 est.)
Inflation (CPI) 7.1% (2020 est.)[3]
Population below poverty  27.4% (2018)[5]
line
 2.7% on less than $1.90/day (2020f)[6]
Gini coefficient 34.0 medium (2015)[7]
Human Development  0.656 medium (2018)[8] (125th)
Index
0.574 medium IHDI (2018)[9]
Labour force 2.1 million (2012)
Labour force by agriculture: 47.9%, industry: 10.9%, services: 41.2%
occupation
(2012 est.)

Unemployment 2.5% (2012 est.)

Main industries aluminum, cement, vegetable oil
Ease-of-doing-business  106th (medium, 2020)[10]
rank

External

Exports $1.359 billion (2012 est.)

Export goods aluminium, electricity, cotton, fruits, vegetable oil, textiles
Main export partners  Turkey 23.5%

 Switzerland 21.6%

 Uzbekistan 16.4%

 Kazakhstan 11.6%

 China 10.2%

 Russia 4.42%

 Mongolia 3.74%

 Italy 2.14%

 France 2.12%

 Kyrgyzstan 1.21% (2019)[11]

Imports $3.778 billion (2012 est.)

Import goods petroleum products, aluminium oxide, machinery and

equipment, foodstuffs
Main import partners  China 40.1%

 Russia 23.7%

 Kazakhstan 16.2%

 Uzbekistan 4.73%

 Turkey 3.89%

 United Arab Emirates 1.52%

  Kyrgyzstan 1.42%

 Lithuania 0.96%

 Italy 0.87%

 Germany 0.78% (2019)[12]

Public finances
Public debt US$2.2 billion (31 December 2012 est.)

Revenues US$2.046 billion (2012 est.)

Expenses US$2.066 billion (2012 est.)

Economic aid recipient: US$67 million from US (2005)

Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars.

The economy of Tajikistan is dependent upon agriculture and services. [13] Since

independence, Tajikistan has gradually followed the path of transition economy,
reforming its economic policies. With foreign revenue precariously dependent upon
exports of cotton and aluminium, the economy is highly vulnerable to external shocks.
Tajikistan's economy also incorporates a massive black market, primarily focused on
the drug trade with Afghanistan. Heroin trafficking in Tajikistan is estimated to be
equivalent to 30-50% of national GDP as of 2012. [14]
In the fiscal year (FY) 2000, international assistance remained an essential source of
support for rehabilitation programs that reintegrated former combatants of the Tajikistani
Civil War into the civilian economy, thus helping maintain the peace. International
assistance also was necessary to address the second year of severe drought that
resulted in a continued shortfall of food production. Tajikistan's economy grew
substantially after the war. The gross domestic product (GDP) of Tajikistan expanded at
an average rate of 9.6% over the period of 2000-2007 according to the World
Bank data. This improved Tajikistan's position among other Central Asian countries
(namely Turkmenistan and Uzbekistan), which have degraded economically ever since.
[15]
 As of August 2009, an estimated 60% of Tajikistani citizens live below the poverty
line.[16] The 2008 global financial crisis has hit Tajikistan hard, both domestically and
internationally. Tajikistan has been hit harder than many countries because it already
has a high poverty rate and because many of its citizens depend on remittances from
expatriate Tajikistanis.

Contents

 1Economic history
 2Gross domestic product
 3Industries
o 3.1Agriculture
o 3.2Forestry
o 3.3Fishing
 o 3.4Mining and minerals
o 3.5Industry and manufacturing
o 3.6Energy
o 3.7Services
o 3.8Tourism
 4Labour
 5Currency, exchange rate, and inflation
 6Government budget
 7Foreign economic relations
o 7.1WTO
 8See also
 9References
 10External links

Economic history[edit]
This is a chart of trend of gross domestic product of Tajikistan at market
prices estimated by the International Monetary Fund with figures in millions of ruling
currency.

