DRAFT
REPUBLIC OF TAJIKISTAN












NATIONAL DEVELOPMENT STRATEGY

OF THE REPUBLIC OF TAJIKISTAN

FOR THE PERIOD TO 2015













Regional Conference on MDG based NDS and PRSP,
15-17 March, 2007, Dushanbe, Tajikistan

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1. INTRODUCTION ............................................................................................................................................ 4
2. PHASES AND PRINCIPAL CHALLENGES OF TAJIKISTAN’S ECONOMIC DEVELOPMENT .... 4
3. THE NDS IN THE NATIONAL DEVELOPMENT SYSTEM .................................................................... 8
4. GOALS, PRIORITIES AND PRINCIPLES ................................................................................................ 10
5. CREATION OF THE INSTITUTIONAL ENVIRONMENT FOR DEVELOPMENT (FUNCTIONAL
BLOCK).......................................................................................................................................................... 12
6. PROMOTION OF ECONOMIC GROWTH............................................................................................... 24
(PRODUCTION BLOCK)................................................................................................................................. 24
7. SOCIAL BLOCK ........................................................................................................................................... 33
7.1. DEVELOPMENT OF THE EDUCATION SYSTEM.............................................................................................. 35
7.2. DEVELOPMENT OF SCIENCE........................................................................................................................ 39
7.3. DEVELOPMENT OF THE HEALTH CARE SYSTEM.......................................................................................... 41
7.4. IMPROVEMENT OF SOCIAL WELFARE.......................................................................................................... 46
7.5. EXPANSION OF ACCESS TO WATER SUPPLY, SANITATION AND HOUSING AND MUNICIPAL SERVICES........ 50
7.6. PROMOTION OF ENVIRONMENTAL SUSTAINABILITY ................................................................................... 53
7.7. PROMOTION OF GENDER EQUALITY............................................................................................................ 55
8. MONITORING AND ASSESSMENT.......................................................................................................... 58
9. NDS FINANCING MECHANISMS ............................................................................................................. 58
APPENDIX 1 ...................................................................................................................................................... 60
APPENDIX 2 ...................................................................................................................................................... 61



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Table of Acronyms


CSIP Centralized
State
Investment Programme
FDI
Foreign direct investment
GBAO
Gorno-Badakhshan Autonomous Region
GDP
Gross Domestic Product
HIV
Human Immunodeficiency Virus
HPP Hydropower
plant
MTBF
Medium-Term Budget Framework
MDGs
Millennium Development Goals
NDS National
Development
Strategy
NGO Non-governmental
organization
PHC
Primary health care
PIP
Public Investment Programme
PRS
Poverty Reduction Strategy
PRSP
Poverty Reduction Strategy Paper
RRS
Region of republican subordination
SMEs
Small and medium-sized enterprises
WTO
World Trade Organization
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1. INTRODUCTION


Tajikistan has entered a new phase in its development. With a view to establishing a
platform for the country’s further development, in 2005 the President of the Republic of
Tajikistan initiated the drafting of this National Development Strategy (NDS), which is
intended to provide for an orderly long-term development process in accordance with the
Millennium Development Goals (MDGs).


As Tajikistan’s principal strategic document, the National Development Strategy
defines the priorities and general thrust of government policy, which is focused on achieving
sustainable economic growth, expanding the public’s access to basic social services and
reducing poverty.


The NDS represents a fundamentally new approach to promoting development, which
takes into account experience gained elsewhere in the world in the drafting and
implementation of similar strategic documents, lessons learned and conclusions drawn from
the country’s earlier phases of development, as well as the realities and prospects for
development on the ground.


All of the state, sectoral and regional conceptual frameworks, strategies, programmes
and plans for the country’s development currently in place and under development, as well as
the activities of all government agencies, are based on the National Development Strategy.


The National Development Strategy serves as a tool for engaging in a dialogue with
the business community and non-governmental organizations.


It is envisaged that the development of technical and financial assistance programmes
for Tajikistan will be based on the National Development Strategy.

