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IMF Forecasts 'Severe Shock' For Tajikistan

Remittances from Tajiks working abroad are set to decline by 30 percent this year
MOSCOW (Reuters) -- Tajikistan faces "a severe external shock" because the global economic crisis will cut remittances and depress exports this year, the International Monetary Fund said.

Most of Tajikistan's hard currency earnings come from aluminium and cotton exports as well as remittances.

It said transfers from Tajiks working abroad, mostly in Russia, are projected to decline by 30 percent this year, "threatening the livelihoods of many poor households that depend on remittances for basic income."

Economic growth is set to slow to 2 percent this year from 7.9 percent in 2008. The value of exports is seen shrinking 7 percent to $756 million. The fund urged reforms in the agricultural sector and at state-run companies.

"Tajikistan is facing a severe external shock from the global economic crisis, the effects of which are compounded by domestic rigidities," the IMF said in a statement.

"Continued heavy state influence over markets and poor energy infrastructure put prospects for faster growth at risk," the IMF said. "Poverty remains widespread, and could increase as the economic outlook deteriorates."

Some analysts have expressed concerns over the social stability in the former Soviet republic bordering Afghanistan. The United States plans to transit nonmilitary supplies for its Afghan troops through the impoverished Central Asian state.

"[IMF directors] stressed the need to push forward with agricultural sector reforms to remove rigidities and secure macroeconomic stability and growth," it said.

"Efforts will also be needed to enhance transparency and accountability in state-owned enterprises."