The Tajikistan's Economy

Tajikistan was the poorest country in Central Asia as well in the former Soviet Union following a civil war after it became independent in 1991. With foreign revenue precariously dependent upon exports of cotton and aluminium, the economy is highly vulnerable to external shocks. In FY 2000, international assistance remained an essential source of support for rehabilitation programs that reintegrated former civil war combatants into the civilian economy, thus helping keep the peace. International assistance also was necessary to address the second year of severe drought that resulted in a continued shortfall of food production. On August 21, 2001, the Red Cross announced that a famine was striking Tajikistan, and called for international aid for Tajikistan and Uzbekistan. Tajikistan's economy grew substantially after the war. The GDP of Tajikistan expanded at an average rate of 9.6 % over the period of 2000–2004 according to the World Bank data.

Although less than 10% of the country’s land can be cultivated, Tajikistan has a sizeable agricultural sector accounting for one-quarter of GDP and employing half the workforce. Large quantities of cotton are produced under ecologically ruinous schemes established during the Soviet era. Grain, fruit and vegetables are also grown.

In recent years, the country has been badly hit by a regional drought, an earthquake and a series of mudslides (caused by poor land use) which forced the government to make several appeals for international food aid.

Tajikistan’s economic prospects lie with exploitation of its mineral resources, which include gold, aluminum, iron, lead, tin and mercury ores. There are coal deposits as well as small amounts of natural gas, which together with hydroelectric schemes meet the bulk of the country’s energy needs. There is little heavy industry other than mineral processing (mainly aluminum); light industry is concentrated in food processing and textiles.

The Tajik economy suffered severely during the 1990s from the dislocations caused by the break-up of the Soviet Union followed by two outbreaks of civil war. It has recovered slowly since the 1997 peace accord but some positive results are now showing: the hyper-inflation which blighted the economy during the civil war has now been cut to 7.5% (2006). Annual GDP growth in 2005 was 6.7%. The government’s economic reform program, which is now being implemented, comprises a typical recipe of privatization, deregulation and fiscal reform.

Tajikistan secured membership of the IMF and World Bank in 1993; it also belongs to the European Bank for Reconstruction and Development as a ’Country of Operation’. It has received substantial aid from Middle Eastern donors, including Saudi Arabia, Kuwait and the Islamic Development Bank. External donors now supply around 60% of Tajik government income.

The recently completed Anzab tunnel which connects the previously hard to access Northern part of the country to the capital Dushanbe has been labeled as part of the new Silk Road. It is part of a road under construction that will connect Tajikistan to Iran and the Persian Gulf through Afghanistan.

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