By: The Kabul Times
KABUL: The International Monetary Fund approved $220 million in emergency assistance for Afghanistan to help the country cope with the economic fallout from the coronavirus pandemic.
The disbursement will help Afghan authorities plug an urgent balance of payments gap in 2020 and fund pandemic-related spending on health and social relief, the Washington-based lender said in a statement on Friday. Discussions on a new IMF arrangement may start “soon,” depending on how the pandemic evolves.
“The Covid-19 pandemic has hit hard Afghanistan’s economy,” Mitsuhiro Furusawa, the IMF’s deputy managing director and chair, said. “The shock has generated a large balance of payments need. Emergency financing from the IMF under the Rapid Credit Facility would help meet this urgent need and create room for pandemic-related spending, including by catalyzing donor financing.”
The coronavirus outlook and measures to contain it have worsened the country’s economic outlook. Afghanistan’s economy is forecast to contract 3 per cent this year, assuming the pandemic is contained by the third quarter, a major reversal from the 3.5 per cent expansion previously projected. The country’s fiscal deficit will widen to 3.5 per cent of the gross domestic product due to urgent pandemic-related spending and revenue losses.
The balance of payments gap is estimated at $857m or 4.5 per cent of GDP. Afghan authorities are also seeking financing from other sources to mitigate the impact on the already fragile economy, burdened by ongoing conflict and political uncertainty.
The IMF and World Bank have been offering emergency funds to developing and low-income nations across the world to bolster their efforts to fight the rapidly spreading deadly virus.
Last month, the World Bank approved an initial $1.9 billion in emergency aid for coronavirus spending to 25 developing countries, including $100m for Afghanistan.