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- GDP (PPP):
- $16.2 billion
- 7.4% growth
- 6.6% 5-year compound annual growth
- $2,067 per capita
- Inflation (CPI):
- FDI Inflow:
Tajikistan’s economic freedom score is 53.4, making its economy the 131st freest in the 2013 Index. Its score is unchanged from last year, with improvements in fiscal freedom, control of government spending, and freedom from corruption offset by declines in three other economic freedoms including trade freedom. Tajikistan is ranked 27th out of 41 countries in the Asia–Pacific region, and its overall score is lower than the world average.
Lagging far behind many other developing countries in terms of economic and human development, Tajikistan’s economy remains “mostly unfree.” Poor policy choices and the uncertainty generated by a lack of meaningful reform progress have severely weakened the prospects for much-needed long-term economic development. Pervasive corruption continues to undermine the judicial system and the rule of law, making it harder to establish a solid foundation for economic freedom.
Tajikistan’s entrepreneurial environment remains constrained by a burdensome and inefficient regulatory framework. Private-sector growth has been largely hampered by the state’s heavy presence in the economy, which is overly dependent on commodity export earnings.
Tajikistan’s transition to democracy has been uncertain since the 1992–1997 civil war between an Islamist/democratic coalition and the ruling post-Soviet Communists. Communist President Imomali Rahmon, in power for 20 years, controls all three branches of government. Challenges to stability include corruption, Islamist terrorism, tensions with Uzbekistan, and turmoil in Afghanistan. Abuses of human rights are widespread. Tajikistan is Central Asia’s poorest country. The economy depends heavily on revenues from aluminum and cotton exports, and remittances from around 1 million migrant workers, especially in Russia, account for 45 percent of GDP. Illegal drug production and trafficking are also important sources of income. In June 2012, the government announced that the China National Petroleum Corporation would begin exploring for oil and gas in Tajikistan.
Protection of private property rights is weak. Judicial corruption is widespread, and the courts are sensitive to government pressure. Legal proceedings are not transparent, and a lack of respect for due process undermines the freedom of civil society. Under Tajik law, all land belongs to the state; individuals or entities may be granted first- or second-tier land use rights. Widespread cronyism and nepotism are symptomatic of pervasive corruption.
The top income tax rate is 13 percent. The statutory corporate tax rate is 15 percent with transport and banking services taxed at 25 percent. Other taxes include a value-added tax (VAT). The overall tax burden equals 18 percent of total domestic income. Government spending is equivalent to 27 percent of total domestic output. Deficits have been falling, and public debt stands at about 35 percent of GDP.
Entrepreneurial activity is seriously hampered by state interference that increases regulatory costs. With no minimum capital required, launching a business takes five days. However, completing licensing requirements takes more than 200 days and costs over six times the level of average annual income. The labor market remains underdeveloped. The state influences prices through regulation, subsidies, and numerous state-owned enterprises.
The trade-weighted average tariff rate is 5.9 percent, but non-tariff barriers that include health and safety standards with difficult compliance requirements limit trade freedom. All private investment is screened and requires government approval. Investment laws are implemented inconsistently. Financial-sector assets have grown, but continued state interference seriously handicaps capital acquisition for private-sector development.