Statement by Sun Vithespongse at the Board meeting of July 30, 1998

International Bank for Reconstruction and Development 87376 International Development Association International Finance Corporation Multilateral Investment Guarantee Agency FOR OFFICIAL USE ONLY CONFIDENTIAL EDS98-398 July 29, 1998 Board Meeting of July 30, 1998 Statement by Sun Vithespongse Tajikistan - Country Assistance Strategy We welcome the opportunity to discuss the CAS for Tajikistan, a country in which wide spread poverty has been caused recently by the combination of economic decline and civil conflict. As one of the poorest countries of Former Soviet Union (FSU) in central Asia, it has suffered a lot of damage in the post conflict situation, with 80 percent of the total population living without adequate basic needs for food, shelter, clothes, education and health. We support the Bank’s strategy which focuses on support for privatization with a particular emphasis on restructuring farms, investing in rural infrastructure, improving the quality of social services and assistance to the poorest, and enhancing institutional capacity. As the bank is one of the major sources of external assistance to Tajikistan, it is appropriate to provide $165 million of IDA resources to help Tajik Government in the next three years that is the most likely scenario of the Bank’s assistance. We appreciate the Government for its recent economic achievements. Despite its unevenness and modesty, average inflation rate for the first four months of 1998 was much lower than the percentage per month in July/August 1997. Nominal exchange rate was improved and recent fiscal performance has been impressive. In the last quarter of 1997 fiscal deficit was narrowed to 0.2 percent of GDP. GDP growth was 1.7 percent in 1997 and, in the first quarter of 1998, it was estimated to be 1.3 percent over the corresponding period of 1997. We support the proposed IBRD/IDA lending programs for the next three years, but the Bank would need to seek the strong commitment of the Government for these projects to mitigate the potential risks. Regarding the post conflict situation and potential political changes of the Government after the upcoming election, it is likely that the Bank’s proposed programs would be the most appropriate scenario to help the Government reduce the poverty. To gain the envisaged results, the Bank should emphasize on frequent and regular supervision of the projects and a very strong field resident presence for collaboration with local officials. We also agree the core case scenario of the assistance strategy. But we wish the Tajik Government and the Bank can collaborate successfully to implement the base case programs of the strategy for  2 the country’s poverty reduction and economic development. Finally, we thank the management and staff for this well-prepared document.