A deeply troubled bank in Tajikistan is promising its customers that there is light at the end of the tunnel, although it is a mystery how it is pulling off the trick.

Tojiksodirotbank, the country’s second-largest lender, told some account-holders on December 13 that it will soon be in a position to pay out savings, ending months of worry for clients unable to get their hands on their money.

Tajikistan Banking Crisis Tajikistan
Tajikistan Banking Crisis

Signs that some things have begun to revert to a semblance of normality came earlier in the day with news that the bank’s former chairman and part owner, Tojidin Pirzoda, was being reinstated. Pirzoda was reportedly squeezed out of the bank in May along with six top executives as the lender was bing taken into administration by the National Bank of Tajikistan. Only Pirzoda is back so far, according to EurasiaNet.org sources.

An official announcement about the payment of deposits has not yet been made, but it is reportedly imminent.

The riddle is who or what is stumping up the cash. Tojiksodirotbank has been badly hit by its exposure to bad loans and collapse in the value of migrant remittances. It has previously announced it was in talks of a buyout by the European Bank for Reconstruction and Development (EBRD), but that has yet to materialise.

RFE/RL’s Tajik service, Radio Ozodi, cited Pirzoda as saying the money came in the form of a rescue package from the government. It is this money that will be pass on to account-holders, he said.

Asia-Plus news website reported, citing its own sources, that the bailout package was for 2 billion somoni ($250 million at the official rate) and that the government now owns an 80 percent stake in Tojiksodirotbank.

But as Asia-Plus laconically notes: “It has not been possible at this time to clarify from where and on which conditions the funds to ‘save’ this credit organization have been drawn.”

Barring a mystery endowment from the usual benefactors, Russia and China, the only obvious possibility is that the government is going down the route of printing up the money — a hazardous move in the best of scenarios.

Pirzoda used to own a controlling stake in Tojiksodirotbank — around 59 percent. It is not known on what terms Pirzoda has returned to the bank. There is also no publicly available information about how many account-holders Tojiksodirotbank even has and how much they are on the hook for should there be a rush to withdraw cash.

The last big show of discontent from Tojiksodirotbank customers was on November 18, when a group of them assembled outside the bank’s headquarters. Representatives from the bank assured customers that they were trying but had not yet succeeded in securing backing from international financial institutions.

The International Monetary Fund is keeping all of Tajikistan hanging as it happens.

Back in summer, National Bank deputy chairman Jamoliddin Nuraliyev, the son-in-law of President Emomali Rahmon, told Reuters news agency that Tajikistan was still in talks for a $500 million bailout  from the IMF. Not a penny has been forthcoming as yet, and if it is confirmed that the government spent $250 million on salvaging Tojiksodirotbank alone, even that figure may be desperately short of requirements.

There are other major banks — most importantly Agroinvestbank — also in desperate need of a life raft.

The last time Tajikistan got money from the IMF was in 2012 as part of a $145 million line of credit opened in 2009. The fund’s goodwill toward Tajikistan has been sorely tested by all manner of financial shenanigans in Dushanbe, but past experience and the irresistible appeal of inertia suggests they will loosen the pursestrings again, despite understandable misgivings.

Article by EurasiaNet