1. Introduction

Today, Tajikistan is at a turning point of its development. Having survived a brutal civil war during 1992-97, its economic situation is now on the road to recovery and even progress. The peacetime economy was bolstered by some initial economic reforms, allowing GDP to expand at an average rate of 9.3 percent over 2000-2004[1]. The sources of growth are becoming more diversified. Strengthening privatisation, particularly in the agricultural sector, as well as reform of public utilities and increased investment in public infrastructure are core elements of the national growth strategy. Actual progress on these fronts has been weak however, and the IMF accordingly anticipates that real economic growth will be slow. Real GDP is expected to expand at a rate of 5 percent over the medium term. Under an agreement with the IMF, external borrowing for public investment projects is capped at 3 percent of GDP, on account of Tajikistan’s large existing foreign debt burden. This condition underscores the difficult trade-off Tajikistan must make between maintaining macroeconomic stability and borrowing funds for badly needed public investment. With foreign financing limited, the Government hopes to increase public revenue as a percentage of GDP through a combination of reforms aimed at simplifying tax codes, and improving tax collection. Progress on these fronts, however, has been slow.

Poverty in Tajikistan has increased in both breadth and depth since the collapse of the Soviet Union. Recent evidence from the 2003 Tajik Living Standards Survey suggests that high rates of economic growth over the last several years have succeeded in reducing poverty. According to the World Bank’s recent Poverty Assessment Update,[2] all major poverty indices declined over 1999-2003. The proportion of the population living on less than $2.15 PPP per day fell by 16 percentage points to 67 percent. The proportion of the population living on less that $1.08 PPP per data also fell by around 13 percentage points to 18 percent. At least with respect to income poverty, rapid rates of economic growth have had a measurable impact on incomes.

While the country appears to be heading in the right direction, the overall poverty situation in the country remains severe and still numbers among the worst in the world. More than two thirds of the population continues to live on less than $2.15 per day. Higher income and consumption rates have not necessarily translated into improved living conditions for all: nutrition, for example, appears to have grown worse, with significantly more families reporting that they eat only one meal per day. Despite the apparent increase in income and consumption, a majority of households reported that they saw little improvement in their living conditions since 1999.

Though Tajikistan still is the poorest country in the region, it has a real chance to prove that through progressive economic, social and political reforms it can ‘move mountains’ and become an example of relative equality, modest prosperity and gradually evolving democracy in Central Asia. The government’s commitment to achieving the Millennium Development Goals (MDGs) provides the country with a unique opportunity to foster equitable and sustainable development.

2. MDGs Needs Assessment in Tajikistan

Government

The Government of Tajikistan signed the Millennium Declaration in 2000 along with 191 countries. Since then, the government has implemented a number of activities that demonstrated the seriousness of its commitment to achieving the MDGs:

In 2003, the Government of Tajikistan and the UN Country Team (UNCT) produced a joint report called “Progress towards the Millennium Development Goals” that reviews current challenges and opportunities that the country faces for achieving each of the MDG targets;
The government recognized that national development strategies and policies should be realigned with the MDG priorities, and that it should assess the financial resources needed to implement these priorities. Tajikistan is one of the 8 pilot countries where the MDG needs assessment exercise is being undertaken in partnership with the Millennium Project in New York.
In July 2004, President Emomali Rakhmonov conducted a videoconference with Prof. Jeffrey Sachs on the MDG needs assessment. In August 2004, five working groups were established by a Presidential decree, to be chaired by the relevant Deputy Prime Ministers to develop appropriate policies and financial costing for achieving the MDG targets in the following sectors:
- Education
- Health
- Water and Sanitation
- Gender
- Food Security and Nutrition

The working groups are coordinated by the State advisor to the President on economic policy Mr. Kholboboyev and comprise relevant line ministries, government organizations, as well as experts from national and international NGOs.

· The policy priorities resulting from the working group meetings will be incorporated into the MDG needs assessment final report, and will be built into the revised Poverty Reduction Strategy Paper (PRSP) in 2005.

UN Country Team

The UN support Tajikistan’s efforts to integrate the Millennium Development Goals into its national development strategies, budgetary frameworks, and ministries’ priorities, as well as donor assistance frameworks and development programmes. UNCT has a team of specialists working on preparing the MDG needs assessment document, and providing technical assistance to the government working groups on the MDGs.

United Nations Millennium Project

To support the MDG process, the UN Secretary-General launched the Millennium Project (MP) to find best practices and strategies to achieve the MDGs in the countries where there the challenges are greatest. Over a period of three years, the Millennium Project is to draw up a plan that will allow all developing countries to the MDGs by 2015. The MP is lead by Prof. Jeffrey Sachs, and its research focuses on identifying the operational priorities, organizational means of implementation and financing structures necessary to achieve the MDGs. While the country offices are in charge of carrying out country-specific MDG needs assessment the MP team of 300 experts is responsible for providing technical assistance and overall support.

