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Tajikistan is a landlocked country within Central Asia and the poorest Central Asian country to emerge from the collapse of the Soviet Union. In 2019, Tajikistan had a national poverty rate of more than 26% and an extreme poverty rate of 11%. To reduce poverty at home, young Tajik men in particular travel abroad to countries such as Russia to work and send their earnings home to their families. In 30%-40% of households in Tajikistan, at least one member works abroad and sends funds home. As a result, the country’s economy has become heavily dependent on the money its migrant workers bring in. Remittances to Tajikistan in 2017 were equivalent to nearly 35% of the country’s gross domestic product (GDP). Now, with the spread of COVID-19, the economy is struggling to recover from restricted travel abroad.

Remittances in the Short Term

Remittances to Tajikistan are a major source of revenue for the country. Yet, they have both positive and negative economic implications. Remittances are often beneficial in the short term as a lifeline to the poor. They essentially provide the means by which the poor can purchase basic goods and services to lift themselves out of poverty. Moreover, more than 80% of remittances to Tajikistan go toward essentials like food, clothing and shelter. Still, the lack of economic opportunity at home leaves little room for the Tajik people, particularly those in rural areas, to thrive independently.

Remittances in the Long Term

Economic dependence on remittances to Tajikistan opens up the country to risk in the long term. Tajikistan’s economy so heavily intertwines with Russia’s that it leaves itself at the mercy and political goodwill of Russia. Additionally, the dependency also exposes Tajikistan’s economy to external shocks from Russia’s economy. While Russia may recover from these shocks, Tajikistan itself may not. Furthermore, Tajikistan’s dependence on remittances reduces the incentive for the Tajik government to create programs that help develop the country’s own domestic economy.

Remittances in the Pandemic

During the peak of the COVID-19 pandemic, the Russian imposed lockdown caused the Tajik economy to suffer. Now, Tajikistan is slowly trying to recover from those economic damages. Russia’s lockdown meant that Tajik laborers in Russia suffered a decrease in work opportunities and thus, a fall in income. In addition, it also restricted Tajik migrants from traveling to Russia to work and earn the money they need to support their families. In the spring of 2020, President Emomali sought financial aid from the International Monetary Fund (IMF) because remittances to Tajikistan from Russia declined by 50%.

The faltering economy hit the poor in Tajikistan especially hard. The World Bank has reported that around 40% of Tajikistan’s population reduced the consumption of food during the peak of the pandemic and that the fall in the value of remittances could push the poverty rate even higher. However, the international community and the Tajik government are working to mitigate the impact of COVID-19 on the state of migrant workers.

Solutions

USAID and the World Bank are a few organizations working to help get Tajikistan’s economy back on track. USAID began providing assistance to Tajikistan in 1992, and its work continues today. To help build Tajikistan’s domestic economy and decrease its dependence on remittances, USAID is supporting the expansion of the private sector in a variety of ways. For example, USAID supplied technical assistance to 7,906 individuals and generated 2,409 jobs in the dairy and horticulture practices.

In April 2020, the World Bank also approved a grant of $11.3 million for the Tajikistan Emergency COVID-19 Project to provide aid. This will go toward providing emergency cash assistance to poor households and strengthening the country’s healthcare capacity.

The Tajik government is also working to ameliorate the economic fallout from COVID-19. For example, the government offered a number of targeted social assistance programs, deferred tax collections and relaxed monetary policy. Deferring tax payments provided households and firms with the additional support they needed to finance temporary disruptions in cash flow. Additionally, the government’s targeted social assistance programs increased public sector wages and pensions by 10%-15%. Still, the government is doing little to diversify the Tajik economy to avoid economic disaster in the future. It needs to implement domestic economic policies that encourage private sector development. Additionally, policies that help maintain a stable environment for that private sector activity are necessary. These solutions would help businesses thrive in Tajikistan and decrease their dependence on remittances.

