This Country Economic Memorandum (CEM)looks at the potential for accelerated economic growth inTajikistan, where as of the peace agreement of mid-1997,renewed reform efforts have brought stability, whereinflation is under control, small scale privatization hasbeen completed, and, efforts to reform agriculture have beenintensified. However, the main challenge lies in reducingpoverty through economic growth, helping the Governmentdevelop a set of policies to achieve this objective. Thereport focuses on productive economic sectors, such asindustry, and agriculture, although the importance of thepower sector is also briefly discussed. Finance and banking,telecommunications and transport, are outlined, basicallydue to their importance in the expansion of domesticeconomic activity, and regional/international trade. Thereport stipulates macroeconomic stability is still fragile,namely due to low tax revenues, and rising foreign debt,constraining fiscal sustainability, while implementation ofstructural reforms remains elusive, and, the share ofprivate sector is very low. Nonetheless, Tajikistan'spotential to increase its output with little additionalinvestment, lies in its human, and physical capital,provided these are used efficiently in the medium term.Sustaining macroeconomic stability, requires credibility,and consistency in monetary policies, improved revenuemobilization, and careful management of its foreign debt.But a medium-term strategy should be in place, to sequencereforms, and enable private development.
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