Tajikistan: Risk Assessment

Country Risk Rating

D A high-risk political and economic situation and an often very difficult business environment can have a very significant impact on corporate payment behavior. Corporate default probability is very high.

Business Climate Rating

D The business environment is very difficult. Corporate financial information is rarely available and when available usually unreliable. The legal system makes debt collection very unpredictable. The institutional framework has very serious weaknesses. Intercompany transactions can thus be very difficult to manage in the highly risky environments rated D.


  • Financial support of international donors and China
  • Considerable hydroelectric, oil and gas potential
  • Raw materials wealth (aluminum, cotton and minerals)
  • Russian military support


  • High levels of poverty and weak institutions
  • Risk of destabilization by Islamists and drug trafficking
  • Considerable State involvement in economic activity
  • Dependence on transfers from workers abroad and multilateral loans
  • Weak foreign exchange reserves

Current Trends

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An economy suffering from the slowdown of the Russian economy

Growth in 2016 will increase slightly but remain at a moderate level, as in 2015. The floods that struck the country in July 2015 caused damage to its water resources, energy sector, transport and social infrastructures. Agricultural production is expected to improve slightly in 2016 after a year of poor harvests, and the services sector, representing 40% of GDP, will continue to be driven mainly by corporate services and transport, and should continue to underpin economic activity. The Russian currency crisis and its economic slowdown have had serious repercussions, not only for export earnings but also for remittances from workers living in Russia, the keystone of the Tadjik economy. These transfers account for almost half of GDP, making Tajikistan the most dependent country in the world on this type of transfer. Investment is likely to slow because of the weakness of external demand. Any upturn in terms of growth, however, is most likely to arise from the structural reforms to be implemented in 2016-2017. Inflation will remain high in 2016, rising slowly because of a moderate upturn in commodities prices, downwards pressures on the exchange rate (linked with the probable depreciation of the Russian ruble), as well as increased Customs tariffs.

Expansionary policy-mix and continuing large current account deficit

The budget deficit is expected to deepen in 2016, although the government has confirmed its commitment to achieving a balanced budget by maintaining social spending and delaying spending in areas deemed to be of lower priority. Budget revenues are likely to suffer because of the weakness in economic activity. In monetary terms, the Tajikistan central bank has implemented a policy of devaluing the somoni whilst attempting to influence the currency markets. All this has accomplished is to reduce the currency reserves and allow the emergence of a parallel currency market. In the context of a worsening budget deficit, the public debt will increase slightly in 2016.

The current account deficit should reduce slightly in 2016, but will remain high compared to its pre-2013 levels. Despite the depreciation of the somoni against the dollar, which would tend to reduce imports, the deterioration in the balance of trade, because of low prices for its exported goods (i. e. aluminum, zinc and metals), together with the decline in remittances from expatriate workers, will continue to have a significant impact on the current account balance. This will, however, be counterbalanced by an improvement in the financial accounts (increased foreign direct investments). The country will remain vulnerable to external shocks, given the scale of the depreciation in the exchange rate in 2015, leading to the application of exchange controls, and the depletion of its currency reserves. The banking sector is subject to substandard regulation and suffers a growing level of non-performing loans.

A complex geopolitical environment including ethnic dissension

Elected to the Presidency for the fourth time in a row in November 2013, this latest term of office will see Mr. Emomali Rahmon leading the country until 2020. In the parliamentary elections of March 2015, Mr. Rahmon’s political party (People’s Democratic Party) won 65.2% of the votes. Three other pro-governmental parties also reached the 5% electoral threshold, whilst none of the opposition parties won any seats in parliament. The political equilibrium is nevertheless put at risk by rising social expectations, in a country in where unemployment and poverty are real challenges. It would appear that the leadership lacks both the desire and the capacity to implement social reforms for the establishment of an inclusive market economy.

The security situation remains fragile, bearing in mind the extremist Taliban threat from across the Afghan border. In addition, inter-ethnic tension between the Tajik and Kyrgyz populations resurfaced in the Ferghana valley in August 2015. There were violent confrontations triggered by disagreements relating to the reopening of borders and access to water. Negotiations are currently taking place with the aim of reaching an agreement to settle these long standing ethnic conflicts. The worsening in the economic and social situations could further inflame tensions between the two groups. Finally, the country’s economy continues to suffer from a very difficult business climate. The country's corruption is endemic, and the involvement of politicians in businesses is one of its failings in terms of governance.


Coface (09/2016)