Year Gross Domestic Product US Dollar Exchange

1995 65,000 123.33 Tajik roubles

2000 1,807 1.82 somoni

2005 7,201 3.11 somoni

For purchasing power parity comparisons, the US Dollar is exchanged at SM 0.82 only.
The Tajikistani economy has been gravely weakened by six years of civil conflict and
loss of markets for its products. Tajikistan thus depends on international humanitarian
assistance for much of its basic subsistence needs. Even if the peace agreement of
June 1997 is honoured, the country faces major problems in integrating refugees and
former combatants into the economy. The future of Tajikistan's economy and the
potential for attracting foreign investment depend upon stability and continued progress
in the peace process.
In 2006 GDP per capita of Tajikistan was 85% of 1990s level.[17] While population has
increased from 5.3 million in 1991 to 7.3 million in 2009.
Despite resistance from vested interests, the Government of Tajikistan continued to
pursue macroeconomic stabilization and structural reform in FY 2000. In December
1999, the government announced that small-enterprise privatization had been
successfully completed, and the privatization of medium-sized and large-owned
enterprises (SOEs) continued incrementally. The continued privatization of medium-
sized and large SOEs, land reform, and banking reform and restructuring remain top
priorities. Shortly after the end of FY 2000, the Board of the International Monetary
Fund gave its vote of confidence to the government's recent performance by approving
the third annual Poverty Reduction and Growth Facility Loan for Tajikistan. Improved
fiscal discipline by the Government of Tajikistan has supported the return to positive
economic growth. The government budget was nearly in balance in 2001 and the
government's 2002 budget targets a fiscal deficit of 0.3% of GDP, including recent
increases in social sector spending.
The following table shows the main economic indicators in 1997–2017. [18]

200 20 200 200 200 20 201 201 20 20 201 20 20 201

Year 1993 1995
0 05 6 7 8 09 0 1 12 13 4 15 16 7

GDP 10. 11.4 12.7 13.9 14. 15. 17.2 18. 20. 22. 24. 26. 28.
in 6.61 4.73 5.92
41 8 0 7 62 77 9 93 65 43 04 02 38
US$ bn. bn. bn.
bn. bn. bn. bn. bn. bn. bn. bn. bn. bn. bn. bn. bn.
(PPP)

GDP
per
capita 1,5 1,62 1,76 1,89 1,9 2,0 2,21 2,3 2,5 2,7 2,8 3,0 3,2
1,186 836 945
in 04 5 0 5 43 70 6 76 40 02 36 08 12
US$
(PPP)

GDP
growt −11.1  −12. 8.3  6.7  7.0  7.8  7.9  3.9  6.5  7.4  7.5  7.4  6.7  6.0  6.9  7.1 
h % 5 % % % % % % % % % % % % % % %
(real)

Inflati
on 2,000. 612. 32.9  7.3  10.0  13.2  20.4  6.4  6.4  12.4  5.8  5.0  6.1  5.8  5.9  7.3 
(in
6 % 5 % % % % % % % % % % % % % % %
Percent
)

Gov.
debt
(Perce 111  46  37  34  30  37  37  36  32  29  28  34  42  48 
... ...
ntage % % % % % % % % % % % % % %
of
GDP)
Gross domestic product[edit]

Real GPD per capita development of Tajikistan

In 2005 Tajikistan's GDP grew by 6.7%, to about US$1.89 billion, and growth for 2006
was about 8%, marking the fifth consecutive year of annual growth exceeding 6%. The
official forecast for GDP growth in 2007 is 7.5%. Per capita GDP in 2005 was US$258,
lowest among the 15 countries of the former Soviet Union. In 2005 services contributed
48%, agriculture 23.4%, and industry 28.6% to GDP. [19] The recent global recession has
reduced Tajikistan's GDP growth rate to 2.8% in the first half of 2009. Remittances from
expatriate Tajikistanis is estimated to account for 30-50% of Tajikistan's GDP.

Industries[edit]
Agriculture[edit]
Main article: Agriculture in Tajikistan
Although the government has announced an expedited land reform program, many
Soviet-era state farms still existed in 2006, and the state retains control of production
and harvesting on privatized farms. Privatization of cotton farms has been especially
slow, and unresolved debts of cotton farmers remained a problem in 2006. In the early
2000s, the major crops were cotton (which occupied one-third of arable land in 2004 but
decreased after that date), cereals (mainly wheat), potatoes, vegetables (mainly onions
and tomatoes), fruits, and rice. Cotton makes an important contribution to both the
agricultural sector and the national economy. Cotton accounts for 60 percent of
agricultural output, supports 75 percent of the rural population, and uses 45 percent of
irrigated arable land.[20] More than 80% of the 8,800 square kilometers of land in use for
agriculture depends on irrigation. Tajikistan must import grain from Kazakhstan and
Uzbekistan.[19]
Tajikistan produced in 2018:

 964 thousand tons of potato;

