Coronavirus pandemic bearing serious consequences for remittance-dependent Tajikistan
11 months ago Web Desk 0
The coronavirus pandemic is bearing serious consequences for remittance-dependent Tajikistan, which has seen a 15 percent decrease in such transfers in the first half of this year.
The fall in incomes of Tajik laborers in Russia appears directly linked to the lockdowns imposed by authorities there as a measure to combat the spread of COVID-19.
Tajikistan’s economy is perilously reliant on remittances. In 2019, those payments amounted to around $2.5 billion, which is equivalent to around 33 percent of gross domestic product, or GDP, according to Eurasianet.
Eurasianet notes that the slump this year has even forced a change of rhetoric from the government, which has in the past downplayed or ignored the role that remittances play in keeping the economy afloat.
In May, President Emomali Rahmon wrote a letter to the International Monetary Fund pleading for budget support, noting that remittances had fallen by 50 percent, or $80 million, in March and in the first half of April.
“The decline in remittances is likely to last for several months, leading to a sharp decline in consumption and an increase in unemployment, as well as pressure on the foreign exchange market,” Rahmon said in his letter.
Also on July 22, the head of Amonatbonk (Tajikistan’s state-owned savings bank), Sirojiddin Ikromi, made the link even more explicit, stating that the fall in remittances was negatively impacting economic growth.
“With their remittances, migrants enable their families to buy food and other essential goods, and thereby increase turnover of money and, in turn, increase tax revenues. This is one continuous chain wherein money enters the economy in the form of cash transfers and influences other sectors of the national economy,” he was cited as saying by Radio Liberty’s Tajik Service.
The National Bank stated last week that GDP growth had slowed in the January-June period to 3.5 percent, down from 7.5 percent in the same period in 2019, Reuters reported. The news agency noted that the government has reduced its annual growth forecast for the year from 7.8 percent to 4.7 percent.
The World Bank in April this year predicted sharpest decline of remittances in recent history. According to the World Bank, global remittances are projected to decline sharply by about 20 percent in 2020 due to the economic crisis induced by the COVID-19 pandemic and shutdown. The projected fall is largely due to a fall in the wages and employment of migrant workers, who tend to be more vulnerable to loss of employment and wages during an economic crisis in a host country. Remittances to low and middle-income countries (LMICs) are projected to fall by 19.7 percent to $445 billion, representing a loss of a crucial financing lifeline for many vulnerable households, the World Bank noted.
In 2021, the World Bank estimates that remittances to LMICs will recover and rise by 5.6 percent to $470 billion. The outlook for remittance remains as uncertain as the impact of COVID-19 on the outlook for global growth and on the measures to restrain the spread of the disease. In the past, remittances have been counter-cyclical, where workers send more money home in times of crisis and hardship back home. This time, however, the pandemic has affected all countries, creating additional uncertainties.
Source: Asia Plus