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- GDP (PPP):
- $22.3 billion
- 6.7% growth
- 7.1% 5-year compound annual growth
- $2,688 per capita
- Inflation (CPI):
- FDI Inflow:
The rule of law is extremely weak in Tajikistan, and corruption and bribery are widespread. State interference limits investment and development in the private sector. State-owned enterprises dominate many sectors of the economy, stifling entrepreneurialism.
Economic Freedom Snapshot
- 2016 Economic Freedom Score: 51.3 (down 1.4 points)
- Economic Freedom Status: Mostly Unfree
- Global Ranking: 149th
- Regional Ranking: 33rd in the Asia–Pacific Region
- Notable Successes: Management of Public Spending and Fiscal Freedom
- Concerns: Investment Freedom, Financial Freedom, and Rule of Law
- Overall Score Change Since 2012: –2.1
The modest momentum toward greater economic freedom that followed independence from the Soviet Union has dissipated. Relatively prudent fiscal policies are the only bright spot for an economy that still lacks the most basic foundations of a free-market system.
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. Corruption, Islamic terrorism, and narco-trafficking are endemic. Most Tajiks work in the underground economy. 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. Like other Central Asian republics, Tajikistan has been negatively affected by the economic slowdown in Russia. Tajikistan joined the World Trade Organization in 2013.
Corruption is pervasive. Patronage networks and regional affiliations are central to political life. At least two of President Emomali Rahmon’s children hold senior government posts, and various family members reportedly maintain extensive business interests in the country. The judiciary lacks independence. Many judges are poorly trained and inexperienced, and bribery is reportedly widespread. Under Tajik law, all land belongs to the state.
The top individual income tax rate is 13 percent. The statutory corporate tax rate is 15 percent, but transport and banking services are taxed at 25 percent. Other taxes include a value-added tax. The overall tax burden equals 21 percent of total domestic income. Government spending amounts to 27.7 percent of total domestic output. Deficits have been falling, and public debt equals about 30 percent of GDP.
With no minimum capital required, launching a business takes less than a week, but completing licensing requirements takes more than 30 days. The labor market remains underdeveloped. The state influences prices through regulation and large subsidies to numerous state-owned and state-trading enterprises; nearly half of social protection subsidy recipients are “non-poor.”
Tajikistan’s average tariff rate is 5.7 percent. Importation of goods is expensive and time-consuming. State-owned enterprises operate in several sectors of the economy. Foreign investors may not own land. All private investment is screened and requires government approval. Financial-sector assets have grown, but continued state interference seriously handicaps capital acquisition for private-sector development.