 778 thousand tons of wheat;
 680 thousand tons of onion;
 641 thousand tons of watermelon;
 443 thousand tons of tomato;
 356 thousand tons of carrot;
 308 thousand tons of vegetable;
 300 thousand tons of cotton;
 241 thousand tons of grape;
 238 thousand tons of apple;
 237 thousand tons of maize;
 211 thousand tons of cucumber;
 116 thousand tons of cabbage;
 108 thousand tons of barley;
 90 thousand tons of rice;
In addition to smaller productions of other agricultural products, like apricot (31
thousand tons).[21]
Forestry[edit]
3% of Tajikistan is forested, mainly at elevations between 1,000 and 3,000 meters.
No forest region is classified as commercially usable; most are under state protection.
Wood production is negligible, but local inhabitants harvest non-wood forest products.
 
[19] [22]

Fishing[edit]
Streams and lakes produce a limited amount of fish, and some fish is produced
by aquaculture. In 2003 some 158 tons of fish were caught and 167 tons raised on fish
farms.[19]
Mining and minerals[edit]
Main article: Mining in Tajikistan
Tajikistan has rich deposits of gold, silver, and antimony. The largest silver deposits are
in Sughd Province, where Tajikistan's largest gold mining operation also is located.
Russia's Norilsk nickel company has explored a large new silver deposit at Bolshoy
Kanimansur. Tajikistan also produces strontium, salt, lead, zinc, fluorspar,
and mercury. Uranium, an important mineral in the Soviet era, remains in some quantity
but no longer is extracted. Fossil fuel deposits are limited to coal, of which about 30,000
tons are mined annually. Tajikistan's extensive aluminium processing industry depends
entirely on imported ore.[19]
Industry and manufacturing[edit]
The output of most industries declined sharply during the mid-1990s; despite
widespread privatization, in the early 2000s industry rallied very slowly. In 2006 an
estimated one-third of Tajikistan's 700 major industrial enterprises were completely idle,
and the remainder were operating at 20 or 25% of capacity. The causes are outmoded
equipment, low investment levels, and lack of markets. To revitalize the sector, in 2006
the government was considering renationalizing some enterprises. Tajikistan's only
major heavy industries are aluminium processing and chemical production. The former,
which provided 40% of industrial production in 2005, is centered at the Tursunzoda
processing plant, the latter in Dushanbe, Qurghonteppa, and Yavan. Aluminium
production increased by 6% in 2005. Some small light industrial plants
produce textiles and processed foods, using mainly domestic agricultural products. The
textile industry processes about 20% of domestically grown cotton. The expansion of
light industry output contributed significantly to GDP growth in 2005. The construction
industry, about half of which is state-owned, has suffered from low investment in capital
projects and from shoddy workmanship that has discouraged international contracts.
However, new infrastructure projects and increased housing construction brought a
60% increase in output from 2004 to 2005.[19] As of 2009, one third of industrial plants
and factories are inactive, according to Tajikistan's Institute of Economic Studies.
Industrial output has fallen by 13% in the first six months of 2009, leading to a fall in
export revenues of 48%.
Energy[edit]
See also: List of power stations in Tajikistan
The rivers of Tajikistan, such as the Vakhsh and the Panj, have
great hydropower potential, and the government has focused on attracting investment
for projects for internal use and electricity exports. Tajikistan is home to the
hydroelectric power station Nurek, the second highest dam in the world. [23] Sangtuda 1
Hydroelectric Power Plant of 670 megawatts (MW) capacity, operated by Russian Inter
RAO UES, commenced operations on 18 January 2008 and was officially
commissioned on 31 July 2009.[24][25][26][27] Other projects at the development stage
include Sangduta 2 by Iran, Zerafshan by Chinese SinoHydro and Rogun power plant,
which, at 335 metres (1,099 ft), is projected to supersede the Nurek Dam as tallest in
the world if completed.[28] The Rogun Dam was originally planned to be built by Russia's
Inter RAO UES, but following disagreements, Russia pulled out. In 2010, production
resumed with Iranian investment and Chinese assistance. [29][30][31] Besides hydropower,
other energy resources include sizable coal deposits and smaller reserves of natural
gas and petroleum. In December 2010, Russian Gazprom announced discovery of
significant natural gas reserves in Sarykamish field with 60 bcm of natural gas, enough
for 50 years of Tajikistan's domestic consumption. The national power company is Barqi
Tojik.[32]
Tajikistan is a partner country of the EU INOGATE energy programme, which has four
key topics: enhancing energy security, convergence of member state energy
markets on the basis of EU internal energy market principles, supporting sustainable
energy development, and attracting investment for energy projects of common and
regional interest.[33]
Services[edit]
Throughout the early 2000s, the overall output of the services sector has increased
steadily. The banking system has improved significantly because of strengthened
oversight by the National Bank of Tajikistan, relaxed restrictions on participation by
foreign institutions, and regulatory reform. The system includes 16 commercial banks
and the central bank, or National Bank. The state controls the system, although in
principle most banks have been privatized. An internationally assisted restructuring
program was completed in 2003. Banks provide a narrow range of services,
concentrating on providing credit to state-owned enterprises. Only an estimated 10% of
the capital in Tajikistan moves through the banking system, and small businesses rarely
borrow from banks.
Abdujabbor Shirinov, Chairman of the National Bank of Tajikistan announced 142 credit
organizations, including 16 banks and 299 their branches, two non-bank financial
institutions and 124 microfinance organizations functioned in Tajikistan at the first of
2013.[34]
Tourism[edit]
The tourism industry of Tajikistan was eliminated by the civil war, but has begun to re-
establish itself in recent years. In 2018, the British Backpacker
Society ranked Tajikistan as the 7th best adventure travel destination on earth.[35] The
Tajik Committee on Tourism Development responded to this accolade by stating that
"the inclusion of Tajikistan in the British Backpacker Society’s top 20 adventure travel
destinations testifies the development of tourism in [the] country." [36]

