Washington, DC (BBN) – The International Monetary Fund (IMF) has agreed to provide a $129 million loan to support Afghan’s economic program.
“An IMF mission, headed by Axel Schimmelpfennig, and the Afghan authorities have reached a staff-level agreement on a 3-year program under the Extended Credit Facility (ECF) in the amount of SDR 85 million (about US$129 million) to support the authorities’ economic program,” an IMF announcement said.
Pending approval by IMF management and the completion of the program prior actions, the Afghan authorities’ request for an ECF arrangement is expected to be submitted for the IMF’s Executive Board’s consideration in November this year, it added.
The IMF said the authorities have made important progress on managing the Kabul Bank crisis that came to the fore in the fall of 2010. Kabul Bank has been put into receivership and efforts are underway to recover the embezzled assets from the former shareholders of the bank which will limit the fiscal costs of the crisis.
“The central bank is also stepping up supervision and ensuring that the banking law and regulations are fully enforced, including on conflict of interest. The authorities’ program outlines further steps to strengthen and develop Afghanistan’s financial sector,” the IMF said in its announcement.
“Despite a difficult external environment, a volatile security situation, and this year’s drought, real GDP growth should range between 6.0 and 8.0 percent during the program period, and could increase further once the development of the mining sector begins. Over the medium term, sustaining high and inclusive growth with a view to reducing poverty will require a stable security situation, improvements in governance, and an enabling environment for the private sector,” it added.
BBN/SSR/SI-07Oct11-6:58 am (BST)