EFSD: Rogun Dam project threatens financial stability of Tajikistan
The ambitious Rogun Dam construction project, designed to ensure Tajikistan’s energy independence and turn the country into a major exporter of electricity, could turn into serious problems for its financial stability. Analysts of the Eurasian Fund for Stabilization and Development (EFSD) in their new economic review warn that large-scale financing of this megaproject is fraught with significant risks to the budgetary and debt sustainability of the republic.
According to experts’ forecast, it is the high costs associated with the completion of the construction of the hydroelectric power station that have become the key reason for revising the forecast for the state budget deficit upwards. If in the near future the economy of Tajikistan demonstrates steady growth, largely due to the services sector and remittances of migrants, then in the medium term the financial burden from the Rogun Dam will be fully manifested. The budget deficit is projected to reach 1.3% of GDP in 2026 and grow to 1.6% of GDP in 2027.
EFSD specialists point to two main threats. The first is a possible significant increase in the final cost of the Rogun Dam completion project, which will require additional, unplanned injections from the state treasury. The second is the need to increase spending in other socially important areas against the background of limited budgetary opportunities. In fact, the country risks finding itself in a situation where all financial reserves will be directed to one giant project to the detriment of other sectors of the economy and the social sphere.
The situation is aggravated by systemic problems in the electricity sector of Tajikistan. Experts note that the risks to the budget and public debt may seriously increase after 2027 if the financial recovery of the industry is not completed. This implies solving such painful issues as raising electricity tariffs for households and enterprises, improving the collection of payments and drastically reducing technical and commercial losses in the networks.
Thus, despite the current positive macroeconomic indicators, including high GDP growth of 8.2% in the first quarter of 2025 and a temporary budget surplus, analysts have serious concerns about the long-term prospects. The pursuit of the realization of the national dream in the form of the Rogun Dam puts the Tajik economy in a vulnerable position, where any unforeseen increase in costs or an external economic shock can critically disrupt the fragile budget balance and lead to an uncontrolled increase in public debt.
Original (in Russian): ЕФСР: проект Рогунской ГЭС угрожает финансовой стабильности Таджикистана
