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- GDP (PPP):
- $23.3 billion
- 3.0% growth
- 6.4% 5-year compound annual growth
- $2,749 per capita
- Inflation (CPI):
- FDI Inflow:
Tajikistan’s many ongoing challenges include rebuilding infrastructure, improving the entrepreneurial environment, and attracting dynamic investment. Progress on reforms to foster sounder macroeconomic management and improvement of the business climate has been only marginal. The potential for growth is high, but government interference has left the economy vulnerable in a repressive political environment.
Despite some progress in privatizing small and medium-size public enterprises, private-sector development has been slow. Remittances continue to be an important source of external financing. Foreign investment is deterred by burdensome bureaucratic regulations and inconsistent administration. Tajikistan remains one of the world’s most corrupt nations.
President Emomali Rahmon has been in power since 1994. His ruling party won parliamentary elections in March 2015 that were criticized by international monitors. For the first time since 1991, the Communists and the Islamic Renaissance Party failed to clear the 5 percent threshold needed to win seats. Relations with neighboring Uzbekistan are strained, and the Russian military patrols the border with Afghanistan. Abuse of human rights is widespread. Tajikistan relies heavily on revenues from aluminum and cotton exports. It is estimated that the illegal drug trade and remittances from migrant workers, primarily in Russia, account for over 45 percent of GDP. Tajikistan has been negatively affected by the economic slowdown in Russia.
Under Tajik law, all land belongs to the state. The judiciary lacks independence. Many judges are poorly trained and inexperienced, and bribery is reportedly widespread. Corruption is pervasive. Patronage networks and regional affiliations are central to political life. At least two of President Rahmon’s children hold senior government posts, and various family members reportedly maintain extensive business interests in the country.
The top individual income tax rate is 13 percent, and the statutory corporate tax rate is 15 percent. Other taxes include a value-added tax. The overall tax burden equals 22.8 percent of total domestic income. Government spending has amounted to 29.4 percent of total output (GDP) over the past three years, and budget deficits have averaged 1.0 percent of GDP. Public debt is equivalent to 35.9 percent of GDP.
Entrepreneurial activity is hampered by state interference that increases regulatory costs and uncertainty through various bureaucratic impediments. Labor regulations are not flexible enough to facilitate dynamic employment growth. The government influences prices through regulation and large subsidies to numerous state-owned and state-trading enterprises. The economy is highly dollarized, and central bank institutional capacity is weak.
Trade is important to Tajikistan’s economy; the value of exports and imports taken together equals 55 percent of GDP. The average applied tariff rate is 5.6 percent. All land is owned by the government. The government screens foreign investment, and state-owned enterprises distort the economy. The government’s continuing interference and the financial sector’s limited overall capacity are serious impediments to development of the private sector.