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Tajikistan is the poorest of the five former Soviet Central Asian republics, with an estimated four-fifths of the population living below the poverty line. Basic services and infrastructure are poor to non-existent.

Although less than 10% of the country's land can be cultivated, Tajikistan has a sizeable agricultural sector accounting for one-quarter of GDP and employing half the workforce. Large quantities of cotton are produced under ecologically ruinous schemes established during the Soviet era. Grain, fruit and vegetables are also grown.

In recent years, the country has been badly hit by a regional drought, an earthquake and a series of mudslides (caused by poor land use) which forced the government to make several appeals for international food aid.

Tajikistan's economic prospects lie with exploitation of its mineral resources, which include gold, aluminium, iron, lead, tin and mercury ores. There are coal deposits as well as small amounts of natural gas, which together with hydroelectric schemes meet the bulk of the country's energy needs. There is little heavy industry other than mineral processing (mainly aluminium); light industry is concentrated in food processing and textiles.

The Tajik economy suffered severely during the 1990s from the dislocations caused by the break-up of the Soviet Union followed by two outbreaks of civil war. It has recovered slowly since the 1997 peace accord but some positive results are now showing: the hyper-inflation which blighted the economy during the civil war has now been cut to 7.5% (2006). Annual GDP growth in 2005 was 6.7%. The government's economic reform programme, which is now being implemented, comprises a typical recipe of privatisation, deregulation and fiscal reform.

Tajikistan secured membership of the IMF and World Bank in 1993; it also belongs to the European Bank for Reconstruction and Development as a 'Country of Operation'. It has received substantial aid from Middle Eastern donors, including Saudi Arabia, Kuwait and the Islamic Development Bank. External donors now supply around 60% of Tajik government income.

Tajikistan now has its own currency, the Somoni, which was introduced in October 2000 to replace the five-year-old Tajik rouble. In April 1998, Tajikistan was admitted to the Customs Union of the Commonwealth of Independent States, a loose federation of former Soviet republics, whose members continue to dominate Tajik trade. In July 2001, Tajikistan acquired observer status at the World Trade Organization.