Looking Forward

The COVID-19 pandemic changed Tajikistan’s economy and the lives of the Tajik poor. However, the country should still be able to rebound. The Asian Development Bank predicts that Tajikistan’s GDP growth rate may reach 5% by the end of 2021 from a pre-pandemic growth rate of 7.5%. Thus, Tajikistan may still reach the target it set in its National Development Strategy up to 2030. The strategy sets a target of increasing domestic incomes by up to 3.5 times by 2030 and reducing poverty in half. Should the Tajik government grant the private sector more opportunities to invest, create jobs, and thus, contribute to the economy, it may very well attain this goal.

– Savannah Algu
Photo: Unsplash

Tajikistan During the COVID-19 Pandemic
In the Central Asian nation of Tajikistan, which lies at the heart of Afghanistan, Pakistan and China, the effects of the COVID-19 pandemic have hit the population particularly severely. Since many of the country’s citizens rely on remittances that family members send to them from abroad, Tajikistan has been facing economic difficulties for years. Moreover, with the loss of employment that the COVID-19 pandemic has caused, thousands of families are struggling to make ends meet. Here is some information about Tajikistan during the COVID-19 pandemic.

Food Insecurity in Tajikistan

Although the Tajik government has implemented emergency cash payments for public distribution and promised to raise the national wages, the donations of private individuals and the subsidization of food are the solutions that will make the largest difference according to Tajik citizens. As evidenced by the surveys that the World Bank conducted in 2020, the effects of COVID-19 have caused families to cut the size of their meals significantly and for parents to go hungry so that their children may have food to eat for lunch at school the next day. Nearly half of respondents to the World Bank survey reported reducing their food intake to compensate for the increased pressure on finances.

The Tajikistan Emergency COVID-19 (TEC-19) Project

Yet amidst all of this misfortune and sorrow, the humanitarians working with the World Bank have helped draft a relief bill called the Tajikistan Emergency COVID-19 (TEC-19) Project with the government of Tajikistan to provide some support and assistance to the Tajik citizens. The program, which is specifically intended for low-income families, aims to provide immediate and direct solutions to public health challenges by supplying funding for more ICU beds and granting emergency cash transfers to families with toddlers and infants.

Despite these efforts, only 50,000 families who the Targeted Social Assistance Program listed as critically poor were eligible to receive these funds. The resources that charitable organizations can give are finite, and the government of Tajikistan does not have the capacity to offer the level of resources that the country requires for recovery. Among the 9.3 million people within Tajikistan, about 2.5 million individuals still fall below the poverty threshold. In 2019, Tajikistan began experiencing promising economic growth, with contributions from Tajiks abroad allowing the percentage of those in poverty to decrease by several points for the first time in years. However, in this most recent economic crisis, projections have determined that poverty rates will rise again.

Solutions to Help Tajikistan During the COVID-19 Pandemic

So, what can individuals and organizations do to aid Tajikistan during the COVID-19 pandemic? In an article from RadioFreeEurope/Radio Liberty by Farangis Najibullah, a Tajik woman named Maryam suggested that institutions implement free lunch programs for school children, at least until the COVID-19 pandemic becomes more readily treatable in Tajikistan. Providing mid-day meals to young students free of charge would alleviate financial pressures immensely for families during a time of extremely high food insecurity and allow parents to save their money for other necessities.

Additionally, the World Bank predicts that the Tajik economy will experience future growth within the next couple of years, suggesting that there is room for private investors to fund projects and get laborers back to work. Despite the current global conditions, Tajikistan’s surrounding neighbors, China and Russia, may soon rein in an era of recovery that will offer trade opportunities for adjacent economies. Private donors have the power to spark a period of upward mobility in Tajikistan and drastically revitalize the market.

Tajikistan’s potential financial growth, which the World Bank estimates could go up to over 3% in 2022, is beneficial for both the Tajik workers and the investors in the larger sphere of trade, as an increase in international trade would bring Tajikistan out of its economic slump and bring about a reliable source of labor for future endeavors. If these efforts succeed, the government of Tajikistan would be able to make great progress in providing more in-depth public programs, financing social enrichment efforts for families and youth and addressing its international debts, paving the way to a more stable footing for the nation in 2022.

– Luna Khalil
Photo: Flickr