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IMF Approves $370 Million Loan Program To Help Bolster Afghanistan's Struggling Economy

The board of the International Monetary Fund (IMF) has approved a $370 million loan facility to support the economy of Afghanistan, which is suffering from decades of war as well as the effects of the global coronavirus crisis.

The IMF said on November 6 that the 42-month loan arrangement under the Extended Credit Facility (ECF) is designed to help stabilize the country's economy, bolster its response to the COVID-19 outbreak, and "catalyze donor support."

IMF Deputy Managing Director Mitsuhiro Furusawa said the Afghan government's economic program had been hampered by the coronavirus pandemic, but he added that Kabul had put policies in place to return to growth.

He said, though, that "should downside risks, including from the pandemic and the security situation, materialize, the recovery could falter and financing needs increase."

"The COVID-19 pandemic continues to weigh heavily on Afghanistan's economy and livelihoods. The authorities' determined response and expedient donor support have prevented a humanitarian crisis. However, the pandemic has set back progress toward self-reliance," he said in a statement.

The government will receive $115 million immediately under the program, with the rest arriving through installments, subject to semiannual reviews of criteria tied to economic policy and anti-corruption efforts, the Washington-based organization said.

"The program seeks to preserve macroeconomic stability, reverse the fiscal deterioration caused by the pandemic, and protect development and social spending," the IMF said.

"Structural reforms under the program will focus on mobilizing domestic revenue, improving the quality of public spending and public financial management, bolstering the financial sector, and strengthening the anti-corruption regime," it added.

The IMF, considered the world's lender of last resort, forecasts that the Afghan economy will contract by 5 percent in 2020 and will recover by 4 percent next year.

But it said that sustained donor support, implementation of reforms, and progress with combatting corruption will be critical for Afghanistan's development and the program's success.

With reporting by AFP
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