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26ECONOMIC SCIENCES
THE STATE OF THE THEORY OF FINANCIAL STABILITY IN THE REPUBLIC OF TAJIKISTAN
Chernyakov M.
doctor of Economics Novosibirsk State Technical University 20 Karl Marx Ave., Novosibirsk, 630078, Russia
Mukhtorzada S. Associate Professor of Economics Tajik State University of Commerce 1/2 Dekhoti Street, Dushanbe, Tajikistan
Akberov K. Associate Professor of Economics Novosibirsk State University of Economics and Management 56 Kamenskaya str., Novosibirsk, 630099, Russia
Shuraev I.
Siberian Institute of Management of the Russian Presidential Academy of National Economy and Public
Administration
6 Nizhegorodskaya str., Novosibirsk, 630102, Russia
Mammadli F.
Siberian Institute of Management of the Russian Presidential Academy of National Economy and Public
Administration
6 Nizhegorodskaya str., Novosibirsk, 630102, Russia
Rzayeva H.
Siberian Institute of Management of the Russian Presidential Academy of National Economy and Public
Administration
6 Nizhegorodskaya str., Novosibirsk, 630102, Russia
Huseynova K.
Novosibirsk State University of Economics and Management 56Kamenskaya str., Novosibirsk, 630099, Russia
Abstract
The article assesses the state of the theory of financial stability in the Republic of Tajikistan, which is experiencing the consequences of the pandemic. The study of the financial sector of the Republic of Tajikistan showed that its financial stability is poorly assessed, but it is not pre-default. The article assesses the macroeconomic situation in the Republic of Tajikistan and assesses the level of development of its elements using a systematic approach.
Keywords: financial stability; theory, Republic of Tajikistan, pandemic.
Introduction. The development and effectiveness of the financial sector and, consequently, the financial market largely depend on the development of the institutional structure of the economy as a whole and, of course, primarily on the degree of development and effective functioning of state and non - state financial institutions, institutions - functions in the financial sphere. When we talk about the financial market of the state, we usually mean a certain integral and self-sufficient structure that corresponds to the classical idea of this element of the financial system [1]. This structure generally includes: the securities market, the credit market, the foreign exchange market, the precious metals market, and the investment market [2]. Studies by various authors show that there are states in the world whose financial markets are in an undeveloped state, and therefore their structure is very different from the common model [3]. Such countries include the Republic of Tajikistan.
Methods: a dialectical approach to the knowledge of social phenomena, which allows us to identify the existing concepts of financial stability in financial management. The work also used general scientific research methods (dialectics, analysis, synthesis, consistency, complexity), as well as other special techniques and procedures.
Results and discussion. Tajikistan is the poorest of the former Soviet Central Asian republics, with a GDP per capita of about $ 900 (Figure 1). The reforms being implemented in Tajikistan are aimed at improving the business climate in the country, attracting investment, and developing tourism. They are generally more successful than those of their neighboring countries. In addition, the reforms provide for the modernization of the energy sector and the health sector.
40 30 20 10 0 -10 -20
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
GDP, billion dollars 5,6 6,5 7,6 8,5 9,2 7,9 7 7,2 7,8 8,1 8,3
■ Investments in fixed assets, billion dollars 1,1 1,1 1 1,2 1,5 1,6 1,4 1,3 1,5 1,3 1,2
■ Growth rate of investment in fixed assets, % Foreign 12,6 2,8 -23,3 14,1 24,9 28,3 14,7 1,7 7,8 -6,3 -4,6
■ Direct investment, billion dollars 0,46 0,45 0,44 0,33 0,45 0,57 0,35 0,31 0,36 0,36 0,34
Figure 1. Growth rate of fixed capital investment in Tajikistan in 2010-2019.
The dynamics of investment in fixed assets (Figure 1) in recent years has largely been driven by investment in energy projects: for example, in 2019, the volume of investment in energy projects decreased, and the growth rate of total investment in fixed assets also decreased. In 2020, the volume of investment activity naturally decreased: according to the results of the first half of the year, investments in fixed assets decreased by 4.6% compared to the same period last year. The decline was primarily due to a decrease in state and foreign financing of investment projects [4].
The inflow of foreign direct investment to Tajikistan has slowed since 2015, with a further decline in 2020 due to increased uncertainty (Figure 1).
