A new World Bank report gives Tajikistan passing grades for its present economic performance but cautions that an excessive state role in the economy poses a significant threat to continuing stability.

The bank’s report on Tajikistan specifically focuses on “the impact of enterprises with state participation and competitive neutrality.” It starts with praise, noting that the Tajik economy grew by 8.3 percent in 2023 and 8.2 percent during the first quarter of this year. Growth, the report adds, was driven by increased revenue from gold exports, a rise in private consumption and government investment in infrastructure projects.

The report then quickly shifts from cheery commentary about the present to a more ominous tone about the near future. A budget deficit is expected to grow in 2024 thanks to a decrease in tax revenue. In addition, costs involving the government’s signature infrastructure project, the Rogun hydroelectric power station, are spiraling upward.

“Tajikistan will remain a country with a high risk of a debt crisis until the full repayment of Eurobonds related to Rogun” in 2025-27, the WB report states. It adds that the economic growth rate is projected to slow to 6.5 percent in 2024 and 4.5 percent in following years.

The report devotes lots of attention to the poor performance of enterprises with state participation, defined as companies in which the government has a major, if not majority stake. Most state-connected enterprises in Tajikistan are unprofitable, the World Bank notes, adding that the 25 largest such enterprises, covering such sectors as mining, energy and telecoms, accounted for losses totaling 4.2 billion somoni, or roughly 3.2 percent of GDP.

The heavy state involvement in loss-making ventures “creates significant fiscal risks for financial stability of the country,” the report asserts. “Although government participation in [state-connected enterprises] may serve legitimate purposes, the preferential treatment given to these enterprises distorts market dynamics and hinders private-sector development.”

Meanwhile, an investigative report by RFE/RL found that some Chinese-run mining ventures in Tajikistan are stoking complaints from local citizens about excessive air, water and soil pollution. But instead of investigating mining practices at the ventures, Tajik authorities are pressuring citizens to drop their complaints.