Tajikistan tackles debt crisis & competitiveness of cotton sector

19 Jun '07

3 min read

The World Bank Board of Executive Directors endorsed a USD15 million credit for Tajikistan 's Cotton Sector Recovery Project. The project, to be funded by the International Development Association, aims at improving the livelihood of cotton farmers and supporting the cotton production in selected, low-income areas of Tajikistan.

The project will assist the Government with resolving the debt crisis among cotton producers, improving the policy environment, and increasing cotton output and profitability.

Cotton makes an important contribution to both the agricultural sector and the national economy. Cotton accounts for 60 percent of agricultural output, supports 75 percent of the rural population, and uses 45 percent of irrigated arable land.

At the national level, it is an important source of both export earnings and tax revenue. Tajikistan is the world's fourth largest exporter of cotton, and there is strong demand on international markets for its high quality product.

Given the importance of the cotton sector, the current combination of low productivity, low on-farm profitability and excessive debt are major impediments to agriculture sector development and rural poverty reduction.

Overdue debt is the most visible aspect of this crisis, paralyzing the private sector ginneries and export marketing agents who provide most seasonal finance, and inhibiting access by cotton producers to alternative markets.

In addition, theprivatization of collective farms has been slowed because the growth of alternative sources of rural finance has been constrained, markets for farm inputs are distorted, and a large proportion of Tajik farmers live in abject poverty.

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