China accounts for more than half of foreign investment in the country. Russia, Great Britain, France,
Tajikistan's economic growth rate is the highest in the region, with GDP growing at an average rate of 67% per year over the past few years. However, in 2020, the economic crisis caused by the COVID-19 pandemic interrupted this trend - the growth rate in 2020 is expected to be 1% or lower (Figure 3). It should be noted
The main sectors attracting investment in Tajikistan are mining and manufacturing, which account for more than 2/3 of foreign direct investment.
In 2019, 2.4 thousand people officially left Tajikistan, and about 400 people entered the country. According to Rosstat, about 90 thousand citizens of Tajikistan came to Russia in 2019, 41 thousand left Russia for Tajikistan.
Credit activity experienced a significant decline in 2016-2017, after which it was recorded at a new, lower level (Figure 2). The increase in credit activity at the end of 2020 indicates primarily the easing of the monetary policy of the National Bank of Tajikistan, as well as measures to support the population and business. At the same time, it should be noted that in the first half of 2020, the share of bad loans increased from 24% to
that the decline in growth rates in Tajikistan began in the second quarter of 2020, in the first quarter there was an increase of about 5% compared to the same period in 2019.
Turkey and Switzerland are also significant partners of 27.2%. Tajikistan.
Figure 2. Credit activity in Tajikistan, 2016-2020.
0s m
ne
JS
5=
25 20 15 10
-S-S,
S 5 O 0 •• « • •
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
-Economic growth rate, % 7 7 8 7 7 6 7 7 8 8
• • • • Industrial production rate, % 9 6 11 4 5 11 16 21 12 14
Figure 3. Economic growth and industrial production growth in Tajikistan in 2010-2019.
In the structure of Tajikistan's GDP, a significant share is occupied by agriculture and forestry, as well as industry, in which the most significant share is occupied by the cotton industry, metallurgy, and mining (Figure 4).
The decline in GDP in the second quarter of 2020 was primarily due to a decline in construction, trade, services and transport, with industry contracting only slightly and agriculture showing growth of more than 20%.
Since 2017, Tajikistan has declared inflation targeting as its monetary policy - achieving price stability
First of all, the acceleration in inflation is due to the growth rate of food prices, while non-food inflation slowed in 2020.
The money supply has been growing at a steady pace over the past few years, and at the beginning of 2020 it was slightly reduced-simultaneously with the increase in the refinancing rate-against the background of the emergence of pro-inflationary factors, but in the second half of 2020, the rate reduction and the build-up of the money supply continued.
The exchange rate of the national currency tends to gradually devalue. The National Bank of Tajikistan
with an inflation rate of 6±2% (6±2% in 2018-2019). 2018 was successful in terms of keeping inflation in the planned corridor, but since the beginning of 2019, inflation has started to accelerate and exceeded the upper limit. The national regulator expected an early decline in inflation, believing that the increase in the rate of price growth was caused by short-term reasons, but the economic crisis of 2020 increased pro-inflationary factors.
declares a floating exchange rate regime, but has an official exchange rate of the dollar to the somoni, which is subject to manual correction.
The state budget of Tajikistan has remained in deficit in recent years, although with a tendency to consolidate (Figure 5). The amount of public debt is below the threshold of 70% of GDP, at the level of 40-50%. Domestic debt accounts for about 20% of the total public debt, the main part of which is owed to international financial organizations (the IMF, development banks).
Transport and communications Taxes minus subsidies Construction Trade, hotels and restaurants Services Agriculture and forestry Industry
5 10
2019 2018 «2017
15
20
25
Figure 4. Dynamics of the structure of Tajikistan's GDP in 2017-2019 (%of GDP).
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o
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«4©
OJ JS
60 50 40 30 20 10 0
2016 r. 2017 r. 2018 r. 2019 r. 2020 r.
■ Budget revenues 30 30 29 27 24
■ Budget expenditures 39 36 32 29 30
■ Budget deficit 9 6 3 2 6
■ Gross debt 42 50 48 43 48
Figure 5. Tajikistan's budget parameters, public debt.
The pandemic crisis has had a significant negative impact on the state budget of Tajikistan: the trend of gradual reduction of the budget deficit was interrupted, in 2020, the deficit amounted to 6% of GDP. Revenues in 2020 decreased-primarily due to a reduction in the collection of taxes on income and profit, expenses in turn increased.
The increase in public debt for budget purposes was primarily due to borrowing from international financial institutions.
Tajikistan is an importing country, the volume of imports significantly exceeds the volume of exports
Tajikistan's exports are fairly evenly distributed across the countries - about 44% of exports go to the CIS countries (of which Russia-about 4%, the main export partner in the CIS - Uzbekistan), 23% of exports go to Europe, and primarily to Eastern European countries outside the EU. Tajikistan imports two-thirds of all goods from the CIS, half of them from Russia.
