IMF Reaches a Staff-Level Agreement with the Islamic Republic of Afghanistan on an Extended Credit Facility Arrangement
August 14, 2020
End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after discussions with country authorities. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF’s Executive Board for discussion and decision.
- IMF staff and the Afghanistan authorities have reached a staff-level agreement on an economic reform program to be supported by a new three-and-half year US$364 million Extended Credit Facility (ECF).
- The ECF—following a disbursement under the IMF’s Rapid Credit Facility in June—will help mitigate the economic impact of the Covid-19 pandemic, maintain macroeconomic stability, and underpin reforms for economic resilience and good governance.
- Continued financial assistance from international partners is critical to support objectives of Afghanistan’s National Peace and Development Framework (ANPDF-II) for 2021-25, including inclusive growth, poverty reduction, and self-reliance.
An International Monetary Fund (IMF) mission led by Mr. Azim Sadikov held virtual discussions with the Afghanistan authorities in July and August 2020 on IMF support for Afghanistan’s economic reform program. At the conclusion of the discussions, Mr. Sadikov issued the following statement:
“I am pleased to announce that the Afghanistan authorities and IMF staff have reached a staff-level agreement on a three-and-half year Extended Credit Facility (ECF) arrangement to support authorities’ economic reform program. Access under this arrangement is proposed at SDR 259 million (about US$364 million). The agreement is subject to approval by the IMF Executive Board, which is expected to consider the request in late October, after the authorities implement the agreed prior action to improve the accountability and transparency in procurement.
“The new ECF arrangement will support authorities’ reform program to maintain macroeconomic stability and lay the ground for a sustained post-pandemic economic recovery while continuing to advance structural reforms. As the recovery gets underway, the reform program will aim to gradually reverse the fiscal deterioration caused by the pandemic and create space for development spending while increasing self-reliance, mainly through improvements in customs and revenue administration and value added tax implementation in 2022. Monetary policy will continue to focus on maintaining price stability and a flexible exchange rate regime, while fostering confidence in the Afghani.
“Building on the 2016-19 ECF, successfully completed in December 2019, institutional reforms under the new ECF arrangement will focus on addressing structural fragilities that hamper growth, economic resilience, and equitable social outcomes. To that end, the program will aim to improve fiscal governance, strengthen the anti-corruption regime, and bolster the financial sector. Key reforms include building capacity to manage public investment and fiscal risks, improving the effectiveness of the asset declaration regime, enhancing spending efficiency, and strengthening social protection. Bolstering the financial sector, including by completing the reform of state-owned banks, will also be important to boost its capacity to contribute to growth.
“Coming before the November pledging conference, the ECF arrangement is expected to catalyze donor financing, which is critical to support Afghanistan’s reform and development objectives under the multi-year National Peace and Development Framework.”
IMF Communications Department
PRESS OFFICER: Randa Elnagar
Phone: +1 202 623-7100Email: MEDIA@IMF.org