Labour[edit]
In 2003 Tajikistan's active labour force was estimated at 3.4 million, of whom 64% were
employed in agriculture, 24% in services, and 10% in industry and construction. After
declining in the early 2000s, the real wages of state employees were raised in 2004 and
2005. Because of the continued dominance of state farms, the majority of workers are
government employees, although only a small number rely completely on wages. Driven
by high unemployment, in 2006 an estimated 700,000 workers found seasonal or
permanent employment in Russia and other countries. Their remittances, estimated at
US$600 million in 2005, are an important economic resource in Tajikistan; in 2004 an
estimated 15% of households depended mainly on those payments. In May 2009
remittances to Tajiks had fallen to $525 million, a 34% decline from the previous year.
Immediately before the 2008 financial crisis there were an estimated 1.5 million foreign
workers sending remittances back to Tajikistan. In 2006 the average wage was US$27
per month. The national unemployment rate was estimated unofficially as high as 40%
in 2006, but in rural areas, unemployment has exceeded 60%. Unemployment has been
higher in the southern Khatlon Province than in the northern Soghd Province. [19] Mean
wages were $0.66 per man-hour in 2009.
Tajikistan's informal employment sector has been reported to use both child
labour and forced labour in the country's cotton industry according to the U.S.
Department of Labor's List of Goods Produced by Child Labor or Forced Labor.

Currency, exchange rate, and inflation[edit]

The somoni (SM) was introduced in 2000 to replace the Tajikistani rouble, which had
been the currency since 1995. In March 2022, about SM 11.2 equalled
US$1.<Oanda.com, March 9, 2022> <ref[oanda.com, March 9, 2022]/ref> Throughout
the post-Soviet era, inflation has been a serious obstacle to economic growth and
improvement of the standard of living. For the years 2001–3, Tajikistan's inflation rates
were 33%, 12.2%, and 16.3%, respectively, but in 2004 the rate fell to 6.8%, and the
rate for 2005 was 7.1%. In late 2006, inflation approached the 10% level. The official
forecast for 2007 is 7%.[19]

Government budget[edit]
The year 2004 was the first year of budget deficit after three consecutive years of
budget surpluses, which in turn had followed four years of deficits between 1997 and
2000. In 2005 revenues totalled US$442 million (aided by improvements in tax
collection), and expenditures were US$542 million, a deficit of US$100 million. The
approved 2007 state budget calls for revenues of US$926 million and expenditures of
US$954 million, leaving a deficit of US$28 million. [19]

Foreign economic relations[edit]

