| Summary: | Tajikistan’s economic performance remains favorable as remittance inflows and public investment continue to support domestic demand but there is uncertainty over the outlook in the context of heightened geopolitical tensions. Public debt is sustainable but sizeable investment needs constrain fiscal space, and the risk of debt distress remains high due to upcoming Eurobond repayments. Adherence to a deficit target of 2.5 percent of GDP is essential to anchor debt sustainability, while advancing reforms to increase space for priority social and development spending. The authorities have requested a twenty-two-month arrangement under the Policy Coordination Instrument (PCI) to anchor macroeconomic policies and foster inclusive growth. Staff supports the request for the new arrangement. The Letter of Intent and Program Statement set out policies to support the program’s objectives
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