2. PHASES AND PRINCIPAL CHALLENGES OF TAJIKISTAN’S ECONOMIC
DEVELOPMENT


The country faced serious economic difficulties in the early 1990s arising from the
collapse of the USSR and the transitional period: the end of budget subsidies from the Soviet
Union; aggravation of the socio-political situation and civil war, which cost the country’s
economy more than 7 billion USD; a steep decline in production; macroeconomic instability;
and rapid impoverishment of the population, among other things.


The focus of the initial phase of post-Soviet development covering the years 1992-
1997 was to achieve political stability and create basic market mechanisms. In 1992-1996
Tajikistan’s gross domestic product (GDP) shrunk by a factor of more than 3, performance
indicators of sectors in the real economy fell by a factor of 2-10 and inflation rose to several
thousand percent. Even essential items were unavailable and poverty assumed threatening
proportions.


In spite of the difficulties, a targeted economic policy was pursued which consisted
primarily of the development of new market-based economic relations. The main emphasis
was on large-scale multi-vector economic reforms.

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As a result, the downward spiral of the country’s economic crisis was halted, the
foundations were laid for development of the economy, and in 1997 economic growth, albeit
slight, was achieved for the first time.


Stabilisation of the socio-political situation created a conducive environment for post-
conflict recovery, expansion of economic reforms, full-scale implementation of economic
programmes and the performance of ambitious measures as part of the second phase of
development. The country’s economic development followed an upward trajectory in 1997-
1999.


The steady deepening of economic reforms, the involvement of new spheres of the
economy in these reforms, the achievement of strategic and programme goals and the
implementation of measures to promote macroeconomic stability enabled the country to post
strong economic growth indicators starting in 2000: annual growth in GDP was 9.3% in
2000-2005; inflation fell to 6-7%; and external debt, which was equal to 108% of GDP in
2000, dropped to 38.9% of GDP.


The strong growth and macroeconomic stabilisation over the past five years also
contributed to a drop in the country’s poverty rate, from 81% in 1999 to 64% in 2003. The
size of interregional differences in the poverty rate also declined, since the poorest regions
reported the most significant reductions in poverty. The difference in poverty rates among the
regions remains high, however, with a figure of 84% in Gorno-Badakhshan Autonomous
Region (GBAO) and 45% in regions of republican subordination (RRS).


All of this has laid a solid foundation for further economic growth, for increasing the
quantity and quality of basic social services and reducing poverty in the new phase of
development. Tajikistan has a strong commitment to achieve further market development
and the MDGs.


Many of the problems of the transitional period were dealt with in the previous
development phases, although there are still quite a few tasks associated with Tajikistan’s
market transformation that need to be addressed. These involve, above all, the creation of an
institutional and functional environment for national development, as well as a physical
environment for economic development and expanded access to basic social services.
Achievement of the MDGs is another key task. Further development of the rule of law and
the formation of a modern civil society have an important role to play in the new phase of the
country’s development. This means that these tasks can and must be addressed by taking a
comprehensive (block-based) approach to the current phase of development.


Tajikistan has at its disposal real opportunities to accomplish this, and taking
advantage of these opportunities in an effective way can lay a solid foundation for economic
and social development. It has: (1) large potentials of hydropower resources and fresh water;
(2) diverse mineral resources; (3) Strong potential for the development of tourism; (4)
availability of agricultural raw materials for industrial processing; (5) relatively large areas of
undeveloped land suitable for agricultural use; (6) favourable conditions for the cultivation of
environmentally sound food products; (7) advantageous strategic geographical position to
leverage potentials as a transit country in future regional transport and communication; and
(8) availability of a comparatively inexpensive labour force.

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It should be noted that the country’s economic development is influenced by a
number of objective factors: (1) it is landlocked; (2) it is far away from developed world
economic centres; (3) it has a shortage of accessible oil and gas deposits; (4) it is fragmented
into regions because of its natural and geographical features; (5) it has a small domestic
market; (6) there is political instability in the surrounding region; and (7) there are high
transaction costs associated with natural disaster recovery efforts and combating drug
trafficking and terrorism.