Tajikistani exports in 2006

In the post-Soviet era, Tajikistan has substantially shifted its markets away from the
former Soviet republics; in 2005, more than 80% of total exports went to customers
outside the Commonwealth of Independent States (CIS), including more than 70% to
countries of the European Union (EU) and Turkey. However, because most of
Tajikistan's food and energy are imported from CIS countries, in 2005 only about 53% of
total trade activity was outside the CIS. In 2005, the top overall buyers of Tajikistan's
exports, in order of value, were the Netherlands, Turkey, Russia, Uzbekistan, Latvia,
and Iran. Besides aluminium, which accounts for more than half of export value, the
main export commodities are cotton, electric power, fruits, vegetable oils, and textiles. In
2005 the largest suppliers of Tajikistan's imports, in order of value, were Russia,
Kazakhstan, Uzbekistan, Azerbaijan, China, and Ukraine. Those import rankings are
determined largely by the high value of fuels and electric power that Tajikistan buys
from its neighbours. Another significant import is alumina (aluminium oxide) to supply
the aluminium industry. The major suppliers of alumina are Azerbaijan, Kazakhstan, and
Ukraine.[19]
Tajikistan has suffered trade deficits throughout the post-Soviet era. In 2003, the deficit
was US$97 million, based on exports of US$705 million and imports of US$802 million.
In 2004, exports were worth US$736 million and imports, US$958 billion, creating a
trade deficit of US$222 million. The deficit increased again in 2005, to US$339 million,
mainly because cotton exports decreased and domestic demand for goods increased. [19]
In 2005, the current account deficit was US$86 million, having shown a general
downward trend since the late 1990s. The estimated current account deficit for both
2006 and 2007 is 4.5% of GDP, or about US$90 million in 2006. In 2005 the overall
balance of payments was US$14 million. The estimated overall balance of payments for
2006 is US$8 million.[19]
 At the end of 2006, Tajikistan's external debt was estimated at US$830 million, most of
which was long-term international debt. This amount grew steadily through the 1990s
and early 2000s because of state borrowing policy. In 2004 Tajikistan eliminated about
20% of its external debt by exchanging debt to Russia for Russian ownership of
the Nurek space tracking station, and by 2006, rescheduling negotiations had reduced
the debt by about two-thirds as a percentage of gross domestic product. [19]
In the early 2000s, foreign direct investment has remained low because of political and
economic instability, corruption, the poor domestic financial system, and Tajikistan's
geographic isolation. The establishment of businesses nearly always
requires bribing officials and often encounters resistance from entrepreneurs with
government connections. To attract foreign investment and technology, Tajikistan has
offered to establish free economic zones in which firms receive advantages on taxes,
fees, and customs. In 2004, the parliament passed a law on free economic zones [37] and
in 2008 passed a decree creating two zones: the Panj Free Economic Zone and
the Sughd Free Economic Zone.[38] In 2003 foreign direct investment totaled US$41
million; it increased to US$272 million in 2004 because of the debt-reduction transaction
with Russia. In the first half of 2005, the figure was US$16 million. Beginning in 2005,
the Russian Rusal aluminium company resumed operations to complete the
hydroelectric station at Rogun on the Vakhsh River and expand aluminum production at
the Tursunzade plant. That plant was scheduled for possible sale to Rusal in 2007. Also
in 2005, Russia and Iran resumed work on the Vakhsh River Sangtuda hydroelectric
project. Gazprom, the Russian natural gas monopoly, allocated US$12 million for oil
and gas exploration in Tajikistan in 2007 after spending US$7 million in 2006. In 2005
the Russian telecommunications company VimpelCom bought a controlling share of
Tajikistan's Tacom mobile telephone company. As of 2006, Turkey tentatively planned
to invest in a luxury hotel and a cotton processing plant. [19]
WTO[edit]
Tajikistan joined the World Trade Organization (WTO) on 2 March 2013, becoming the
159th country to join the organization. The Working Party on the accession of Tajikistan
was established by the General Council on 18 July 2001. Tajikistan completed its
membership negotiations on 26 October 2012, when the Working Party adopted the
accession package. The General Council approved the accession on 10 December
2012. The Working Party held its sixth meeting in July 2011 to continue the examination
of Tajikistan's foreign trade regime. As part of bilateral market access negotiations,
Tajikistan agreed to lower tariffs on cooking equipment, refrigerators, ovens and water
heaters in discussions to gain Thailand's backing. Earlier, the government of Tajikistan
confirmed that it had concluded negotiations with Japan, and had received support from
the nation for its accession in an agreement signed on July 31, 2012. [39]

See also[edit]
 Tajikistan portal

 Visa policy of Tajikistan