In 1999, Tajikistan’s progress toward lasting political stability created favorable conditions for the early stages of an economic revival. GDP grew 3.7 percent last year (Russian agencies, Central Asia and Caucasus Business Report, Vol. 3 Issue 5). Barring any major crisis, GDP is estimated to rise 5.0 percent in 2000. Due to a 57 percent increase in exports to CIS countries, total Tajik exports rose 15 percent in 1999, but still remained below 1997 levels (Goskomstat, CIS Statistical Bulletin, December 1999). A modest contraction in exports to non-CIS countries in 1999, despite the substantial depreciation in the Tajik ruble relative to the euro, prevented a stronger recovery in exports. Capital investments also increased rapidly throughout 1999, albeit starting from a very low base.
There will be no strong, sustainable recovery in Tajikistan, however, until the country’s political situation stabilizes enough to give the government the breathing room it needs to focus on structural economic reforms and attract foreign investment. For the time being, the government continues to rely on loans from the IMF to finance fiscal deficits and bolster foreign exchange reserves. Accordingly, the Tajik authorities are doing their best to follow the policy guidelines prescribed by international financial institutions. Despite its enormous challenges in other areas, the government appears committed to economic reform and is keeping inflation under control. Although privatization is proceeding very slowly, the IMF is satisfied that the authorities are heading in the right direction. In December 1999, the government announced that privatization of all small businesses was complete. Soon after, in January, the IMF board of directors approved its latest US$18 million loan installment just ahead of crucial parliamentary elections to be held in March. These elections are expected to mark the last major step in the process of post-war political reconciliation in Tajikistan.
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