Islamic Republic of Afghanistan—IMF Management Completes Second Review of Staff-Monitored Program | WPN World People News

On April 13, 2016, the Management of the International Monetary Fund (IMF) completed the second and final review under the Staff-Monitored Program (SMP)1 with Afghanistan. The focus of the nine-month SMP was on addressing fiscal and banking vulnerabilities, preserving macroeconomic stability, improving prospects for inclusive growth, and building a track record for a possible future IMF financial arrangement. Despite difficult circumstances, the authorities implemented the program successfully and hence IMF management completed the SMP on schedule.

Notwithstanding this progress, Afghanistan’s economic situation remains very difficult. Security and political uncertainties and the drawdown of international troops, together with weak governance and institutions, have held back growth and employment, and recently contributed to increased emigration. The outlook is challenging, with real GDP growth projected at 2 percent in 2016, only marginally higher than in 2015. A further deterioration in security conditions and shortfalls in donor aid pose important downside risks, while the banking system continues to face several challenges despite key reforms and measures taken by the central bank to address the vulnerabilities in the financial sector.

To help address these difficult issues, the Afghan authorities recently requested a Fund financial arrangement (Extended Credit Facility—ECF). The ECF would help tackle some of the challenges and thus assist in improving the conditions for sustainable growth and in catalyzing support from donors. IMF management welcomes this request, and discussions on the new arrangement are slated to begin in May 2016.

Source: International Monetary Fund