Tajikistan is facing a severe external shock from the global economic crisis and a serious regional downturn could lead to a decline in remittance inflows, the executive board of the International Monetary Fund said at its Article IV consultation with the country's officials.
The IMF warned that a decline in remittance inflows may put pressure on the external position and threaten the livelihoods of many poor households that depend on remittances for basic income. It added that the widespread poverty could increase as the economic outlook deteriorates.
Further, the global lender said weakening external demand is depressing the country's main exports-cotton and aluminum. It adds further threats for the external position.
The IMF officials called on the authorities to fund only those investment projects that are likely to enhance growth prospects. They welcomed the authorities' commitment to tighten policies in the event of a prolonged or more severe global economic downturn.
In April, the IMF had agreed to provide up to US$116 million for Tajikistan to counter economic slowdown. It expects Tajikistan's economy to grow only 2% in 2009 after expanding 7.9% in 2008.
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