The MDG Needs Assessment

The purpose of the MDG needs assessment work is the following:

Provide an analysis of the current development trends in Tajikistan and to discuss explicitly changes in national policies and sectoral strategies that may be required to achieve all 8 goals;
Build comprehensive, but flexible models through which the Government and its partners can discuss development scenarios, including detailed breakdowns of needs as well as estimates of both internal (government) and external (donor) resources needed to achieve the MDGs;
Provoke substantive discussion about the practicalities of development in Tajikistan.

The UN MDG needs assessment team aims to produce a document that:

· provides a holistic analysis of the country’s development situation;

· tailors the MDGs to Tajikistan’s national circumstances;

· prioritizes policy reforms needed to achieve the MDGs;

· identifies means of policy implementation;

· calculates the total cost of achieving quantifiable MDG targets, and

· evaluates financing options.

The Results

There will be three important outcomes of this joint process of the Government and the UNCT:

1. Detailed needs assessment of achieving the MDGs in Tajikistan, including costing estimations for some of the quantifiable MDG targets

2. Long-term national plan through to 2015 to outline the policies, institutions, and investments needed to achieve the MDGs

3. Integration of the long-term plan into operative policy documents such as the revised Poverty Reduction Strategy Paper and the Medium-Term Expenditure Framework

Initial Report

An initial assessment of the financial, human and institutional resources needed for MDG attainment in Tajikistan has been drafted by the UN MDG team in conjunction with the Millennium Project. Initial estimates as of August 2004 focus on a set of five core “service delivery” targets: achieving universal primary education (MDG 2), lowering child (MDG 4) and maternal (MDG 5) mortality rates, combating the spread of disease (MDG 6), and improving access to drinking water (MDG 7). Costing issues for the remaining MDGs – poverty reduction, gender equality, food security and strengthening international cooperation – will be discussed in more detail in the draft document to be released for comments by January 2005. The final report incorporating feedback from government and relevant international and national organizations will be released by May 2005

· Economic Development Trends

Real economic growth has been strong in recent years, and according to the IMF 2004 country report, the real GDP grew by 10 percent in 2003 and is expected to grow by 8½ percent in 2004. With sustained economic growth, the overall goal of halving the poverty index between 2000 and 2015 will most likely be achieved[3]. However, unless the government channels considerable attention to social services and distributional concerns, it is unlikely that economic growth alone will be sufficient to produce significant improvements in living standards of the most vulnerable segments of the population. Progress towards the MDGs will require a sustained government commitment to strengthening the legal and institutional framework, implementing effective policy reforms in the social sector, improving the quality of public service delivery, and effectively managing financial resources. Fiscal policy aims to support economic growth and public service provision while striking a balance between increasing expenditures and limiting borrowing. The Government aims to reduce the burden of external debt, which, stood at 83 percent of GDP in 2002. Consequently, debt servicing absorbed 35 percent of revenues in 2003 and thus further limited financial resources available for public investment.[4] Despite progress on restructuring Tajikistan’s bi-lateral debts, the debt burden will remain heavy and it continues to pose a threat to macroeconomic stability.

Cost Estimates in Education, Health and Water sectors

The overall cost of achieving key MDG targets in education, health, and water services provision in Tajikistan by 2015 will be on the order of US$5 billion. This includes:

US$1.7 billion for education;
US$2.4 billion for health;
US$0.9 billion for expansion of access to water and sanitation services[5]

Table 1. MDG Costs and Financing Gaps 2003-2015


Sector	MDG	Cost	Notional domestic financing	Notional international financing	Financing gap	Annual average gap
		$US mln	$US mln	$US mln	$US mln	$US mln
Education	2	1670	1010	260	400	36
Health*	4,5,6	2450	560	440	1,450	132
Water	7	920	290	85	545	50
Total		5040	1860	785	2395	218
Source: MDG team estimates. * Domestic financing figure is for all health care; cost figure is not comprehensive and covers expenditures required to provide for basic health care and interventions to fight HIV/AIDS, tuberculosis and malaria.

