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IMF To Offer Afghanistan New Loans After 'Success' At Reforms

Pedestrians walk past a bank advertisement board offering loans in Kabul in 2011.

The International Monetary Fund said it will negotiate new loans with Afghanistan to help revive in the country's war-ravaged economy.

After concluding a review of Afghan's economic situation on May 13, the IMF said it was pleased with the country's progress aat reforming its government budget process and financial sector.

"Despite difficult circumstances, the authorities implemented the program [recommended by the IMF] successfully," it said.

But because of Afghanistan's ongoing conflict and a drawdown of NATO forces helping to defend the country against Taliban attacks, "Afghanistan's economic situation remains very difficult," it said.

The IMF expects Afghanistan's economy to grow by 2 percent this year, barely faster than last year. And that pace could deteriorate further if security conditions worsen and donor aid slows.

The country's banking system also needs more reform to eliminate vulnerabilities, the IMF said.

The IMF said it will start negotiations this month with Kabul authorities on new Extended Credit Facility loans the government requested to help it address some of these problems.

The loans "would help tackle some of the challenges and thus assist in improving the conditions for sustainable growth and in catalyzing support from donors," it said.

With reporting by AFP