The World Bank’s Tajikistan Macro Poverty Outlook – Spring 2020, which was released on April 27, in particular, note that except for two problem banks, the financial sector continued its recovery from the 2016 banking crisis, showing an improvement in the quality of the credit portfolio.

The share of nonperforming loans (NPL) reportedly stood at 26 percent at the end of 2019 (down from 48 percent in 2016), and the capital adequacy ratio rose to 21.4 percent (from 17 percent in 2016).  Banking sector profitability also continued to improve, and the level of dollarization declined to 53 percent at the end of 2019 (from a peak of 64 percent in 2015), according to the report. 

The poverty rate—using Tajikistan’s official poverty line—fell to 27.4 percent in 2018, reflecting a recovery in remittance inflows.  The rural poverty rate declined markedly from 36.1 percent in 2014 to 30.2 in 2018, reflecting rising household consumption.  The rate of extreme poverty also fell steadily from 18 percent in 2013 to 12 percent in 2018.

Meanwhile, the banking sector is expected to experience a deterioration of the loan portfolio in 2020 and increase in the NPL ratio.  The latter is expected to be affected by the balance-sheet mismatches as a result of Somoni depreciation.

According to the World Bank analysts, the Nationl Bank of Tajikistan (NBT) will need to enhance it regulatory role to restore the banking sector’s stability.

Poverty reduction prospects will be undermined by the increase in food prices and the fall in growth rate and remittances.

The World Bank’s Macro Poverty Outlook (MPO), produced biannually, provides information on the most recent economic developments in countries, and their impact on poverty trends and projections for the medium-term.