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Debt-Saddled Tajikistan Mulls More Bond Sales

Government badly needs funds for a huge hydropower project it hopes will end the misery of winter blackouts.

1 December 2017

Tajikistan could embark on a second round of bond sales as well as seeking a loan from the International Monetary Fund to give it a hand out of the economic doldrums.


Tajikistan successfully raised $500 million in its first international bond sale two months ago, as lower borrowing costs offset investor concerns about the junk-rated country’s many risk factors.


Falling commodity prices and the slumping Russian ruble have hurt Central Asian economies in the past several years, not least in Tajikistan, one of the poorest countries in Asia.


Tajikistan’s central bank governor, Jamoliddin Nuraliyev, last year said the country could seek a $500 million loan from the IMF.


“We need financial resources to facilitate credit in the country, so that we can avoid stagnation,” The Diplomat quotes Nuraliyev as telling local media.


An IMF executive team concluded a visit to Tajikistan earlier this month, and shortly afterward, “Tajikistan floated the idea to raise around $850 million in successive bond issues in the coming months,” The Diplomat writes.


Cracks in the country’s banking sector were revealed when the central bank stepped in to bail out two large banks and liquidate two smaller ones hit by underperforming loans.


The massive Rogun dam project will be the biggest beneficiary of the government’s recent borrowing, but some say the country is digging itself massively into debt to fund it.


The first bond sale and further planned borrowing for Rogun will soon push the country’s external debt to 84 percent of GDP, Alexander Golinsky, an analyst at Russia’s Sberbank, told Reuters in September.


Servicing those debts could eventually absorb 10 percent of the government’s annual revenue, Golinsky said.


A hydropower plant at the massive dam is planned to generate 3,600 megawatts of power to help alleviate the country’s chronic electricity shortages. Work got under way last year.



  • The government also approached the World Bank about a loan for the Rogun project but found its conditions unsatisfactory, Reuters said.


  • Economic signals are not all bad, the IMF reported this month: “In the past few years economic activity in Tajikistan was strong, despite large external shocks that weakened the external position and exposed vulnerabilities. While remittances declined by 45 percent in nominal USD terms in 2015-16, real GDP growth was 6-7 percent supported by an expansionary fiscal policy that boosted investment in construction and industry and informal sector activity. Inflation remained low.”

Compiled by Ky Krauthamer

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