Burdened with an excessive foreign debt and facing a severe humanitarian crisis, the government of Tajikistan now finds itself disgraced in the eyes of the international community. One of the Central Asian nation's leading creditors, the International Monetary Fund, is demanding repayment of over $47 million in loans after determining Dushanbe cooked its books in order to makes itself seem more creditworthy.

The IMF Executive Board, meeting earlier in March, determined that the Tajik National Bank had supplied the international lender with "inaccurate information" about the country's cotton sector, Tajikistan's primary export earner, as well as top employer. The bank also doctored data concerning the size of international reserves, its net domestic assets and its credit policy. The deception pre-dated the onset of Tajikistan's current crisis, in which severe winter weather has caused alarming shortages of heat and electricity. [For background see the Eurasia Insight archive].

"The Board agreed that the Republic of Tajikistan shall be expected to repay the Fund the three non-complying disbursements that were not discharged under Multilateral Debt Relief Initiative (MDRI) relief," the IMF said in a statement issued March 6. In all, Tajikistan will have to give back $47.4 million.

At the time IMF approved the loans, the Tajik Nation Bank reportedly led top fund officials to believe that the bank's reserves stood at $450 million, when, in fact, they were roughly one-third of that amount. In addition, the National Bank also concealed the fact that the reserves had been pledged as collateral in order to obtain commercial-bank loans to prop up the cotton sector.

In most such cases of fraudulent behavior, the IMF usually demands repayment within 30 days. But given Tajikistan's status as Central Asia's poorest nation, and taking into account the humanitarian crisis, the fund said Dushanbe could repay the money in six monthly installments starting on September 5, 2008.

In its own statement, the Tajik National Bank pledged to meet the IMF's repayment timetable. Bank officials gave no indication of where they would find the necessary funds to meet the repayment timetable. The state is already caught in a vicious cycle of deficit spending. In 2007, the government is estimated to have generated about $614 million in revenue, while spending over $756 million.

The fiscal picture is likely only to grow worse in the coming months. Given the IMF's findings, other key creditors, such as the Asian Development Bank, are intending to conduct audits. This raises the possibility that President Imomali Rahmon's government will have to repay other loans.

Tajik political analyst Saymuddin Dustov said he believed that the Tajik government would likely try to squeeze more taxes out of an already hard-pressed population, in order to cover the new IMF obligation.

While some political analysts and economists in Dushanbe, including Dustov, confessed to feeling ashamed by recent developments, others expressed outrage. One such expert, economist Hajimuhammad Umarov, questioned the timing of the IMF announcement, suggesting that Tajikistan was somehow being punished unfairly.

In Moscow, some analysts believe that the IMF's action was dictated not by financial considerations, but by geopolitics. "It is absolutely probable that the recent IMF statement is merely a means of pressure on Tajikistan in order to turn [the country's] loyalty toward Washington, rather than Moscow," Mikhail Delyagin, the director of Russia's Globalization Institute, was quoted as saying by the Nezavisimaya Gazeta daily.

Defenders of the bank say that the scope of the Tajik government's dishonesty was simply too great to ignore.

In bringing the deception to light, the IMF painted an alarming picture of Tajikistan's cotton sector. According to some reports, the country already owes foreign commercial banks roughly $330 million, and each year, the sector needs a fresh injection of about $80 million just to stave off collapse. Overall, the country's foreign debt is currently estimated at $1.3 billion.

IMF officials first started to grow suspicious in late 2007 that they had been fed faulty information. The IMF's worst fears were confirmed in December and January, after Tajik officials responded to requests for additional data.

The IMF scandal is unfolding as the country's humanitarian crisis enters a new phase. As temperatures rise with the onset of spring, the power shortages that plagued the country during the winter are easing. But now concern is growing about the food supply. The harsh weather inflicted a severe agricultural toll, although the extent of the damage has not yet been fully estimated. In the Gorno-Badakhshan region, for example, local officials say the winter wheat crop was effectively wiped out by the harsh weather.

Already, an alarming spike in inflation is being reported in some regions in the country. In Gorno-Badakhshan, the price of vegetable oil has doubled in the past year, while the cost of flour has risen 60 percent over the same period. In addition, powdered milk has experienced a 50 percent price jump, the Asia-Plus news agency reported.