Economists Warn Against Incurring More Debt
Friday, 25 May, 2007
Economists Warn Against Incurring More Debt
Friday, 25 May, 2007
On May 14, President Imomali Rahmon met the head of the International Monetary Fund mission to Tajikistan, Carlos Pinerua, to discuss preparations for a conference of donor organisations to be held on June 2.
Pinerua described the forthcoming meeting as “a historic opportunity” for Tajikistan to show the world its economic success over the past ten years and particular attention will be paid to the National Development Strategy.
The strategy, aimed at alleviating poverty and accelerating economic growth, is currently being reviewed by the government. The plans is to source most of the funds needed to put it into effect from foreign investment, loans and grants.
Local experts polled by NBCentralAsia are concerned that the strategy might get Tajikistan into more foreign debt than it can handle. The country’s external debt last year stood at 877 dollars, about 33 per cent of gross domestic product.
An economist who has been involved in making recommendations for the national strategy but wishes to remain anonymous says Tajikistan has no chance of funding the strategy with grants from donors and out if its own resources.
He pointed out that donors promised around 900 million dollars for the first phase of a poverty reduction programme adopted in 2003, but Tajikistan has only received half of that amount, and the money came later than originally agreed. As a result, the programme has not been as effective as it might have been.
Economist Sodik Ismailzoda Swift economic reforms carried out with the help of international financial institutions, IFIs, can be ineffective if they fail to take national interests into account. For example, the first agricultural reforms left production of cotton, the major crop, largely unprofitable, while most of the industrial enterprises privatised at the insistence of the IFIs are not operating to full capacity.
Political observer Parviz Mullojanov points out that neighbouring Kyrgyzstan, which has similar economic indicators to Tajikistan, took out too many loans without properly considering the consequences, leaving it with debts it finds very difficult to manage.
“Under [former president Askar] Akaev, the country was seen as an ‘island of democracy’ and was at the front of the queue for getting foreign investment and loans. However, now it turns out that the funds have been misused and debt has become a heavy burden for future generations,” he said.
However, Timurali Afghonov, head of the government debt and assets department at the Tajik finance ministry, argues that the country will be able to cope because the central budget is already in a position where it could pay the debt service charges for around 400 million dollars in new loans.
Afghonov said the government’s monetary and finance policy has receive positive assessments from the IFIs, and the national economy has grown significantly over the last five years, making it more attractive to investors, he adds.
(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)
