At the conclusion of the visit, the mission issued the following statement:

Tajikistan’s economic recovery continues to take hold. Growth driven by remittances, industry, trade, and services reached 7.5% through September 2012. Annual inflation subsided to 4.5% in July but has since picked up to 6.5% due to rising global food prices, demonstrating one of Tajikistan’s main vulnerabilities to external shocks. Growth in 2013 is projected to remain robust on the back of strong remittances.

With regard to the mission’s visit, discussions with the authorities were productive and there was progress agreeing on policies and actions for the rest of 2012 and 2013 that could be supported by an IMF program. Key areas for structural reforms include improving public financial management and strengthening the financial sector, which should help stimulate private sector investment and job-creating growth. The mission and the government agreed to continue consultations and program discussions in the coming period.

The mission agrees with the National Bank of Tajikistan’s (NBT) proposed stance on monetary policy for 2013, which aims at containing inflation to single digits and securing macroeconomic stability. The mission welcomes the continued commitment to greater exchange rate flexibility to protect Tajikistan’s competitiveness while supporting the buildup of international reserves. In this context, the mission also welcomes planned efforts to bolster international reserves through the conversion of all gold of the NBT and the Ministry of Finance into monetary gold.

The authorities’ proposed 2013 budget is appropriate and the mission supports the government’s commitment to protect the most vulnerable in the population through increased social spending. The mission is encouraged by the government’s willingness to introduce a dividends policy for state-owned enterprises, which will help build fiscal buffers and improve public financial management. The mission welcomes the adoption of the new tax code and supports ongoing reforms to restructure the State Tax Committee along functional lines and strengthen tax administration. The government’s prudent external debt policy has been a key achievement and the mission urges the authorities to plan spending and borrowing over the medium term that is consistent with fiscal and external sustainability.

Policies to develop and strengthen the financial sector and increase transparency of public financial management – including of state-owned enterprises – would help mitigate fiscal risks. The mission welcomes the government’s commitment to stop directed lending and directed investment in Tajikistan, and urges proper resolution of any banks that have been negatively affected by these practices. These actions will help create a more level playing field for private investment and encourage financial intermediation on a purely commercial basis.