IMF, Afghan officials confer on reform agenda

KABUL (Pajhwok): The International Monetary Fund (IMF) team, led by Paul Ross, held wide-ranging meetins with the authorities in Kabul to discuss macroeconomic policies and a structural reform agenda that could form the basis for a possible nine-month Staff-Monitored Program (SMP).

A statement from the IMF quoting Ross as saying: “The new administration is resolved to lay the foundation for a vibrant economy that benefits all Afghans. The conclusion of the presidential elections and agreement on a national unity government helped reduce the uncertainties and restored confidence.

“We welcome the authorities’ determination to maintain macroeconomic stability and to implement reforms that promote sustainable and inclusive growth.”

A possible SMP would support the macroeconomic policy and reform agenda of the Afghan government for 2015 with a framework to address economic vulnerabilities and facilitate engagement with the international community to sustain donor support, Ross added.

Ross said it would focus on mobilizing revenue, strengthening the financial sector enforcement, improving economic governance, and laying the basis for high growth.

“Good progress was made in discussions on an SMP. Understandings were reached on macroeconomic policy objectives and on several key structural reforms. Provided that a common understanding is reached on the 2015 budget, the macroeconomic framework will maintain buffers of low debt, a comfortable international reserves position, and the current account financed by continued donor grant financing,” the statement added.

On structural issues, understandings were reached on measures to safeguard financial sector stability and strengthen the financial sector as well as the need for domestic revenue mobilization. Also, the authorities plan to strengthen further the anti-money laundering and combating the financing of terrorism framework and step-up anti-corruption efforts.

“Discussions are ongoing on the 2015 budget, medium-term revenue mobilization, and the state banks. On the 2015 budget, discussions focus on tax policy and expenditure measures. Introducing broad-based tax measures and improved compliance are essential to mobilize revenue to move toward fiscal sustainability. Regarding state banks, IMF staff has recommended restarting the sale of New Kabul Bank and recommended steps to address problems in other state banks,” Ross added.

Given Afghanistan grant financing is needed to support the move toward fiscal sustainability and to enhance confidence in the Afghan economy.

The IMF staff team met with Omar Zakhilwal, national economic advisor and acting finance minister and Da Afghanistan Bank Governor Noorullah Delawari, and other senior officials.

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