IMF raises Tajikistan's 2025 GDP growth forecast to 6.7%

DUSHANBE. Dec 13 (Interfax) - The International Monetary Fund has raised its forecast for Tajikistan's GDP growth in 2025 to 6.7% from 4.5%.

"Economic growth is projected to moderate slightly to 6.7% for 2025 [the 2024 growth forecast is 6.8%], while the rate of inflation is expected to stay close to the central bank's target of 6% +/-2%," the IMF said in a press release following the First Review under the Policy Coordination Instrument for Tajikistan.

Tajikistan's economy grew 8.3% in 2023, according to the IMF. GDP increased by 8.4% in January-September 2024 and annual inflation was 3.1% in September.

"The external current account is expected to shift to a small deficit in 2025 as financial inflows gradually begin to normalize following the strong performance experienced in recent years. The fiscal deficit is projected to remain within the long-term anchor of 2.5% of GDP, ensuring a continued decline in public debt," the IMF said.

The IMF said previously that it expected Tajikistan's current account deficit in 2025 to be 1.7% of GDP, compared to a surplus of 0.3% of GDP in 2024. There was a surplus of 4.9% in 2023.

"Policies should aim to strengthen resilience against external shocks and address structural constraints to attaining more sustainable and inclusive growth. Improving revenue mobilization and spending efficiency is critical to increasing space for development priorities," it said.

It said monetary policy should remain geared to managing liquidity proactively in the context of large foreign exchange inflows and strong credit growth, with the exchange rate playing a greater role as a shock absorber. Governance and transparency reforms in the state-owned enterprise sector are essential to improving productivity and the investment climate to support more diversified private sector-led growth.

Tajikistan has shown considerable resilience to persistent geopolitical challenges, the IMF said. The economy has continued to experience strong growth and low inflation in 2024 despite lingering global and regional geopolitical tensions, it said. Large financial inflows have contributed to strong domestic demand and comfortable levels of FX reserves, while prudent fiscal policy has resulted in low fiscal deficits and a continued reduction in public debt. Improved banking soundness has bolstered confidence in the banking system, supporting financial deepening.

Tajikistan's 22-month PCI program was approved in February 2024 and aims to maintain macro-financial stability and foster more sustainable growth.