Experts predict that Western powers’ sanctions against Russia will affect Tajik economy in the worst possible way

4 months ago tngadmin Comments Off on Experts predict that Western powers’ sanctions against Russia will affect Tajik economy in the worst possible way

According to the analysts, the Tajik government has to rethink its economic policy and reduce its dependence on Russia.

All experts predict that the crisis associated with economic sanctions against Russia will significantly affect Tajik labor migrants and their families.

They note that the Tajik economy is heavily dependent on migrants’ money. According to them, the statistics showing that the labor migrants’ remittances make up only about 31% of the country’s GDP is underestimated and the real figures are much higher.

The Russian ruble depreciation already affects the incomes of labor migrants’ families.

Experts believe that the restrictive measures of the Western countries will seriously affect the number of labor migrants from Tajikistan in Russia. At the same time, the migrants will experience the impact of sanctions both directly and indirectly.

Moody's Analytics forecasts that Russian gross domestic product (GDP) will decrease by 7% this year.

Tajik economist, Professor Hojimuhammad Umarov, told CABAR.asia in an interview that this means the jobs will be cut. “The Russian Federation will take some measures so that job cuts do not have a significant impact on the employment of its own citizens. Our labor migrants will be affected to a greater extent,” Umarov said.

The sharp depreciation of the Russia ruble devalued the migrants’ remittances from Russia. Officially, the ruble depreciated against the national currency – the somoni – by more than 20%.

The process of receiving bank remittances has become more complicated due to the disconnection of Russian banks that fell under sanctions from the SWIFT system.

In Tajikistan, the US dollar exchange rate against the somoni rose sharply by 15-20%. On March 9, the National Bank of Tajikistan (NBT) set the US dollar exchange rate at 13 somoni per 1 US dollar. The national currency also depreciated against the euro: it is 14.31 somoni per 1 euro.

However, the banks do not issue dollars currently. On the black market, the dollar exchange rate is much higher than the official rate. Experts predict that the NBT will soon have to raise the dollar exchange rate even more.

The Tajik banks need to establish new correspondent relationships with banks in other countries. Otherwise, difficulties will arise, according to the economists.

Amid the ruble depreciation, the prices for basic food supplied from Russia reportedly rose in Tajikistan. For example, the flour and vegetable oil prices increased by 2-5%. The prices for other goods in Tajik stores change daily.

Since the Tajik market is import-driven, the sanctions imposed on Russia and the ruble depreciation will raise the prices for all imported goods, primarily those supplied from Russia and Belarus. These are fuel, building materials, machine tools, cars, office equipment, medicines, and other essential products.

There will also be problems with goods re-exported from Russia to Tajikistan. For example, bananas are shipped to the western ports of Russia and, after technological processing, they reach consumers both in Russia and in the CIS countries.

The manufacturers of computer products are also leaving Russia creating a stir in the market. According to experts, this raised the price of computer parts in Tajikistan by 30%.

The energy prices will also rise; now, the analysts say that the price of 1 barrel of oil will gradually reach U$150. This means that the prices of all other goods will also rise.

The government now has to take the necessary measures quickly to minimize the impact of the crisis.

Experts, however, believe the government does not have enough tools to fight the crisis as it is not able to influence political processes abroad. Besides, according to them, the Tajik authorities did not learn a lesson from the previous crises and did not take measures to diversify exports and imports.

Professor Umarov considers that the government should reduce Tajikistan’s economic dependence on Russia, China, and Kazakhstan to avoid similar crises in the future. Within one year, it should carry out targeted reforms of export and import relations. In addition, Tajikistan’s external debt should be diversified.

“In times of crisis, the government should increase its influence on the country’s economy to reduce artificial price hikes,” Umarov believes.

The high level of market monopolization has already led to higher prices for goods.

Source: Asia-Plus