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Economy of the Country Essay

Tajikistan became one of the poorest nations in the Central Asia after coming out of the clutches of civil war in 1997. Its foreign exchange mainly comes from the cotton and aluminium exports. This has resulted in increased sensitivity of the state to external imbalances. The deteriorating health of the economy can be noticed from the fact that in the year 2000, Tajikistan’s rehabilitation program was entirely dependent upon the international aid. This rehabilitation program brought back the combatants of civil war into the mainstream, which assisted the country in making peace at both ends.

International aid was required to assist the country in combating the food crisis that Tajikistan had encountered due to severe drought. After the civil war, there was some recovery in the economy, as it grew considerably after 2000. According to the data provided by World Bank, for period 2000-2004, the GDP of the country grew at a rate of 9. 6%. This growth in GDP led to improvement in country’s position among other Central Asian countries such as Turkmenistan and Uzbekistan. But since then the economy of the country has been continuously moving backwards.

According to the figures available, nearly 57% of the population of this country

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lives below the poverty line. The country is stricken with widespread poverty. The dollar exchange rate is estimated to be 0. 82 Somoni. The wages in the country are low amounting to nearly $2-$3 per day for an average person in 2007. The civil war lasted for six years creating innumerable problems for the country including a strained relationship with Russia that resulted in loss of subsidies and more importantly the loss of its products market.

The country has to look for assistance from Russia and Uzbekistan and other international humanitarian bodies to fulfil the country’s basic needs. In addition to this, the country faces the uphill task of bringing back the refugees and combatants of civil war in the country’s mainstream. The stability of the nation and pace of the peace process has an important part to play in attracting foreign investment, as well as determining the country’s future. In the 1990’s, the GDP per capita of the country fell by 67%.

In the financial year 2000, the Government of Tajikistan went into reform mode and took steps towards promoting macroeconomic stabilization and certain institutional reforms even though it faced endless number of protests. The Government pursued privatization of small enterprises and increased privatization of medium and large state-owned enterprises. The Government’s budget for development of economy, during 2000, was in control until 2005. The growth rate of the financial system was in good shape with an annual growth rate above 6 percent.

The country’s economy is highly dependent on agriculture and livestock. The reason behind this dependence on agriculture is the economic downturn it faced with collapse of Soviet rule and the civil war that plagued the country. Nearly two thirds of the country is employed in subsistence agriculture. Nearly 900,000 of the total workforce of the country are employed in Russia or other countries. Government corruption is one the major challenges facing the country and contributing to the high levels of poverty in the country.

The lowlands of the country specialize in the production of cotton, wheat, barley, fruit, vegetables and mulberry trees. A significant portion of the population of the nation is also engaged in livestock farming, such as sheep, dairy cattle, goats and yaks. The country also has deposits of silver, gold, uranium, tungsten, zinc, lead, coal, antimony, salt and mercury. But due to inadequate mining and raw-materials processing facilities, the country has not been able to benefit from its resources.

The country’s hydro- electric resources are abundant, but the poor management of these resources has resulted in power shortages. Other industries which have suffered due to its separation from the Soviet Union include ginning cotton, spinning of silk, winemaking, carpet weaving, metals processing and textiles manufacturing. The major exports of the country include aluminium, electricity, cotton, fruits, vegetable oil and textiles. The major imports include petroleum products, electricity, aluminium oxide, machinery and equipment. The country trades primarily with Netherlands, Uzbekistan, Russia and Turkey.

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