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TajikiSTAR
Surrounded by emerging market darlings Uzbekistan and Kazakhstan, Tajikistan often goes overlooked by investors. Our team recently traveled to Dushanbe, and we found it timely to provide an update on the country’s macroeconomic outlook.
With 8% annual growth, the macroeconomic backdrop is progressing positively. The government continues to maintain prudent fiscal policies, keeping the annual budget deficit within a 2% of GDP target. Debt-to-GDP remains stable at a moderate 30%, far below the single-B median. External accounts have sustained their positive trend since 2022, with the current account once again in surplus during H1 2024. Remittances, which on average reach a third of the total economy, continue to show resilience despite (or due to) the domestic developments in Russia. Reserves continue to accumulate, now exceeding USD 4 billion. Tajikistan produces a substantial amount of gold and the National Bank of Tajikistan (NBT) is the principal buyer of it from domestic miners. NBT then monetizes this gold throughout the year, further bolstering reserves.
Tajikistan raised funds to finance its flagship Rogun Dam project through an international bond issuance. During our visit, we had the opportunity to see the dam’s active construction. The government has done an excellent job attracting financing from International Financial Institutions, such as the IMF and World Bank (WB), and is pursuing necessary reforms to expand financing options. As part of this effort, they secured a Policy Coordination Instrument with the IMF, which they are successfully implementing. We believe this will set the groundwork for a funded program if needs arise down the line. They have begun liberalizing the electricity tariffs and unbundling the state-owned power company Barqi Tojik, which are some of the hardest reforms envisioned in their IMF and WB programs.
Given the plethora of positive developments, Tajikistan certainly deserves a closer look by the investors.
The EMsights Capital Group manages portfolios that held Tajikistan currency and sovereign credit as of 30 Sep 2024. Portfolio securities are subject to change.
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