IMF Reaches Staff-Level Agreement on First Review Under the ECF with Afghanistan

IMF News, March 6, 2017

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IMF and the Afghan authorities reached a staff level agreement on the completion of the first review under the ECF arrangement.
The agreement is subject to approval by IMF Management and the Executive Board.
Upon completion of this review, SDR4.5 million (about US$6.1 million) will be made available to Afghanistan.
The staff report on the first review will be presented to the IMF’s Executive Board for approval during the month of May.

An IMF team led by Mr. Christoph Duenwald visited Dubai during February 23 – March 4, 2017 to conduct discussions on the first review of Afghanistan’s economic program supported by a three-year IMF Extended Credit Facility (ECF) arrangement.
During the mission, the team met with Afghanistan’s authorities to discuss latest economic developments and review implementation of reforms under the ECF.
End-of-Mission press releases convey preliminary findings after a visit; the views expressed are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board.

Afghanistan’s GDP growth for 2016 is estimated at 2 percent.
GDP growth is projected to pick up to 3 percent in 2017 on account of favorable agricultural output.
Inflation is expected to pick up to 6 percent in line with developments in trading partners and increased demand related to the refugee influx.
Donor grants continue to finance large budget and trade deficits allowing for treasury cash balances and international reserves to remain at comfortable levels.

The ECF sets out a structural reform agenda focusing on institution building, fiscal and financial reforms, and measures to combat corruption to lay the foundations for scaled up private sector development and higher inclusive growth.
Staff found performance to have been satisfactory.
The team commended the authorities for prudent macroeconomic management and achieving progress under challenging circumstances.
The team discussed follow up actions that would help move the reform agenda forward.

Afghanistan continues to face daunting challenges, with the perilous security situation hurting confidence and growth.
An influx of returning Afghan refugees from neighboring countries is compounding these challenges.
The international community continues to stand by Afghanistan providing much needed development, security, and technical assistance support, as demonstrated by the successful Brussels and Warsaw meetings last year.

IMF Reaches Staff-Level Agreement on First Review Under the ECF with Afghanistan