Short macroeconomic review and activity of banking system of Tajikistan for the first half of 2017

The next press conference following the results of activity of the National Bank of Tajikistan and banking system of the country for the first half of 2017 has taken place on July 24, 2017with participation of domestic and foreign mass media representatives.

In the beginning of press conference Mr. Jamoliddin Nuraliev, First Deputy Chairman of the National Bank of Tajikistan has noted that for the first half of 2017 the National Bank of Tajikistan has consistently directed its effective monetary policy for maintenance of stable growth of money supply in economy, preservation of necessary price level, financial stability and promotion to stable growth of economy.

1. Macroeconomic Indicators

The Gross Domestic Product (GDP) of the country for the first half of 2017 has made TJS 24 023,8 million, and its real growth – 6,0% (for the similar period of previous year rate of growth made 6,6 %). National economy growth basically has been provided at the expense of industrial sector - 21,3 %, agricultural sector - 6,4 % and trading - retail turnover - 3,6 %.

Inflation. According to official data inflation rate for six months of current year has made 5,9 %, that in comparison with the similar period of last year is more on 2,8 percentage points. Inflation for this period basically has been caused by food production price rise -8,3 %, non-food production - 1,3 % and services - 4,9 %.

Balance of Payments. The foreign trade turnover for the first half of 2017 has made USD 1,6 billion and has increased by 2,4 % or USD 37,5 million against last year. According to official data of BOP, volume of goods export for the considered period in general has increased by 73,9 % (USD 223,6 million), and volume of import of goods has decreased on 15,0 % (USD 186,1 million).

2. Monetary policy

According to monetary statistics data the volume of reserve money for June 30 of current year has made TJS 12,3 billion, and volume of money in circulation – TJS 9,9 billion, and in comparison with the beginning of current year the volume of reserve money has increased by 1,7 %, and volume of money in circulation - 17,8 %.

In January - June of current year with the view of ensuring of economy requirements to national currency in circulation it has been let out TJS 2,4 billion, that in comparison with the similar period of last year it is more on 14,3 %.

For the accounting period the National Bank of Tajikistan for the purpose of maintenance of effective monetary policy implemented structural reform and has introduced new operating tools, such as overnight and intra-day credits and credit auctions. Application of the given tools has made monetary operations more transparent and effective, and has enabled credit institutions to satisfy the requirements for short-term credits for the amount of TJS 66,6 million.

For the purpose of regulation of money supply in circulation, decrease of exchange rate and inflationary pressure, dedollarization of economy, increase of trust of the population to national currency the National Bank of Tajikistan implements complex of actions and monetary instruments, and also urgent administrative and supervisory measures. So, for six months of current year the National Bank of Tajikistan held 87 securities auctions, and volume of securities sale in these auctions has made TJS 4,0 billion, that in comparison with the similar period of last year it is more in 2,3 times.
3. National currency exchange rate

It has proceeded the exchange rate policy of the National Bank of Tajikistan, based on “floating regulated exchange rate regime with no fixed and announced limits of change” according to which the official rate of TJS is established taking into account a foreign currency supply and demand in the internal exchange market and the National bank of Tajikistan will intervene only in cases of excessive exchange fluctuations.

The official exchange rate of TJS in relation to US dollar from the beginning of year till June 30 of current year has decreased by 11,9 % (for the similar period of 2016 decrease made 10,8 %).
The market price of US dollar cash for this period has grown on 11,7 % (for the similar period of 2016 it has increased to 5,5 %). The difference between official exchange rate and market rate of cash US dollar for June 30, 2017 has made 0,6 %.

4. Development of banking system

There are 96 credit institutions, including 16 banks and 34 microcredit deposit organizations, 13 microlending organizations and 33 microlending funds functioning in the territory of the country as of June 30, 2017.

Total assets of credit institutions for the reporting period have made TJS 20 billion, having increased in comparison with similar date of last year on 1,3 %.

Total obligations of the credit institutions have decreased on 14,4 %, having made TJS 14,5 billion. The balance capital has increased in 2,0 times and the capital of credit institutions has reached TJS 5,3 billion.

