DUSHANBE, April 22, 2009, Asia-Plus  -- The Government of Tajikistan and the World Bank have signed an agreement on the Third Programmatic Development Policy Grant, press release issued by the Ministry of Finance (MoF) said.

Finance Minister Safarali Najmiddinov and acting Country Manager of the World Bank for Tajikistan, Ms. Saodat Bozorova, singed the document at a MoF on April 21.

The US$20 million Third Programmatic Development Policy Grant will help the Government of Tajikistan mitigate the impact of the global economic slowdown and to help it continue to implement its medium-term reform program.  This grant will support the government’s program aimed at maintaining macroeconomic stability.  The World Bank grant complements the efforts of other international development partners, with whom we are coordinating, while supporting the government’s efforts to maintain essential public services, including health, education, and social safety nets.

The aim of the grant is to safeguard Tajikistan’s ongoing reform and poverty reduction program by helping to partially fill the unanticipated financing gap created by the global economic crisis.

At first, the amount of the grant was 10 million US dollars but then, taking into consideration Tajikistan’s vulnerability to effects of the global economic crisis, the World bank increased the grant’s amount to 20 million US dollars, the MoF press service said.

The grant will be provided as direct budget support.  It is the third such operation supporting the government’s reform program laid out in Tajikistan’s first and second poverty reduction strategies.  The resources are critical to support Tajikistan’s efforts to promote growth, improve governance, and reduce poverty.

Press release issued by the World Bank on March 26, notes that Tajikistan’s growth is expected to fall to 3 percent in 2009, one-third the rate of expansion of 9 percent enjoyed during 2000–2007, due mainly to the drop in remittances from Tajik working in Russia and to a decline in exports of cotton and other commodities.  The crisis has put pressure on the government to increase its expenditures on social services to help migrant workers returning to Tajikistan and others who have lost their jobs.  Yet, state revenues needed to deliver critical social services have fallen as economic activity slows.  The drop in export revenue is also putting pressure on the balance of payments, reserves, the exchange rate, and the current account.