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Brief macroeconomic review and banking system activities of the Republic of Tajikistan for the first half of 2020
The press conference on results of the NBT and banking activities systems for the first half of 2020 took place at the National Bank of Tajikistan on July 22, 2020 with participation of Chairman of National Bank of Tajikistan Jamshed Nurmahmadzoda, First Deputy Chairman of the National Bank of Tajikistan Jamoliddin Nuraliev, Deputy Chairman of the National Bank of Tajikistan Hokim Kholikzoda and more than 50 representatives of domestic and foreign mass media according to the instruction of President of the Republic of Tajikistan dated from September 15, 2011, No. AP-1729.
The NBT Chairman Jamshed Nurmahmadzoda, in his address on the results of banking system of the Republic of Tajikistan for the first half of 2020, has noted that the National Bank of Tajikistan during this period, in order to prevent the influence of external and internal factors, has undertaken required measures for effective implementation of monetary policy, ensuring a stable growth of money supply in the economy, preventing the negative impact of the exchange rate fluctuations, maintaining stable prices level, financial stability and promoting sound economic growth.
The country's Gross Domestic Product (GDP) in the first half of 2020 amounted to TJS 32.4 billion and its real growth has made 3.5%. The growth of GDP over this period was ensured for account of increase in the industrial production by 9.2% and agricultural production by 8.2%.
As a result of implemented balanced monetary policy through the effective use of monetary instruments, the inflation rate was maintained at a relatively stable level, amounting to 4.3% in January-June of this year, which is more for 0.3 percentage points than in the same period of last year.
The prevailing inflation was mainly due to the impact of the coronavirus (COVID-19) pandemic, accompanied by the closure and/or restriction of goods movement across the borders of a number of major trading partner-countries, restrictions on the export of food products, in particular wheat and flour by exporting countries and seasonal factors. (bad weather, a decrease in production of domestic products including agricultural crops and the increase in demand for them) and a rise in prices for number of products on the world market (especially the prices for food products).
For 6 months of 2020, in order to regulate the money supply in circulation, to minimize the exchange rate and inflationary pressures and effectively manage the level of banks' liquidity, credit financial institutions attracted overnight deposits in the amount of TJS 153.1 billion, which is more for 3.2 times compared to the same period of last year. Also, for this period, 60 auctions were held on sale of securities of the National Bank of Tajikistan for the amount of TJS 7.3 billion.
It should be noted that in order to develop timely measures to maintain the liquidity of credit financial institutions in connection with the impact of potential risks of the coronavirus pandemic (COVID-19) as well as reducing additional costs and expenditures of loans provided to the industries of the economy, the required reserves of credit financial institutions for deposits and similar obligations temporarily was reduced by 2 percentage points in national currency and 4 percentage points in foreign currency until December 31, 2020 (in accordance with the decision taken at the extraordinary meeting of the NBT's Monetary Policy Committee) and was set respectively at level 1 and 5 percentage points.
This measure has allowed improving the situation of credit financial institutions during the crisis period providing additional liquidity for the banking system in the amount of TJS 241.7 million.
At the same time, in order to support the country's economy and implement stimulating monetary policy during the pandemic, the National Bank of Tajikistan has reduced the refinancing rate by 1.0 percentage point and set it at 11.75 % per annum.
For the first half of 2020, the exchange rate policy continued, based on the “floating regulated rate regime without determining and announcing the limits of exchange rate”.
During this period, the change of national currency exchange rate against the US dollar is estimated stably and its official rate (weighted average purchase and sale rate of the US dollar in the interbank and intrabank markets) decreased by 6.4%, which is more for 6% than in the same period of last year.
The cash exchange rate (selling rate of the US dollar in cash on the unofficial market) for this period increased by 8.7%, which is more for 7.9 percentage points than in the same period of last year.
The difference between the official exchange rate and the selling rate of cash US dollar as of June 30, 2020 has made 3.2% (as of June 29, 2019 this difference has made 3.0%).
These changes are due to the influence of economic and financial processes that have taken place in the world and in the region especially in the countries- main trading partners. During this period, due to the instability of the world economy, the official exchange rate of national currencies of most countries-trading partners of the Republic of Tajikistan also tended to decline.
The National Bank of Tajikistan, in order to minimize the exchange rate pressures, to prevent the impact of existing currency risks as well as to ensure compliance with observing 2 percent difference between the official exchange rate and selling rate of the US dollar in cash on the non-banking market has carried out one-time adjustment of the official exchange rate of national currency in relation to USD in the amount of up to 5.0% on March 20, 2020.
There are 73 credit financial institutions operating in the republic, including 17 traditional banks, 1 Islamic bank, 20 microcredit deposit organizations, 6 microcredit organizations and 29 microlending funds as of June 30, 2020.
For the reporting period, one microcredit deposit organization has transformed into the bank (OJSC "Alif Bank"), also CJSC MCO "Humo" and microlending fund "Imon" were issued a license to conduct Islamic banking activities through the "Islamic banking window".
The number of branches taking into account Islamic banking windows and banking service centers of credit financial institutions, in the reporting period amounted to 1,811 units, having increased by 53 units compared to the same period of 2019, which will contribute to the expansion of the scope of banking operations, ensuring the population's access to credit resources, high-quality and modern financial services and to development of the republic's economy.
The current liquidity ratio of credit financial institutions as of June 30, 2020 reached 65.18% exceeding the established standard by 35.18%.
The total assets of credit financial institutions as of June 30 of this year amounted to TJS 22.5 billion having increased by 4.8% against the same date of last year. The total liabilities and balance sheet capital of credit financial institutions amounted to TJS 16.1 billion and TJS 6.4 billion respectively having increased by 4.9% and 4.5% respectively compared to the same date of last year.
