Hyperinflation: Why Are Tajik Authorities Lying?

Tajik authorities have announced that the inflation rate in the republic has increased by about four percent compared to last year.

However, prices for some goods have risen by one and a half to two times, leading experts to doubt the accuracy of these figures and consider them unrealistic.

Firstly, the government claims that this four percent increase is in comparison to last year. But even compared to last year, this figure is not reflective of reality. Why? Last year, a kilogram of flour cost around four somoni. Now it costs more than nine somoni. The price of rice has risen above 20 somoni. A liter of vegetable oil now costs about 25 somoni. Therefore, it can be argued that the inflation rate has not increased by just four percent but has instead risen by approximately 50 percent.

What is inflation? It refers to the decrease in the purchasing power of money relative to goods. A few years ago, the Tajik somoni had a subunit called diram. That is, 100 dirams equaled one somoni. Now, this subunit has disappeared from the trading system and effectively no longer exists. Paper money in denominations of 1 somoni and 5 somoni is hardly seen in circulation anymore. These paper bills have been replaced by coins of the same denominations. A product that could be purchased for 10 somoni a few years ago now costs 100 somoni. This is the level of inflation that people feel, and this is why they don't trust the government's statements. Authorities claim that inflation has only increased by four percent compared to last year.

Inflation should not be calculated by comparing it to the previous year. It should be measured from the time the currency is printed and put into circulation. If a currency, like the Tajik somoni, loses its value, it indicates that the government is ineffective and unable to address the country's issues. Additionally, the national currency loses its value because the government prints more paper money than is backed by its reserves of foreign currency and gold.

For example, the government might promise to increase workers' wages this year. However, the state may lack the financial capacity to fulfill this promise, so to maintain its reputation, it is forced to print more money and raise wages. These billions of printed paper bills, which are not backed by gold or foreign currency reserves, lead to a depreciation of the currency. This is what is referred to as inflation. Tajikistan is a country that has consistently experienced a negative trade balance for the past 30 years. And in these past 30 years, the republic's exports have been insignificant compared to its imports. This is the reason for the annual rise in inflation in the country.

Another reason, according to experts, is the lack of production in the republic. The question arises: why does Tajikistan, instead of building restaurants, tea houses, palaces, and mansions for state officials, not create small and medium-sized enterprises to produce goods, including food production, food reserves, clothing and footwear, construction materials, and textiles? Such manufacturing enterprises would, firstly, provide employment for the population within the country. Secondly, these goods could be exported to foreign markets, bringing foreign currency into the country. And this income would help strengthen the national currency.

According to experts, as long as production is not prioritized over other sectors in the republic, Tajikistan will not progress, and the national currency will continue to weaken year after year. Experts say that the national currency of Tajikistan has already lost nearly 70 percent of its value since it was first introduced into circulation.