European Union on Tuesday announced that the organization will province Afghanistan with €2.9 million to be utilized as debt relief for supporting the country to maintain and progress towards sustainable development aims.

The EU stated that the ongoing COVID-19 pandemic has brought severe health, social and economic consequences around the globe, adding that “In many developing countries, debt levels were already high before the crisis and are now at risk of becoming unsustainable”.

According to the statement “Afghanistan has to cope with sharply declining revenue as a consequence of the crisis, driven by restrictions on economic activity and trade. Tax revenue dropped by 40 percent in April–May 2020 while the expenditure burden for health and other social services increased,”.

“The Afghan government successfully managed to borrow considerable amounts in highly concessional loans from the IMF to cover its fiscal deficit during the crisis. Although Afghanistan’s debt level still remains low, the current revenue position increased vulnerability,” the statement read.

“Today’s announcement is good news for Afghanistan, as this additional funding will free space to increase the social, health and economic spending in response to the COVID-19 crisis. This comes in addition to the substantial support the EU has already provided to Afghanistan to tackle the pandemic, both bilaterally and through the COVAX facility,” EU Chargé d’ Affaires Arnout Pauwels said in the statement.

“The EU funds are channelled through the IMF’s Catastrophe Containment and Relief Trust (CCRT), to which the EU and its Member States (Team Europe) are the largest donor, with support amounting to EUR 335.9 million globally, which represents 51% of the relief fund. Besides Afghanistan, 27 of the most vulnerable countries around the world will benefit from debt service relief through the support of the EU”, read the statement.

The statement indicated that this support comes at an important moment as the EU’s assessment of the government’s performance on the 2020 state and resilience budget support begins, the announced support will also help in Afghanistan’s macro-economic stability.

“Since the start of the pandemic, the EU has mobilised almost 147 million euros to Afghanistan to address the immediate health crisis and provide humanitarian assistance to the people in need. As the largest donor to the COVAX facility, the EU and its member states have also enabled the delivery of almost 500 000 doses of vaccine to Afghanistan”, the statement concluded.