Insecurity hurting Afghan economic growth: IMF

Monitoring Desk

KABUL: Afghanistan continues to face daunting challenges, with the perilous security situation hurting confidence and economic growth, says a top International Monetary Fund (IMF) official.

“The prospect of a large influx of Afghan refugees from neighboring countries is compounding these challenges,” said Christoph Duenwald, who led an IMF team to Afghanistan.

The team visited Baku during March 8-16 to conduct discussions on the third review of Afghanistan’s economic programme supported by a three-year IMF Extended Credit Facility (ECF) arrangement.

A statement from IMF said the team met Afghan officials to discuss the latest economic developments and review implementation of reforms under the ECF.

At the end of the mission, Duenwald said the two sides reached staff-level agreement on the completion of the third review under the ECF arrangement.

On completion of the review, SDR4.5 million will be paid to Afghanistan, bringing total disbursements to SDR18 million. “Afghanistan’s GDP growth for 2018 is projected at 2.5 percent, the same rate as recorded in 2017, as the economy continues to face challenging security conditions,” Duenwald said.

Inflation is expected to average about 5 percent this year, as donor grants continue to finance large budget and trade deficits allowing treasury cash balances and international reserves to remain at comfortable levels.

The team commended the Afghan authorities for prudent macroeconomic management and achieving progress under challenging circumstances, and discussed follow up actions that would help move the reform agenda forward.

“The IMF remains committed to supporting Afghanistan and its people and will continue to actively engage in a dialogue with the authorities on their reform program with the aim of maintaining macro-financial stability, reinvigorating growth, and building a healthy economy to benefit all Afghans.”