In addition, there are some serious challenges to stable and long-term economic
growth and to poverty reduction efforts in Tajikistan. The country will have to come up with
responses to these challenges over the long term.


Ineffective public administration. The most important institutions – the government
administration and the judicial and law enforcement systems – are not performing effectively
enough. There is still too much interference by government authorities at all levels, including
law enforcement agencies, in the operations of economic entities. The decision-making
mechanism employed by government authorities remains complicated and is not transparent
as far as the public is concerned. Effective mechanisms for civil monitoring of government
agencies have not been developed and the low wages earned by employees in the public
sector encourage corruption.


Weak investment climate. Tajikistan’s inability to obtain large levels of investment
can be explained to some extent by unfavourable economic conditions and its geographical
location. At the same time, the main reasons for this situation are excessive administrative
barriers, corruption, insufficient development of the public and private infrastructure and
weaknesses in addressing key economic problems (low labour productivity, insufficient
competition, low investment and underdevelopment of the private sector).


Inadequate competition. In certain regions artificial restrictions are often imposed on
competition, which has a serious impact on the motivation of economic entities and decision-
making. The majority of sectors of the economy are characterised by a low level of
competition and there is still poor transparency in most enterprises which operate, in essence,
as monopolies. State-owned enterprises operating in the market environment often receive
overt or hidden privileges. Restructured agricultural enterprises are de jure considered
independent market entities, however de facto they are hindered by interference on the part of
government authorities.


Infrastructure limits on growth. Economic development is complicated by problems
related to development of both the public infrastructure (transportation, power,
telecommunications and other communication facilities, water supply and sanitation) and the
private infrastructure (banking and insurance, the securities market, leasing, information
technology). The measures that are being undertaken to draw investment into these sectors
are insufficient. This is the result, to some extent, of deficiencies in the institutional
environment. What is needed is an environment that will ensure transparent decision-making
about the targeting of investments. There also needs to be close monitoring of spending
outcomes and support for the development of public-private partnerships.


Sharp decline in human capital. Delays in legislating minimum state social
standards, the slow pace of reform in social sectors and the low rate of return on funds that
are spent mean that people are being denied access to education and medical and social
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services and that the quality of these services is poor. Coupled with a decline in personal
income, this is contributing to a drop in the level of human development in the country,
inadequate receptivity of the public to the latest progressive management techniques and
entrepreneurial experience, and relatively low income among labour migrants. This
complicates progress in the area of human rights, legislation and social justice.


Problems in the management of external migration. The high rate of population
growth (2.2% per year), in spite of continued family planning efforts, is aggravating the
problem of a labour surplus in Tajikistan. The acute nature of external labour migration
problems caused by high unemployment within the country means that the creation of new
jobs and the upgrading of existing jobs, the preparation of migrants for work abroad and
providing protection for the rights and interests of labour migrants in other countries have top
priority.


Inadequate implementation of reforms at the local level. The centralisation of
government revenues and insufficient clarity with regard to the rights, powers and
accountability of local governments and local self-government authorities mean that they are
not actively involved in the implementation of reforms at the local level. This leads to the
continuation of existing problems and it reduces incentives for regions to seek out effective
ways to enhance their own competitiveness, improve their attractiveness from an investment
standpoint and define their place in the division of labour within the country.


Limited results from international cooperation. Tajikistan’s participation in the
international economy is characterised by a low level of diversification of production and
exports and poor use of competitive advantages in the export market. The limited extent of
cross-border cooperation reduces opportunities for transit, technology exchange, and dynamic
development of the country’s own production facilities, and it exposes the economy to
external shocks caused by fluctuations in demand and prices in international markets.


