This policy note is part of the WorldBank's Programmatic Public Expenditure Review (PER)work program for FY2012-2014. The PER consists of a seriesof fiscal policy notes, which aim at providing theGovernment of Tajikistan with recommendations to strengthenbudgetary processes and analysis. This policy note, thefifth in the series continues the fiscal policy dialogueconducted in the previous notes. It is structured asfollows. Chapter 2 reviews the role of state-ownedenterprises (SOE) in Tajikistan's economy andidentifies key issues. Chapter 3 assesses the fiscal risksposed by SOEs, especially those in the energy sector.Chapter 4 puts forth possible solutions. Chapter 5summarizes the main conclusions of this note: 1) despiteprivatizations and attempts at restructuring, Tajikistanstill has a large, inefficient, and heavily indebted publicsector; 2) the lack of comprehensive information about thesector undermines budget credibility and budget integrity;3) multiple but uncoordinated functions, responsibilities,and accountability lines limit government ability to form acomprehensive view of the SOE sector, define a consistentstrategy, and effect transparency, performance, reporting,and oversight; 4) elaborate QFAs of SOEs and other publicinstitutions create substantial fiscal risks and underminethe hard-earned benefits of fiscal consolidation; 5)liabilities, explicit and implicit, created by SOEoperations are large and must be accounted for and properlydelineated; 6) solutions proposed to address the majorissues are phasing out QFAs, optimizing the size and scopeof the SOE sector, and improving SOE management; and 7) SOEreform should be an integral part of the general reform agenda.
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