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Deal on reform programme reached with IMF

Deal on reform programme reached with IMF

Aug 15, 2020 - 10:32

KABULinfo-icon (Pajhwok): Afghanistaninfo-icon has reached a staff-level agreement with the International Monetary Fund (IMF) on an economic reform programme to be supported by a new three-and-half year $364 million Extended Credit Facility (ECF).

Following a disbursement under the IMF’s Rapid Credit Facility in June, the ECF will help mitigate the economic impact of the Covid-19 pandemic.

The IMF said on Saturday the facility would also help maintain macroeconomic stability and underpin reforms for economic resilience and good governance.

After discussions with Afghan authorities, IMF staff said continued financial assistance from international partners was critical to support objectives of Afghanistan’s National Peace and Development Framework (ANPDF-II) for 2021-25, including inclusive growth, poverty reduction, and self-reliance.

An IMF mission led by Azim Sadikov held virtual discussions with Afghanistan officials in July and August 2020 on support for Afghanistan’s economic reform programme.

At the conclusion of the discussions, Sadikov: “I am pleased to announce that the Afghanistan authorities and IMF staff have reached a staff-level agreement on a three-and-half year Extended Credit Facility (ECF) arrangement…”

The agreement seeks to support authorities’ economic reform programme. Access under this arrangement is proposed at about $364 million. The agreement is subject to approval by the IMF Executive Board.

The board is expected to consider the request in late October, after the authorities implement the agreed prior action to improve accountability and transparency in procurement.

Sadikov added: “The new ECF arrangement will support authorities’ reform program to maintain macroeconomic stability and lay the ground for a sustained post-pandemic economic recovery while continuing to advance structural reforms…”

The reform programme will aim to gradually reverse the fiscal deterioration caused by the pandemic and create space for development spending while increasing self-reliance, mainly through improvements in customs and revenue administration and value-added tax implementation in 2022.

Institutional reforms under the new ECF arrangement will focus on addressing structural fragilities that hamper growth, economic resilience, and equitable social outcomes.

To that end, the program will aim to improve fiscal governance, strengthen the anti-corruption regime, and bolster the financial sector.

Key reforms include building capacity to manage public investment and fiscal risks, improving the effectiveness of the asset declaration regime, enhancing spending efficiency, and strengthening social protection.

Bolstering the financial sector, including by completing the reform of state-owned banks, will also be important to boost its capacity to contribute to growth.




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