Inefficient structure of the national economy. Consequences of the inefficient
structure of the national economy can be seen in the declining contribution of the real sector
to GDP and the country’s limited export opportunities. Other telltale signs include the
vulnerability of key macroeconomic indicators to changes in external trade conditions, poor
results from privatisation, the negligible contribution made by small- and medium-sized
enterprises to the country’s economy and the scarcity of innovation activity. A large
proportion of small business remains “in the shadows”, without being registered and without
paying taxes.


Inadequate enforcement of laws, protection of human rights and development of
civil society. The country’s development cannot be achieved without ensuring the supremacy
of laws and human rights and freedoms that have been enshrined in law, without
harmonisation of the country’s legislation with international laws, and also without a
developed civil society. The majority of problems in this sphere arise from the weakness of
the judicial system and poor development of legislation, which has inadequate enforcement
mechanisms.


All of these challenges create a set of risks, and the extent to which they are addressed
through the deepening of the appropriate reforms will determine the country’s further
development. To this end, all measures that are being planned and undertaken should meet
the following criteria:
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One. They should stimulate economic growth in accordance with the following
conditions: 1) medium- and long-term economic growth will proceed at a rapid pace and will
be sustainable; 2) growth will be accompanied by progressive structural shifts and broader
participation by the private sector, it will provide for diversification and enhance the
country’s competitiveness.


Two. Reforms that go beyond the economic sphere will be of key importance for
economic growth. The creation of an effective management system, both at the central
government level and at the local level, will ensure stable functioning of the economy. A fair
judiciary and a law enforcement system that operates with integrity are vital components as
well.


Three. The reform of sectors associated with the development of human potential, in
particular education, health care and social welfare, is a long-term priority, along with the
development of social partnerships based on this process and the promotion of human rights.


Four. The implementation of any measures for the country’s social and economic
development should not undermine the level of macroeconomic stability that has been
achieved. The key factors in ensuring macroeconomic stability at this time are the
Government’s commitment to a balanced fiscal policy, maintaining the stability of the
exchange rate of the national currency and a steady decline in inflation.


Five. Fundamental improvement of the institutional system is a realistic way to
achieve the goals that have been set. The development of clearly defined and comprehensible
“rules of the game” and the consistent orientation of national legislation toward common
goals and its harmonisation with international standards provide a common foundation for
achieving socio-economic development goals based on democratic principles and the
requirements of a market economy. The creation of public-private and social partnerships and
the promotion of basic democratic human rights are also vital steps in this process.

3. THE NDS IN THE NATIONAL DEVELOPMENT SYSTEM


The National Development System and the NDS. The administrative system
currently in place does not comply with the standard requirements for management of the
national development process. The country’s goals, tasks, programme documents and plans
are not interconnected or vertically integrated. Potential partners in the management of
development (the private sector and civil society) are not sufficiently involved in this process.
The system of government agencies and the human resources within this system do not meet
the demands of a market economy. Furthermore, the allocation of limited financial resources
frequently is not consistent with the priorities set forth in national strategic documents, and
this makes what is already a complicated system even more problematic.


In connection with this, there are plans to create a National Development System
within the framework of the NDS. It will have a clearly defined and vertically organised
superstructure of strategic documents, programmes and plans (programme goals and tasks,
planning and plan implementation, quality oversight and performance monitoring) on the one
hand, and corresponding administrative structures for the management of this process – both
vertically and horizontally, on the other hand.

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With a view to providing for a systematic national development process and ensuring
that this process is comprehensive and consistent, all national, sectoral and regional strategies
and programmes need to be reviewed and brought into conformity with the requirements of
the National Development System and the NDS priorities.


The organisational system for management of the development process, which
consists of administrative bodies, their functions and tasks, need to be revised. The principal
approaches to the establishment of this system are outlined in the Government Reform
Strategy, which was approved by Decree No. 1713 of the President of the Republic of
Tajikistan of 15 March 2006. Implementation of this Strategy will be an important step
toward improving the administration of the development process and ensuring that the proper
systematic approach is taken to the organization of management.


