Tajikistan - Country Commercial Guide
Trade Financing
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Methods of Payment

Payments between two corporate entities must be processed through the bank transfer system.

Large-scale Tajik firms are familiar with letters of credit, documentary collections, wire transfers, and cash in advance.  However, most companies prefer not to use letters of credit due to the high taxation cost.  Borrowing from personal contacts and informal channels of financing are still prevalent.  A U.S. firm’s ability to provide or arrange financing is important to building significant market share.  Offering sales of goods on consignment, at least for initial sales, will enable a U.S. company’s distributor to generate more funds for subsequent purchases. 

Leasing is undeveloped in Tajikistan, and banks are at initial stages to explore leasing of vehicles, agricultural equipment, and construction equipment.  While Tajikistan enacted its Law on Leasing in 2003 and made amendments in 2016 and 2017, most Tajik businesses have little knowledge about leasing as a financing tool. 

For more information about the methods of payment or other trade finance options, please read the Trade Finance Guide.

Most smaller Tajik firms use cash prepayment, with balance due upon delivery.  These payments are either physical cash transfers between the parties, or through direct bank transfers.  The size of cash payments can be significant, driving many banks to develop financial technology (fintech) solutions, which have not yet been widely adopted by the greater population.

Banking Systems

The banking system in Tajikistan is composed of 64 credit institutions, including 14 traditional banks and one Islamic bank.  The banking sector has a poor history, with the government directing banks to provide loans to politically connected individuals, resulting in a very high percentage of non-performing loans (NPLs) “covered” by state interventions.  Despite these interventions, two major banks were ordered to be liquidated in 2016 – a process which is still ongoing.  Approximately only 5 million out of 9.7 million residents hold bank accounts.  A significant portion of the population lacks confidence in the banking system and prefers to cash paychecks upon receipt.

NPLs have decreased overall since 2016, though credit remains tight due to the high number of banks and low number of depositors.  Microfinance institutions provide some lending at the small and medium enterprise (SME) level, though overall capital costs are high regardless of the loan origin: bank or microfinance institution.  Total assets of the banking system are estimated to be $2.78 billion; the total balance of the loan portfolio is estimated to be $1.3 billion.  Demand for loans denominated in the national currency (somoni) is high, due to relative volatility in somoni-dollar exchange rates and the low volume of dollars available in the country.  Average weighted rates of loans denominated in Somoni and USD is 23.10% and 12.18% respectively.  High interest rates is one of the factors contributing to limited access to financing and low financial literacy along these lines.  Officially, non-performing loans are standing at 11.4% of total loan portfolio.

Foreign Exchange Controls

Tajikistan is subject to the International Monetary Fund’s Article VIII on Foreign Exchange controls.  The National Bank of Tajikistan (NBT) controls the local currency somoni, which is officially fully convertible with U.S. dollar, but companies should inform commercial banks in advance that limited volumes of U.S. dollars in the Tajik banking system and market may delay transactions. 

NBT maintains a managed float exchange rate regime and does currency interventions on ad hoc basis to control inflation and strong local currency devaluation.  In 2022 the somoni appreciated more than 10% against the dollar during 2022, thanks to the strengthening of the ruble from April – October 2022 and inflow of remittances from Russia to Tajikistan.  There are no unauthorized currency exchange points in Tajikistan since 2015.  Only banks have official permission from NBT to conduct currency exchange operations.

US Banks & Local Correspondent Banks

NBT maintains a correspondent bank account with the Federal Reserve of New York. No commercial banks maintain U.S. correspondent bank accounts, though many desire them.  Sanctions compliance is a serious consideration, with Russia being Tajikistan’s number one trade partner, and U.S-sanctioned Iran as Tajikistan’s seventh largest trade partner.

Tajikistan had relied on its correspondent accounts with Russia-based banks following the 2012 withdrawal of Citibank and the Bank of America.  Use of these accounts declined rapidly following the 2022 Russian invasion of Ukraine.  Tajikistan has relied on its correspondent accounts with banks in Kazakhstan, Uzbekistan, Georgia, Azerbaijan, Turkey, and China, but these transactions are much more expensive than previously.  NBT cannot perform transactions through its correspondent account on behalf of the commercial banks.