Tajikistan to Borrow $490 Million to Bailout Local Banks

The government of the Republic of Tajikistan has announced that it is in the process of borrowing $490 million from the central bank to bailout four local banks. In a statement to the parliament, Finance Minister Abdusalom Kurboniyon said the beneficiaries will be the country’s two largest banks: Agroinvestbank and Tojiksodirotbank, with the two other beneficiaries being much smaller banks: Tajprombank and Fononbank. The government will issue special notes to the banks in exchange for their assets. The banks will then be able to sell the notes to the central bank. Customers of these banks have been unable to access their accounts for several months, owing to the country’s growing debt crisis.

The banks have seen their share of bad loans swell by over 20 percent in the last year, reaching over 58 percent at the end of the third quarter of this year. The government’s cash injection is more than 20 percent of its national budget. Supervisory boards will be set up in each bank to be overseen by the government. Tajikistan has been hard hit by the fall in oil prices, due to its extraordinarily high dependency on remittances from its citizens working in Russia. Earlier in the year, Tojiksodirotbank announced that it was in talks of a buyout by the European Bank for Reconstruction and Development (EBRD). It was reported in February that the country was in talks with the IMF to provide a $500 million bailout package. It is unclear if the government’s indication is proof that the deal has been approved