Country Report Tajikistan March 2011

Economic policy: The budget for 2010 appears to beat the deficit target

According to data from the State Statistics Committee (SSC), in January-November 2010 state budget revenue amounted to S5.4bn (US$1.2bn), an increase of 11.6% compared with the year-earlier period. Expenditure rose by 9.9% year on year, to S5.2bn. This brought the government budget to a surplus of S185.9m (US$42.5m), or 0.9% of January-November GDP. In the year-earlier period the budget surplus was S92.9m, or 0.5% of GDP, although year-end spending pushed it into deficit over the year as a whole.

The state budget for 2011 was approved by parliament in October 2010 with expected revenue of S8.3bn, a nominal increase of S1.8bn, or 27.7%, from 2010. As in 2010, the 2011 budget targets a deficit of 1% of GDP. According to the finance minister, Safarali Najmuddinov, the government has allocated S850m (31% more than in 2010), or nearly one-tenth of total 2011 budget spending, towards the construction of the Roghun hydroelectric power plant. Another S270m has been allocated for other energy projects.

In 2010, the eight mobile telephone operators-using Global System for Mobile Communications (GSM)-active in Tajikistan generated reported total revenue for the state budget of US$409m. Given the tax revenue shortfall brought about by lower than expected collection of value-added tax (VAT) on imports, a result of Uzbekistan's partial trade blockade, the government has plans to legislate a 3% excise tax on mobile telephone use. This could generate around an extra US$7m, which the government hopes to use towards the social sector. Critics have argued that excise taxes are normally imposed on expensive and non-vital items (such as nicotine and alcohol) and should not be used on mobile telephone services, which are a vital component of communications in Tajikistan, given the poor state of the fixed-line infrastructure.

© 2011 The Economist lntelligence Unit Ltd. All rights reserved
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