For 9 months of 2020, Tajikistan began to export less to the CIS countries, which was offset by exports to non-CIS countries, which increased more than 2 times compared to 2019. Imports from non-CIS countries also declined, while imports from the CIS remained stable.
(Figure 6). The main export products are precious metals, cotton, and electricity. The main imported goods are petroleum products and cereals. The current account balance is mostly negative, but not significantly - primarily due to the excess of the level of imports over the level of exports, which in turn is balanced by a significant inflow of foreign currency into the country due to transfers of individuals. It should be noted that the volume of capital flows within primary and secondary incomes did not change much in 2020, and due to a significant increase in exports (from 14-15% of GDP to 21% of GDP) and a slight drop in imports, the current account balance became positive.
Tajikistan has a large external debt (Figure 5) in relation to exports and transfers (Figure 6). In the last 5 years, its value was almost 200%. At the same time, debt servicing takes up a fifth of exports and transfers, which is difficult for the economy, and gold and foreign exchange reserves are approximately equal to the volume of debt payments on the horizon of 1 year, which is estimated moderately negatively.
In general, financial stability is poorly assessed, but it is not pre-default (Figure 7). In January 2021 Tajikistan has asked for small debt modifications, which highlights the problems with financial stability.
5000 4500 4000 3500 3000 2500 2000 1500 1000 500
0 2012 r. 2013 r. 2014 r. 2015 r. 2016 r. 2017 r. 2018 r. 2019 r. 2020 r.
■ Imports, million dollars 3778 4122 4668 3436 3030 2776 3150 3349 2231
■ Exports, million dollars 1331 1163 1079 891 899 1198 1073 1175 1190
■ Balance, million dollars 2447 2959 3589 2545 2131 1578 2077 2174 1041
Figure 6. Tajikistan's foreign trade balance in 2012-2020
2010 r.
2011 r.
2012 r.
2013 r.
2014 r.
2015 r.
2016 r.
2017 r.
2018 r.
2019 r.
2020 r.
i Assessment of the internal state
48
53
82
84
89
75
45
30
53
68
33
i External condition assessment
28
33
53
54
56
41
19
27
22
34
32
Average assessment of financial stability
15
20
34
34
33
18
2
24
11
31
Figure 7. Assessment of Tajikistan's financial stability.
Conclusion. As part of the fight against the consequences of the pandemic, the country managed to attract funds from international organizations. The EU allocated about €80 million: €48 million in a grant, €30 million in a loan from the European Investment Bank for the implementation of the government's anti-crisis plan, as well as separately €1.3 million for protective clothing for health workers and €780 thousand for sanitary supplies for educational institutions.
In addition, several monetary measures were taken to support the liquidity of credit financial institutions. The NBT Monetary Policy Committee revised the refinancing rate twice in May-July 2020 and set it at 10.75 percent per annum on August 3, 2020. Starting from April 1, 2020, the ratio of mandatory reserves of credit financial institutions for deposits and similar obligations in the national currency was also reduced from 3% to 1% (2 percentage points) and in foreign currency from 9% to 5% (4 percentage points).
The article was prepared with the financial support of the Novosibirsk State Technical University (project C21-11).
References
1. Kazakov V. V., Imonov O. D. Problems of formation and development of the financial market of the Republic of Tajikistan // Bulletin of Tomsk State University. 2015. No. 400. Pp. 217-222. DOI: 10.17223/15617793/400/35
2. Chernyakov M.K. The current state of the theory of financial stability / M. K. Chernyakov, S. Gromov, K. Akberov, I. Shuraev, G. Ibishov // German International Journal of Modern Science = Deutsche Internationale Zeitschrift fur zeitgenossische Wissenschaft. - 2021. - № 9, pt. 2. - Pp. 16-18. - DOI: 10.24412/2701-8369-2021-9-2-16-18.
3. Chernyakov M.K. Development of the theory of financial stability: investment portfolio management / M.K. Chernyakov, A.N. Smirnov, D.A. Korykhalina, K.Ch. Akberov, I.A. Shuraev / / Rostov Scientific Bulletin. - 2021. - № 3. - Pp. 85-87.
4. Azizbayev R. A. Financial factors that hinder economic growth in the conditions of cyclical fluctuations in the Republic of Tajikistan // Bulletin of TSUPBP. 2019. №1 (78).- Pp. 27-35.
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