The ADB Board of Directors has approved the grant assistance that will be used to support two new government pilot programs aimed at improving the effectiveness and targeting of social benefit payments. It will also help the government push ahead with an ongoing development plan to modernize and improve tax policy and administration.

Tajikistan is the poorest country in the Commonwealth of Independent States, with high unemployment and the lowest level of per capita expenditures on social assistance in Central Asia. The global economic crisis put a severe strain on government finances. An ADB grant of US$40 million in 2009 helped the government preserve social safety net spending and the new assistance will allow it to do the same for the 2011 and 2012 budgets.

"Over the short term, the assistance will help ensure that critical social spending is maintained; while in the longer term, the improvements to financial management should increase government revenues," said Debra Kertzman, Director of Public Management, Financial Sector and Trade Division at ADB's Central and West Asia Department.

The Ministry of Labor and Social Protection will be provided with support to carry out a pilot program for noncash-based pension payments using cards that should result in time and cost savings as well as reduced cases of fraud. A second pilot program will redesign and consolidate a benefits system linked to subsidies for gas, electricity and children's education for approximately 10,000 households. Assistance will also be given to the Tax Committee to help the introduction of electronic filing of tax returns by large taxpayers and other measures to improve transparency and tax collection.

The grant will come from ADB's concessional Asian Development Fund and will be released in two tranches, with the first set at US$20 million. Technical assistance of over US$1.1 million will also be provided to help implement the program, with ADB extending US$600,000 from its concessional Technical Assistance Special Fund; the Republic of Korea e-Asia and Knowledge Partnership Fund extending US$500,000; and the government providing the equivalent of US$25,000. The e-Asia and Knowledge Partnership Fund, administered by ADB, supports projects that seek to bridge the digital divide and promote improved access to information and knowledge sharing in Asia and the Pacific.

The Ministry of Finance is the executing agency for the program which is expected to be completed by April 2013.