Press Release No. 18/94

IMF Staff Completes Third ECF Review Mission for Afghanistan

March 19, 2018

• IMF staff and the Afghan authorities reached staff-level agreement on the completion of the third review under the ECF arrangement.
• Afghanistan remains dependent on donor grants to finance critical spending needs as the country moves toward self-reliance. 

An International Monetary Fund (IMF) team led by Christoph Duenwald visited Baku during March 8–16, 2018 to conduct discussions on the third 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 the latest economic developments and review implementation of reforms under the ECF.

At the end of the mission, Mr. Duenwald issued the following statement:

“Following productive discussions, the IMF team and the Afghan authorities reached staff-level agreement on the completion of the third review under the ECF arrangement. The agreement is subject to approval by the IMF Executive Board, which is expected to consider the staff report for the third ECF review in late May 2018. Upon completion of this review, SDR4.5 million (about US$6.1 million) will be made available to Afghanistan, bringing total disbursements to SDR18 million.

“Afghanistan’s GDP growth for 2018 is projected at 2.5 percent, the same rate as recorded in 2017, as the economy continues to face challenging security conditions. Inflation is expected to average about 5 percent in 2018. Donor grants continue to finance large budget and trade deficits allowing treasury cash balances and international reserves to remain at comfortable levels.

“The mission reviewed Afghanistan’s performance under the ECF, which sets out a structural reform agenda focused on institution building, fiscal and financial reforms while safeguarding social and other priority spending, 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, and 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. The prospect of a large influx of Afghan refugees from neighboring countries is compounding these challenges. However, as demonstrated by the successful Brussels and Warsaw meetings in 2016, the long-term commitment by the United States renewed last year, and the support expressed by the visiting representatives of the UN Security Council in January 2018, the international community continues to stand by Afghanistan providing it with much needed financial and technical assistance support.

“The IMF remains committed to supporting Afghanistan and its people and will continue to actively engage in a dialogue with the authorities on their reform program with the aim of maintaining macro-financial stability, reinvigorating growth, and building a healthy economy to benefit all Afghans.”