Tajikistan’s banking system, which is still at the stage of formation, is far from ideal, the National Bank of Tajikistan (NBT) head Abdujabbor Shirinov stated this here on November 14 during the Presentation on the International Monetary Fund (IMF)’s Caucasus and Central Asia Regional Economic Outlook (REO).

“However, a certain progress has been made: micro lending has increased by 48.7 percent as compared with last year,” Tajik central bank head said noting that the size of crediting has increased by 37 percent in Tajikistan over the first nine months of this year.

On the inflation situation in the country, Shirinov noted that inflation rate was low in Tajikistan.  “Inflation for the first ten months of this year has stood at 3.1 percent,” Tajik central bank head said, noting that they expect the year-end inflation to stand at 4.0-4.5 percent in 2013.  

According to Caucasus and Central Asia Regional Economic Outlook (REO) published in May 2013, inflation has declined across the Caucasus and Central Asia CCA from elevated levels in 2011, benefiting from lower international food prices and monetary policy tightening in some countries.  Average inflation is expected to rebound moderately in 2013 and 2014, in line with strong economic activity, and, particularly in the oil and gas importers, looser fiscal stances.

For his part, the IMF Resident Representative in Tajikistan Aidyn Bibolov noted that the loan default rate has remained quite a high in the Central Asian region, in particular in Tajikistan and Kazakhstan.

“Besides, the rate of dollarization is high in Tajikistan; some 70 percent of deposits are kept in foreign currency.  Dollarization not only weakens the monetary policy transmission mechanism, it also makes the countries of the region vulnerable to the currency exchange rate fluctuations,” Bibolov noted.

According to him, Tajikistan’s financial sector still remains undeveloped and deposits are at low level – only 14 percent of GDP.

The IMF resident representative pointed to the necessity of improving the corporate governance of banks and the risk management system.