The NDS is a strategic and basic document of the state that defines the country’s
long-range development goals and tasks. All of Tajikistan’s development partners (the
business community, civil society, donor countries and international organizations) should
focus their programmes and plans on these priorities within the context of effective public-
private and social partnerships. (The process for participation in drafting the NDS is outlined
in Appendix 1.)


All tactical documents should also proceed from the priorities and key elements of the
NDS. This means that the goals and tasks set forth in the NDS should serve as the basis for
other documents dealing with development issues as well. These documents’ programmes,
plans, goals and priorities need to be aligned with the NDS by 2009, or will be considered
void.


Successful implementation of the NDS requires the identification of measures aimed
at achieving specific goals and carrying out assigned tasks. It also depends on the consistent
performance of these measures, and the powers and effective operation of those structures
responsible for its implementation.


Interconnection between the NDS and the Poverty Reduction Strategy. Measures
to implement the NDS over the medium term should be reflected in various programmes and
plans, such as the Government’s medium-term programme, the Poverty Reduction Strategy
(PRS), which is integrated with the Medium-Term Budget Framework (MTBF), the Public
Investment Programme (PIP) and medium-term foreign aid programmes of donor
organizations.


The NDS and PRS comprise a single package of documents for the country’s
development. The NDS is intended to define the priorities and directions for the long-range
strategic outlook within this framework, while the PRS is an action plan that outlines the
implementation of the NDS over a three-year period.


A list of current Government actions is approved annually by the Government in
accordance with the PRS and sectoral and regional programmes and plans.


NDS blocks. The structure of the National Development Strategy is determined by
the content of its sectoral sections. The sectoral sections of the NDS are organised into three
blocks, which in turn are defined by their role and place in the achievement of strategic goals:

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(a) the Functional Block, which provides for the appropriate institutional and
functional environment for development and encompasses the following sectors: public
administration reform; macroeconomic development; improvement of the investment climate;
development of the private sector and entrepreneurship; regional cooperation and integration
into the global economy;


(b) the Production Block, which is responsible for the physical environment to
support economic growth and brings together the following sectors: food security and
development of the agro-industrial complex, and the development of infrastructure,
communications, energy, and industry;


(c) the Social Block, which provides for expansion of access to basic social services
and the resolution of social development issues. It is comprised of the following sectors:
development of the health care system; development of the education system and science;
expansion of access to water supply, sanitation and housing and municipal services;
improvement of social welfare; promotion of gender equality; and environmental
sustainability.

4. GOALS, PRIORITIES AND PRINCIPLES


Proceeding from the country’s development phases, the challenges and conditions of
economic growth, as well as the experience of post-Soviet reform, a vision, national goals,
principles and priorities of Tajikistan’s development have been elaborated.


Vision statement. The people of Tajikistan seek to create a prosperous state in which
all members of society will have equal opportunity to enjoy the fruits of political, social and
economic development. This entails a comprehensive approach to the renewal and
development of political institutions, social benefits and economic potential. Public
administration will be reformed to ensure that it operates efficiently based on the supremacy
of democratic principles and the rule of law.


At the same time, the aim of public policy will be to improve the quality of life for the
country’s people, reduce poverty, provide social protection for vulnerable segments of the
population and ensure the healthy development and education of children. Young people
need to be given the opportunity to develop their potential. All able-bodied women and men
should have the ability to realise their goals in life, provided that they are not in conflict with
the law. These efforts will be based on all-round social and economic development that has
the capacity to satisfy the material and spiritual needs of the people for the sake of the
country’s future development. Tajikistan will take its proper place in the global community.


The National Development Strategy of the Republic of Tajikistan for the period up to
2015 is intended to bring this vision to life.


National goals and priorities. The following national goal has been set on the basis
of the vision statement for the country’s long-term development: to strengthen social and
political stability and to achieve the economic prosperity and social well-being of the people
of Tajikistan in an environment shaped by the supremacy of the principles of a market
economy, freedom, human dignity and equal opportunities for each person to realise his or
her potential.

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