By: The Kabul Times
An International Monetary Fund (IMF) team led by Christoph Duenwald visited Dubai from October 3–10, 2019 to conduct discussions for the 2019 Article IV consultation and the sixth and final review of Afghanistan’s economic program supported by a 3½ -year ECF arrangement.
At the end of the visit, IMF’s Duenwald issued a statement saying, the Afghan authorities continue to make good progress in implementing their program supported by the ECF arrangement that expires at the end of this year.
“All end-June 2019 performance criteria and end-September indicative targets were met, and most of the structural benchmarks are on track to be met by their end-October and mid-November deadlines. The Board is expected to discuss the sixth review under the ECF arrangement along with the 2019 Article IV consultation in December. Upon completion of this review, SDR 5.38 million (about US$7.4 million) will be made available to Afghanistan, bringing the total disbursements under the arrangement to SDR 32.38 million (about US$44.4 million).”
“Insecurity and violence, combined with episodes of political uncertainty and weather events, have kept Afghanistan’s real GDP growth rate below 3 percent in recent years, insufficient to absorb the large number of labor market entrants and improve living standards. Growth is expected to reach 3 percent in 2019, rising gradually thereafter, contingent on a gradual improvement in security, political stability, and continued external assistance,” the statement said, adding inflation should average around 2.6 percent this year, rising to an average of 5 percent over the medium term, consistent with the central bank’s objective.
“The overall fiscal balance including donor grants is forecast to remain broadly balanced over the medium term reflecting the authorities’ commitment to fiscal discipline. Large trade deficits continue to be financed by substantial grants, allowing international reserves to remain at comfortable levels.”
According to the statement, the team commended the authorities for good implementation of the reform program, despite difficult circumstances. “Discussions focused on policies and reforms that will help deliver the authorities’ objectives of stronger inclusive growth, self-reliance, and poverty reduction. To this end, continued macroeconomic policy discipline remains indispensable to underpin growth and job creation.”
The IMF went on saying that reforms to strengthen institutions, deepen financial inclusion, boost the business climate, and fight corruption will be needed to strengthen the economy’s resilience and to harness a peace dividend should that opportunity arise. “Such measures will lay the foundation for scaled up private sector development as the sustained engine of growth.”
“The IMF will remain closely engaged with the Afghan authorities to support economic policy design and implementation of economic reforms. The support of the international community will remain vital going forward as the country navigates the difficult path toward self-reliance. “The team would like to take this opportunity to thank the authorities for the candid and constructive discussions.”