Over-Reliance on Foreign Goods Proves Weakness
The falling value of the Tajik currency, the somoni, has been accompanied by rising prices.
Over-Reliance on Foreign Goods Proves Weakness
The falling value of the Tajik currency, the somoni, has been accompanied by rising prices.
Government interventions have failed to stop the somoni losing value, and US dollars have become scarce as currency dealers hold onto what they have until the position becomes more certain.
Some blame neighbouring Uzbekistan for holding up goods destined for Tajikistan, while others say monopoly businesses are in a position to hike the prices of certain foodstuffs.
However, as economics professor Zubaidullo Sultanov told IWPR reporter Anton Rodin, the real issue is that the Tajik economy relies too much on imported goods and produces too little itself, making it highly vulnerable to fluctuations in international market prices. When there is less money around, spending it on imports does not seem like the best use of it.
“The prices are rising on those foodstuffs and goods that we import,” said Sultanov. “When a market is dependent on imports, prices are inevitably going to rise when conditions change on external markets, and when there are shocks or crises. US dollars are used to pay for imported goods. So when the dollar becomes more expensive [as the somoni depreciates], imported items are also going to go up in price.”
Sultanov says the only solution is for the Tajik government to build up domestic production so as to insulate the country from its persistent vulnerability to external shocks, as well as from the capricious behaviour of neighbouring states. He would also like to see stronger controls over monetary flows to stop precious hard currency stocks being squandered on imports.
Some blame neighbouring Uzbekistan for holding up goods destined for Tajikistan, while others say monopoly businesses are in a position to hike the prices of certain foodstuffs.
However, as economics professor Zubaidullo Sultanov told IWPR reporter Anton Rodin, the real issue is that the Tajik economy relies too much on imported goods and produces too little itself, making it highly vulnerable to fluctuations in international market prices. When there is less money around, spending it on imports does not seem like the best use of it.
“The prices are rising on those foodstuffs and goods that we import,” said Sultanov. “When a market is dependent on imports, prices are inevitably going to rise when conditions change on external markets, and when there are shocks or crises. US dollars are used to pay for imported goods. So when the dollar becomes more expensive [as the somoni depreciates], imported items are also going to go up in price.”
Sultanov says the only solution is for the Tajik government to build up domestic production so as to insulate the country from its persistent vulnerability to external shocks, as well as from the capricious behaviour of neighbouring states. He would also like to see stronger controls over monetary flows to stop precious hard currency stocks being squandered on imports.