Deposits. The total amount of balances of deposits as of June 30, 2017 has made TJS 9,0 billion that in comparison with similar date of last year is less on 4,9 %. The volume of balances of deposits in national currency has decreased on 2,6 %, and in foreign currency on 6,0 %. The share of deposits in structure of total balances of deposits in national currency has made 34,8 %, and in a foreign currency of 65,2 % (with the similar period of 2016 31,3 % and 68,7 % accordingly).

Credit investments. The total amount of balances of loans of banking system as of June 30, 2017 has decreased on 12,6 %, having made TJS 9,5 billion. Simultaneously with reduction of total amount of balances, the total amount of given out loans which has made TJS 3,3 billion also has decreased, and the volume of issued microcredits has reached TJS 1,9 billion.

The 38,2 % of total amount of issued loans for this period falls on entrepreneurship, and by sections: 33,5 % on foreign trade, 19,9 % on industry, on 18,6 % consumption, 10,5 % on agriculture, 7,9 % on services, 4,6 % on construction, 2,3 % transport, 1,1 % on financial intermediary and 1,6 % on other sectors.

5. Payment System

In January-June, 2017 the number of payments held by various means of settlements in the territory of the country has made more than 32,0 million units for the total amount of TJS 260,0 billion, and in comparison with the similar period of previous year the number of payments has increased by 7,3 %, and volume of payments by 43,5 %.

The total of bank accounts opened for clients in the credit institutions as of June 30, 2017 has increased in comparison with the similar period of last year by 11,4 %, having made 3,3 million units.
The total quantity of payment cards issued by domestic banks has made 1 686,4 thousand units, that in comparison with similar date of last year is more for 8,1 %.

During this period the quantity of ATM and electronic terminals has made 737 and 2 985 units accordingly, and in comparison with similar date of last year number of cash dispenses has decreased for 42 units, and number of electronic terminals has increased by 690 units. From this number 1 586 units of electronic terminals are established in points of granting of money in cash and 1 399 units in points of trade and granting of services.

For last three months (April-June) in trading enterprises and granting of services 574 units of electronic terminals are established by credit institutions, also there are 523 inquiries of businessmen on establishment of electronic terminals under consideration of the credit institutions.

The volume of operations with use of payment cards has made TJS 3 879,8 million as of June 30, 2017 that in comparison with similar date of last year is more on 17,5 %.

With the purpose of extension of clearing settlements system cooperation of the National Bank of Tajikistan with international payment systems of Visa, Mastercard and Unionpay is established. In particular, for the purpose of extension of share of settlements in national currency and elimination of additional exchange operation at performing calculations and further development of payment services, the Agreement with Mastercard Company has been signed on May 22, 2017.

6. International Cooperation.

For the purpose of realization of banking system reform directed on overcoming of external factors influence, stabilization of national currency rate, development of banking system of the country the National Bank of Tajikistan effects fruitful and effective cooperation with the following international financial institutions, as the International Monetary Fund (IMF), the World Bank Group, European Bank for Reconstruction and Development (EBRD), Islamic Development Bank, the German Agency for International Co-operation (GIZ), Asian Development Bank, and also Funds of Arab countries.

7. Application of citizens

At the end of his address Mr. Jamoliddin Nuraliev, First Deputy Chairman of the National Bank of Tajikistan has underlined that the National Bank of Tajikistan has accepted and considered applications and complaints of citizens in oral and written forms by phones and through official web site with the purpose of protection of banking services consumer rights. For the reporting period as a whole it was received 1 216 applications and complaints for consideration.

Also it has been noted that for improvement of financial literacy of the population special page on the Internet - website of the National Bank of Tajikistan named “Banking System Services Consumers Rights Protection Management”, and also e-mail allomushtari@nbt.tj and a new heading under the name “Question of the day” is created for the purpose of assessment of public opinion concerning financial services.

In the final part of the press conference representatives of foreign and local mass-media have received precise responds to their questions concerning reforms in banking system, macroeconomic situation, monetary and exchange rate policy, inflation rate, remittances, attraction of foreign investments to economy, use of payment cards, volumes of money supply in circulation and level of the population trust to banking system.

Press Division
NBT