A timely exchange rate adjustment
Overview:
Despite strong economic growth in the last few years, Tajikistan remains the poorest country in the region. It is extremely reliant on worker remittance inflows which are now abating and on revenues from aluminium and cotton exports whose prices have dropped sharply. The Rahmon government has extremely poor democratic credentials but it has managed to run reasonably sensible economic policies to try and counter these adverse external trends. It has rebuilt its relationship with the IMF which had been severely tarnished due to a misreporting issue. The exchange rate has been devalued and interest rates have been raised to try and maintain external and internal balances. Meanwhile, tight fiscal policy will be relaxed temporarily to allow more social spending to soften the worst effects of the downturn.