DUSHANBE (TCA) — The Eurasian Development Bank (EDB) has published an analytical report titled Economic Effects of Tajikistan's Accession to the Eurasian Economic Union, which assessed the economic effects of the country’s possible accession to the Russia-led economic bloc which also includes Armenia, Belarus, Kazakhstan, and Kyrgyzstan.
The high level of current trade integration with EEU countries is one of the key prerequisites for Tajikistan’s accession to the Union. The share of mutual trade was 39% in 2019, which is higher than in many current EEU member states, according to the report.
EDB experts emphasise that the key driver for Tajikistan’s development in the event of its possible integration with the EEU will be the advantages associated with the single labour market. A striking example of the effectiveness of the Eurasian single labour market is Kyrgyzstan. Accession to the Union in 2015 allowed to increase the number of Kyrgyz migrant workers due to the most favourable treatment despite the crisis that occurred that year and to considerably boost the remittances over the last five years. Tajikistan, on the other hand, has so far been unable to recover to the level of 2014. Should the country join the Eurasian Economic Union, the EDB estimates that not only remittances can be expected to grow, but also the wages of migrants – by an average of 10-30%. All these changes may stimulate additional accumulated remittances of US $1.3-1.5 billion within five years of the country’s joining the Union.
Tajikistan’s accession to the Eurasian Economic Union may also be conducive in the medium term to simplifying the rules of doing business, and to creating more favourable conditions for attracting direct investments, the report says.
Institutional improvements are a priority that can offset the costs of Tajikistan’s accession to the EEU and ensure the realisation of the trade and investment potential of cooperation. “The effects of Tajikistan’s possible accession to the Eurasian Economic Union will be achieved as fully as it is possible to remove or reduce structural constraints. These include a favourable institutional regime, transport routes, secured access to markets, and development of the water and energy sector,” says Evgeny Vinokurov, Chief Economist at the EDB and the EFSD. “In addition, Tajikistan’s possible integration with EEU countries might need to be considered in the wider context of developing the economic potential of cooperation throughout the Central Asian region.”
In spite of the mentioned significant benefits, Tajikistan’s possible accession to the EEU is also associated with some short-term costs. Potential disadvantages include a possible reduction in trade turnover with third countries, the risk of losing sources of financing for economic development, as well as challenges associated with bringing the national legal framework in line with Union requirements, the report says.
A comprehensive analysis of the benefits and costs of Tajikistan’s possible accession to the Eurasian Economic Union, as presented in the EDB’s report, suggests that this may have a significant positive effect on the country’s long-term development. The increase in the annual growth rate of Tajikistan’s economy may reach up to 3 percentage points, boosted by enhanced investment, job creation, and involvement in the production of new labour resources, as well as improved productivity as a result of technology transfer and the positive impact of accession on the institutional environment. In addition to economic growth, Tajikistan’s accession to the Union will contribute to macroeconomic stability – inflation is expected to stabilise at 5% and the debt-to-GDP ratio to decrease by 5-8 percentage points. In addition, the country’s joining the EEU may result in an improvement of its sovereign rating.
The Eurasian Development Bank (EDB) is an international financial institution founded by Russia and Kazakhstan in 2006 with the mission to facilitate the development of market economies, sustainable economic growth, and the expansion of mutual trade and other economic ties in its member states. The EDB's charter capital totals US $7 billion. The member states of the Bank are Armenia, Belarus, Kazakhstan, the Kyrgyz Republic, the Russian Federation, and Tajikistan.