As of June 30, 2020, the total amount of deposit balances amounted to TJS 9.7 billion and has increased by 1.3% in national currency and 0.8% in foreign currency. In general the volume of deposits increased by 1.1% (or TJS 101.8 million) as compared to the same period of last year.
During this period, the number of deposits in the deposit portfolio amounted to 4,001.4 thousand and the number of attracted deposits - 2 663 thousand, having increased over the same period of last year by 540.5 thousand (or 15.6%) and 1.1 thousand.
In the structure of total balance, the share of deposits in national currency has made 52.1%, in foreign currency - 47.9%. This indicator reflects a gradual decrease of dollarization level of economy and increase of public confidence to national currency.
The weighted average rate of time deposits in the banking system in national currency has made 11.1% and foreign currency - 5.2%.
As of June 30 of this year, the total balance of the loan portfolio reached TJS 9.8 billion, having increased in compare to the same date of last year by 9.5% or TJS 852 million.
The total volume of loans issued in January-June 2020 amounted to TJS 3959.3 million. 19.3% of total amount of issued loans falls on foreign trade, 18.8% on agriculture, 10.6% on industry, 27.7% on consumption, 14.0% on services, 5.2% on construction, 1.2% on transport, 0.6% on financial intermediation and 2.6% on other areas.
In general, in January-June, 2020, compared to the same period of last year, the weighted average interest rate on loans in foreign currency decreased by 2.5 percentage points (from 15.5% to 13%), and the interest rate on loans in national currency increased by 1.7 percentage points (from 21.9% to 23.6%).
At the same time, in order to fulfill the instructions and recommendations of Leader of the Nation, President of the Republic of Tajikistan in connection with the impact of the spread of the COVID-19 coronavirus pandemic on the country's economy, credit financial institutions have provided benefits to more than 100 thousand of their clients on June 30, 2020 in the amount of TJS 1, 5 billion.
In particular, the maturity of loans for more than 28,600 clients in the amount of TJS 800 million was prolonged and the accrued fines for more than TJS 43 million were canceled.
It was noted that in pursuance of the instructions and recommendations outlined in the Message of the Leader of Nation, President of the Republic of Tajikistan to Majlisi Oli of the Republic of Tajikistan, as well as tasks set before us at the expanded meeting of the Government of the Republic of Tajikistan, the necessary measures will be taken to maintain a stable level of inflation and exchange rate of national currency through the implementation of sustainable monetary policy.
During the reporting period, the National Bank of Tajikistan took appropriate measures to expand the sphere of non-cash payments, to reduce the use of cash in circulation, to introduce modern electronic means of payment as well as to reduce the share of the shadow economy and ensure transparency of the banking system. As of June 30, 2020, the number of ATMs and electronic terminals in the republic amounted to 1,096 and 5,575 units, respectively, and compared to the same date of last year, the number of ATMs increased by 398 units and the number of electronic terminals by 672 units.
The total number of electronic wallets of credit financial institutions amounted to 705,064 units and 3,327,634 non-cash payment transactions for the amount of TJS 189.4 million were carried out during January-June 2020 through electronic wallets. Compared to the same date in 2019, the total number of electronic wallets of credit financial institutions increased by 546,701 (4.5 times).
The total number of payment cards issued by domestic banks for the reporting period amounted to 2,640.8 thousand units, which is more for 20.8% than last year. The number of payment card holders amounted to 2,486.5 thousand people having increased by 16.6% compared to the last year.
As of June 30, 2020, the total number of bank accounts opened for customers in credit institutions increased by 18.5% compared to the last year, amounting to 4,348,661 units, which indicates an improvement in the coverage of population with banking services.
In order to protect the rights of consumers of banking services, the National Bank of Tajikistan accepts and considers applications and complaints from citizens in writing and orally, via phones and the official website. In total, 1,183 applications were accepted for consideration, including 20 through the Executive Office of President of the Republic of Tajikistan, 757 through the helpline, 301 applications when receiving citizens, 17 - through e-mail and 88 appeals directly through the National Bank of Tajikistan, on which the necessary measures were taken within existing powers.
As of June 30, 2020, the number of insurance institutions has made 18 units, 2 of which were state insurance organizations, 15 institutions - non-state insurance organizations. There is also 1 Mutual Insurance Support Center in the country's insurance market.
According to operational data, in the first half of this year, the insurance premium has amounted to TJS 131.0 million, which is more for 34.6% than in the same period of last year. Monetary compensation paid to individuals and legal entities by insurance organizations amounted to TJS 10.3 million having increased for 71.9% compared to the same period of last year. During the first half of this year, insurance companies have concluded 775.7 thousand insurance contracts.
Then representatives of local and foreign mass media have received detailed answers for their questions regarding the measures taken by the NBT and credit financial institutions to provide benefits to clients within the framework of the Decree of President of the Republic of Tajikistan, No. 1544 dd. from June 5, 2020 “On preventing the impact of the infectious disease on socio-economic sectors of the Republic of Tajikistan ", macroeconomic situation, monetary and foreign exchange policy, inflation, expansion of non-cash payments, refinancing rates, procedure for making money transfers, volume of cash in circulation and volume of international reserves, as well as the provision of concessional loans to the agricultural sector and etc.
In the final part of the press-conference, the Chairman of National Bank of Tajikistan J. Nurmahmadzoda has expressed his sincere gratitude to the mass media representatives for mutual cooperation.
Press Division of NBT