LONDON, Oct. 15 (The Conway Bulletin) — Tajikistan’s Central Bank increased its key interest rate by 1% to 6.9%, its highest level in two years, to try and dampen rapidly rising inflation (Oct. 9).
Like other countries in former Soviet Central Asia, Tajikistan’s economy is suffering from the knock-on effect of sanctions on Russia. Remittances from workers based in Russia generate around half of Tajikistan’s GDP. This revenue stream has dried up since the sanctions dampened Russia’s economy.
But Tajikistan is also battling rising inflation. Inflation measured over 5% for the first eight months of this year, nearly double the rate for last year.
The main problem for Tajikistan is that as well as weakening remittance flows from Russia, importing goods has become more expensive.
Rising inflation and a weakening economy is a nightmare combination for Tajikistan.
This was also the second interest rate increase by Tajikistan this year. In May it boosted interest rates by 1.1% to 5.9%. Previously it had cut rates on eight consecutive occasions.
This story was first published in issue 204 of the weekly Conway Bulletin, a newspaper covering Central Asia and the South Caucasus. For more info, click here