[{"bbox": [96, 152, 1135, 231], "category": "Text", "text": "The NDS 2030 highlights the limited social integration of children with disabilities as one of the key factors of social inequality in Tajikistan. The NDS also emphasises the importance of creating an inclusive education environment."}, {"bbox": [96, 243, 1135, 326], "category": "Text", "text": "In conclusion, the policy is sufficiently relevant and credible for budget support contract objectives to be largely achieved. Therefore, the policy can be supported by the Commission with the proposed budget support contract."}, {"bbox": [85, 337, 375, 365], "category": "Section-header", "text": "## 2.3.2 Macroeconomic Policy"}, {"bbox": [96, 392, 1135, 686], "category": "Text", "text": "The recent main macroeconomic aggregates consider various sources. As per Consensus Forecast (as of May 2022¹¹), the real GDP growth rate in Tajikistan is 3.7 in 2023 compared to 1.4% in 2022, and the Consumer Price Index (CPI) is 12.5% in 2022 compared to 10.2% in 2023. The IMF projects the real GDP growth rate of 3.5% in 2023 compared to 2.5% in 2022, and CPI of 15% in 2023 compared to 10% in 2022. The IMF notes that the output is subject to significant uncertainty, as economic sanctions on Russia might further worsen the projections. The Economist Intelligence Unit (EIU, June 2022) estimates that Tajikistan's external debt levels will stand at 93.4% of GDP in 2022, with the risk of sovereign default being high, as international reserves cover only about a third of total debt. The EIU (2022) also expects the deficit to narrow to about 2.2% of GDP in 2023, as the government tries to limit spending; and that the government will finance the deficit via grants from multilateral lenders and securing extensions from China, its largest lender. The IMF has noted that authorities were quite successful with stabilising the exchange rate, which is currently appreciating."}, {"bbox": [96, 696, 1135, 910], "category": "Text", "text": "The Tajik authorities are pursuing a stability oriented **macroeconomic and fiscal policy**. The IMF (February 2022) has observed substantial progress made by the authorities by meeting the IMF preconditions and implementing most of the previous measures. The National Bank of Tajikistan (NBT) continues its reforms of monetary policy and the banking system through the implementation of the Monetary Policy Strategy 2021-2025. The authorities have plans to transition to an inflation targeting regime. According to the EIU (June 2022), fiscal and monetary policy instruments are generally weak, with little long-term impact on the economy. The main policy priorities are poverty reduction and preventing a sharp depreciation of the somoni. The EIU expects the NBT to maintain the crawling peg of the somoni to the US dollar to minimise volatility."}, {"bbox": [96, 920, 1135, 1108], "category": "Text", "text": "The IMF recommends authorities to follow careful policy by preserving 2022 budget deficit target of 2.5% in order to keep the debt down. The new tax code, which was approved in November 2021, entails some positive features, e.g., taxpayer protections, administrative reforms. However, the IMF notes that it also includes lower tax rates without base broadening and new tax incentives, which will likely result in revenue losses, that would undermine development and social spending as well as rebuilding of buffers, which is important given Tajikistan's debt-related vulnerabilities. The latest debt sustainability analysis (in consideration of high risk of debt distress) were discussed as part of a recent Article IV mission in June 2022."}, {"bbox": [96, 1118, 1135, 1280], "category": "Text", "text": "Tajikistan needs to strengthen **domestic revenue mobilisation** that could be used to support priority social spending programmes. The IMF recommends that it is important to reverse the downward trend in revenues as a share of GDP that has been ongoing since 2017. Broadening the tax base by phasing out inefficient tax incentives is key. According to the World Bank, the estimated tax incentives account for nearly 10 percent of 2018 GDP (WB, 2019). Ongoing tax administration reform that aims increasing compliance level and reducing informalities should also contribute to better revenue performance in the medium term."}, {"bbox": [96, 1290, 1135, 1476], "category": "Text", "text": "Tajikistan's economy remains highly vulnerable to **external and endogenous shocks**. The IMF notes that strengthening financial supervision and the macro-prudential policy framework could increase resilience to external shocks, and recommends the NBT to increase the intensity and rigor of supervision, including the early intervention process, and ensure that banks maintain prudent asset classification, provisioning, and credit risk management practices. The social impact of the external risks are related to returning migrants from Russia. The climate change risks are related to the intensity and frequency of droughts that disproportionately impact vulnerable households, as well as torrential rains that cause severe cascade of floods, landslides, and mudflows."}, {"bbox": [96, 1488, 1135, 1543], "category": "Text", "text": "**The relationship of the Government of Tajikistan with the IMF** is ongoing and follows recommendations arising from February 2022 conclusion on the Article IV consultation. However, the conclusion is still depending"}, {"bbox": [85, 1578, 1144, 1646], "category": "Footnote", "text": "¹¹ Consensus Forecast Tajikistan is a summary of prognoses of economic development in Tajikistan. The data is taken from official publications or statements from different organisations. The consensus forecast is a simple average of forecasts. It is produced with the financial support of the European Union and the German Federal Ministry for Economic Cooperation and Development, BMZ."}, {"bbox": [1027, 1680, 1144, 1706], "category": "Page-footer", "text": "Page 10 of 36"}]