Tajikistan is unlikely to meet all its MDG targets on its own. The initial estimates project that the financing gap for MDGs related to education, health and water sectors will be approximately US$2.4 billion. Tajikistan is highly dependent on external financing for its current poverty reduction framework and is likely to remain so in the future. Although significant external financing will be needed to help Tajikistan achieve the MDGs, calls for additional funding must be balanced with the imperative to manage a heavy burden of the existing foreign debt. The Government aims to reduce the burden of external debt, which stood at 83 percent of GDP in 2002. Serving this debt has absorbed 35 percent of revenues in 2003 and constituted a significant drain on financial resources that might otherwise be used for public investment.[6]

3. Education

Current Situation

Due to the combined effects of the civil war and the challenges of transition, Tajikistan faces considerable obstacles in achieving the MDG target of providing basic education to all girls and boys[7]. Dropping attendance levels, a widening gender gap, growing barriers to full participation in the basic education for children of vulnerable groups, inappropriate curricula, low teacher salaries and the resulting difficulties in retaining good teachers, an inadequate and deteriorating physical infrastructure of schools, and weak capacity for conducting policy assessments are some of the difficulties that the education system is facing today. The attendance level has declined to 88% in 2003 compared to 90% in 2000.[8] The gender gap in school attendance has been widening in recent years, and in 2003, the dropout rate was twice as high among girls than boys in rural areas, and three times as high in urban areas. Dushanbe city has the worst indicators – it has the lowest attendance level and the highest gender gap. The education system has to adopt to the changing social structure and market economy, and meet the demands for a high-quality, up-to-date curriculum as well as to bridge the widening gender gap and increase attendance levels across the country, especially in Dushanbe and in remote rural areas.

Tajikistan has placed increasing emphasis on improving educational outcomes and views strengthening the education system as a key component of the overall program to reduce poverty. This commitment to education is indicated by the fact that over 16 percent of general expenditures (US$31 million in 2002) is allocated to education, a higher percentage than in most OECD countries.[9] In 2003 the Government was able to allocate 2.8 percent of GDP to the sector, one of the highest expenditure items in the state budget but a low share by international standards, even in comparison to other low-income countries.[10] Nonetheless, the government emphasises the need for increased funding; donors emphasise that financial pressure can also be relieved by improving the allocation of resources in the education system. Reforms to the curriculum, staffing policy and the norms governing education sector budget disbursements could help to alleviate financial pressure by creating an environment in which additional funds can have a stronger impact on improving schooling outcomes.

National education strategy

The Government accords a high priority to education and initiated an ambitious program of reforms for the general education sector in July 2004. Reform of the national curriculum, the centrepiece of the reform effort, has several implications for the system. The authorities have reduced the number of courses in the curriculum to focus more resources on core subjects; student curriculum hours have been reduced; teachers will be required to teach more hours to collect their ‘stavkas’ (salaries per teaching load); salaries are set to rise by 25 percent in the 2004/2005 school year. These changes have broad implications for many other areas of the education system: textbooks must be brought into line with the new curriculum standards, teachers must be trained to teach multiple subjects. In addition to these reforms, the education authorities will focus on creating new norms of distributing financial resources on a basis of actual needs and demands, taking account of higher per-student costs in sparsely settled areas. Rehabilitation of and investments in the capital infrastructure are also priorities for the government, but the government’s resources are inadequate to support even the basic operating costs of the school system.

An important means of relieving financial pressure is to improve the allocative efficiency of expenditures. Accordingly, the Ministry of Finance and the Ministry of Education have undertaken to develop new per capita financing norms and have produced some preliminary proposals for reform in this area. The distribution of resources in the sector could be improved by ensuring that small schools in sparsely populated areas – schools that do not benefit from the returns to scale enjoyed in larger urban schools – are not short-changed of funds simply because they have fewer students.

Costing

Assuming baseline GDP growth, the cost of achieving the MDG is estimated at approximately US$1.7 billion, or around US$150 million annually. Recurrent expenditures on general education (excluding the cost of the school feeding programme, which is largely met by foreign aid, and not including spending on pre- and post-general education programmes, which currently absorb around 25 percent of the education budget) would need to rise from 2.0 percent of GDP in 2002 to 3.6 percent of GDP by 2015. In all, the expenditures needed to meet the MDG for education are estimated to average 5.2 percent of GDP annually for the general education system alone.

Table 2. Summary costs of education

Components	2005	2010	2015	% of 2015 Total	Total 2005-2015	Avg. 2005-2015
Capital costs	38	52	71	33%	560	51
Recurrent costs	60	99	146	67%	1108	101
Total	98	151	217		1,668	152
% GDP	5.0%	5.3%	5.3%
Per student	57	79	95
Per student spending % of per capita GDP	22%	26%	27%

Annual notional funding is estimated at US$116 million, including public spending of US$65 million (assuming achievement of a 4% spending target for education as a share of GDP by 2010), private spending of US$27 million, and international spending of US$24 million. The annual incremental cost of meeting the MDG in education – the amount of additional spending required to raise enrolment rates to 100 percent – is over US$30 million per year. This suggests that the international community will need to double disbursements to the general education sector if the MDG target for education is to be met.

Table 3. Notional financing for general education 2005-2015 (US$ mln 2003)

Government Financing