April 17, 2014

Afghanistan and IMF reach agreement for fresh aid

By Meena Haseeb - Tue Feb 05 2013, 11:37 am

Afghanistan and IMF reach agreement for fresh aidThe International Monetary Fund (IMF) on Monday announced it had reached agreement with Afghanistan on the reform path needed to unlock the next aid installment for the war-ravaged country.

IMF in November 2011 granted Afghanistan a $133.6 million line of credit to help the country through the withdrawal of foreign military forces in 2014.

However only two installments of $18 million each have been disbursed by International Monetary Fund (IMF) so far.

According to a stement released by IMF, following a two-week mission in Afghanistan, an IMF team reached “understandings” with the Afghan authorities on a reform path to allow fresh aid to be disbursed.

The source further added, the disbursement is contingent upon “the implementation of key structural benchmarks for submission of laws to parliament and strengthening banks’ capital.”

The statement also added, the Afghan authorities had agreed on the need to tighten monetary policy, in part to protect the country’s international reserves position.

The authorities also saw the need to increase revenues by strengthening customs measures and prepare to implement a value-added tax (VAT) in 2014, the IMF said following the statement adding that the Afghan authorities reiterated their commitment to complete “quickly” the winding down of former private bank Kabul Bank, the center of a scandal that had delayed the original IMF loan for a year.

In the meantiem IMF following its statement said, “The economic outlook for Afghanistan is broadly positive”, adding that growth and inflation were better than expected in 2012.

It also aded that the mission will prepare a report for the IMF executive board “following the implementation of the remaining key structural benchmarks,” it said.

The board, which represents the Fund’s 188 members, decides approval of aid disbursements.

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