Tajikistan’s accession to the EEU will raise migrant workers’ remittances and generate investments into the country, experts say

Almaty. August 3. Silkroadnews – Tajikistan’s accession to the EEU will raise migrant workers’ remittances and generate investments into the country, “Vedomosti” newspaper quoted Director of the Center for Integration Studies of the Eurasian Development Bank saying.  

“Issue of Tajikistan’s accession to the Eurasian Economic Union has been submitted to the republic’s government. We shall not wait for overnight fix, indeed. The nation’s leadership, as well as leaderships of the EEU member-countries, has not arrived at the decision if the countries gain from Tajikistan’s accession to the union”, the newspaper writes.

According to the analyst, the basis of Tajikistan’s economy is formed by agriculture, mining and labor migrants’ remittances. As a whole geography does not provide an advantageous starting point to build a long-term strategy for sustainable growth. A combination of factors makes the issue: isolation from the developed world transport infrastructure, no access to sea, mountainous relief and remoteness from major markets. In 2015 GDP made $7.9 billion, i.e. about $2700 per capita in purchasing power parity.

“We see two major channels (for Tajikistan’s opportunities after joining the EEU): growth of labor migrants’ remittances and growth of investments into the republic”, experts say.

According to the analysts, investments can contribute to GDP growth potential additional 1.6 percentage points of gross product growth per year. The investment potential of remittances from abroad will add another 1 percentage point of GDP growth per year. Direct foreign investment attraction may influence a change in aggregate productivity of the economy through technology transfer and activated competition that will provide additional resource growth of 0.5 percentage point. The capital increase will boost GDP by 0.4 percentage point due to new labor resources involvement. Thus, the net effect shall make up to 3.5 percentage point a year.
The positive effect is not automatic: it’s a potential to be realized, the experts say.

If joining the EEU creates a more comfortable environment for Russian and Kazakhstani investments (namely Russia and Kazakhstan are the largest investors within the CIS region), the result will be an increase in revenues to the state budget and additional jobs. Perhaps, a smooth and painless as possible entry will require to use a number of mechanisms to support the Tajik economy. Two directions are of key importance. The first, as experts note, is a budget support, and the second direction is a support of investment projects on the territory of Tajikistan, for the sake of filling the budget and creating new jobs.

Considering the issue of Tajikistan’s accession to the EEU, in Russia, Kazakhstan and Tajikistan one shall proceed from understanding of the economic nature of the Eurasian Union, analysts say. The EEU is one of the tools for building a long-term strategy of sustainable growth, the publication states.