IMF Completes First Review of Extended Credit Facility Arrangement for Afghanistan

Kabul: The Executive Board of the International Monetary Fund (IMF) on Tuesday completed the first review of Afghanistan’s economic reform program supported by the Extended Credit Facility (ECF) arrangement. The completion of this review makes SDR 103.6 million (about US$149.4 million) available immediately for disbursement.

Afghanistan’s 42-month ECF arrangement of SDR 259 million (about US$370 million) was approved by the Executive Board on November 6, 2020. It aims to support Afghanistan’s recovery from the COVID-19 pandemic, anchor economic reforms, and improve donor financing. Since the onset of the pandemic, Afghanistan also benefitted from the IMF’s disbursement of SDR 161.9 million (about US$220 million) under the Rapid Credit Facility and a debt service relief of SDR 7.2 million (about US$10 million) under the Catastrophe Containment and Relief Trust.

The COVID-19 pandemic and rising security challenges have challenged Afghanistan. While the government’s determined response, supported by donors, helped mitigate the pandemic’s impact, including by containing the economic contraction, poverty worsened and the fiscal deficit widened. Security has deteriorated and uncertainty has risen as the peace talks between the government and Taliban stalled, with the US and NATO troops set to withdraw by September.

Following the Executive Board discussion, Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, made the following statement, “Afghanistan is confronting the fallout of the COVID-19 pandemic amid rising insecurity and uncertainty. Aided by donor support, the authorities boosted health and social spending to cushion the impact on the vulnerable. Nevertheless, the pandemic caused an output loss, worsened poverty and set back self-reliance efforts. Growth is expected to resume this year, but the outlook is subject to considerable downside risks, including from adverse security developments, drought and the pandemic. Should they materialize, it will be essential to boost spending for healthcare, support to the vulnerable, and food security, using fiscal space created by spending reprioritization and grants.”

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