The International Monetary Fund said it will negotiate new loans with Afghanistan to help revive in the country’s war-ravaged economy.
After concluding a review of Afghan’s economic situation on May 13, the IMF said it was pleased with the country’s progress at reforming its government budget process and financial sector.
“Despite difficult circumstances, the authorities implemented the program (recommended by the IMF) successfully,” it said, AFP reported.
IMF added that a 9-month Staff-Monitored Program had been concluded, which was the second and final review to address the fiscal and banking vulnerabilities, preserving macroeconomic stability, improving prospects for inclusive growth, and building a track record for a possible future IMF financial arrangement.
But because of Afghanistan’s ongoing conflict and a drawdown of NATO forces helping to defend the country against Taliban attacks, “Afghanistan’s economic situation remains very difficult,” it said.
“Notwithstanding this progress, Afghanistan’s economic situation remains very difficult. Security and political uncertainties and the drawdown of international troops, together with weak governance and institutions, have held back growth and employment, and recently contributed to increased emigration,” the statement said.
The IMF expects Afghanistan’s economy to grow by 2% this year, barely faster than last year.
Banking Challenges
IMF said, “A further deterioration in security conditions and shortfalls in donor aid pose important downside risks, while the banking system continues to face several challenges despite key reforms and measures taken by the central bank to address the vulnerabilities in the financial sector.”
The statement said the Afghan authorities recently requested a Fund financial arrangement (Extended Credit Facility—ECF) in a bid to help address these difficult issues.
“The ECF would help tackle some of the challenges and thus assist in improving the conditions for sustainable growth and in catalyzing support from donors. IMF management welcomes this request, and discussions on the new arrangement are slated to begin in May 2016,” the statement added.
The loans “would help tackle some of the challenges and thus assist in improving the conditions for sustainable growth and in catalyzing support from donors,” it said.
The US still has nearly 10,000 military personnel in Afghanistan, where their mission is now focused on training and assisting Afghan troops, who’ve taken the lead in fighting the Taliban. The Americans are not supposed to be involved in combat. But the US flew several thousand sorties last year and troops still find themselves in places where the fighting carries on.
