On 1 July Tajikistan’s finance minister put the state’s debt at $3.4 billion, 16% of the country’s output. Ten weeks later the World Bank published the terms on which it will lend to Dushanbe until 2032, and the first term was that the lending would now be lending. From the Bank’s 2027 fiscal year, the one that began on 1 July, the International Development Association’s money for Tajikistan is expected to come as credits in place of grants, because income per head “has risen to a level at which it no longer qualifies for the previous grant-financing regime”. A country is being told it has done well enough to start paying.
The paradox is in the timing. The IMF’s staff, writing last December, put public debt at 25% of GDP at the end of 2024 and still called the risk of distress high. Their reason was a calendar. The $500 million eurobond of 2017, sold to build the Rogun dam, amortises through 2025, 2026 and 2027; $300 million has been repaid, the minister said in July, $100 million falls due this month and the last $100 million in April. By the middle of next year the one debt Tajikistan owes to strangers at a market price will be gone. The debts it takes on from then will be to institutions, at concessional rates, and they will be larger.
Consider what the grant era built and what it left unbuilt. Rogun is the largest dam under construction in Central Asia and the reason the eurobond exists. By the IMF’s count it still needs about $6.4 billion, 45% of the 2024 economy, of which about $3 billion is to come from abroad on “broadly concessional terms” and the rest from the budget, held to 3% to 3.5% of GDP a year. In June the World Bank’s board approved a $300 million grant for the second phase and named 11 other funds and banks in a coordination group, from Abu Dhabi to the OPEC Fund. On 15 September Asia-Plus reported that the Bank’s procurement plan, published on 6 September, lists the remaining right-bank works as a contract of about $1 billion, to be completed in February 2028. The president said in August that 60.3 billion somoni had gone into the site since construction began. S&P puts the remaining need at about $5.8 billion.
The grant was the last of its kind. The framework that follows offers up to $1.8 billion over 7 years, $1 billion to $1.2 billion of it from IDA, and from this fiscal year that money is to be repaid. Beside it the Asian Infrastructure Investment Bank is preparing a $220 million sovereign-backed loan, with the World Bank as co-lead, to rehabilitate 5 of Nurek’s generating units and raise their capacity, in the words of the bank’s project page. The dam’s coalition is changing from donors to creditors while the dam is still a construction site.
A debt ratio does not show the currency of the revenue that services it. That is the second-order effect of this September is the currency of the revenue that services it, and that is where the second-order effect of this September sits. A grant has no currency. A credit does, and Rogun’s external share will be repaid in dollars, while Tajikistan’s electricity is sold in somoni. On 1 February the household tariff rose to 41.37 dirams a kilowatt-hour from 35.38 and the industrial tariff to 94.65 from 80.90, the first rise in 2 years; the IMF’s staff expected it “as part of their effort to reach cost recovery by 2027”. Cost recovery is the phrase a lender uses for a state that has been selling power below its price. The dollar revenue that could service the credits is exports: CASA-1000, the line to Afghanistan and Pakistan, is to start carrying Tajik power in the summer of 2027, the Afghan section’s contractor told the energy minister in April, with Tajikistan’s and Kyrgyzstan’s combined receipts put at more than $250 million a year in the figures Asia-Plus carries.
For 15 years the state has been able to build without pricing what it built, because the money arrived as a gift and the electricity as a promise. From this fiscal year the money arrives as an obligation, the eurobond’s amortisation gives way to the credits’ repayment schedules, and the price of a kilowatt-hour becomes a line in a debt-sustainability analysis. The tariff rise of February was the first instalment. The tax package the government sent to parliament on Monday, which triples the VAT threshold for small traders and pulls construction, consulting, medicines and markets out of the flat-rate regime, is the second: the base is being widened in the sectors where the money is, in the year the state stops receiving money for nothing.
The dam’s coalition is changing from donors to creditors while the dam is still a construction site.
There is a Chinese line in the same ledger, and it points the other way. On 18 September the energy minister met the company that was to build the Tajik section of Line D, the fourth gas pipeline from Turkmenistan to China, a joint venture into which Tajiktransgaz and CNPC’s pipeline arm each put $300 million in 2014. The readout speaks of progress, problems and coordination, 12 years after construction began, and gives no date. Chinese money in Tajikistan has been credit from the start, and the pipeline it was meant to build is the largest project in the country without a completion date.
Sketch 5 years forward, as scenario and not as forecast. By 2031 the eurobond is history, Rogun’s third unit has been running for 4 years and its sixth for 2, CASA-1000 has been exporting for 4 summers, and the World Bank’s framework has run its course. If the framework’s credits are drawn, AIIB’s loan follows and Rogun’s external $3 billion is borrowed rather than given, the debt stock of July can double before growth is counted, and before anything is borrowed for the 700 megawatts of solar the president ordered for Sughd on Monday. The ratio may not look alarming; the IMF’s did not. What changes is who sets the price of Tajik electricity: a government that owes grants nothing, or lenders whose sustainability analyses assume cost recovery by 2027 and exports priced in dollars from the same year.
The framework was discussed by the Bank’s board on 2 June and published in September; the eurobond’s last instalment is paid in April; the dam’s right-bank works are planned to February 2028. Those dates are set. The question the grant era never had to answer is now on the calendar with them: when Rogun’s power is finally sold at cost, in which currency, and to whom, will the household at 41 dirams or the buyer across the Amu Darya be the one paying the creditor?