IMF extends $320 million credit line to Afghanistan

The International Monetary Fund approved the extension of $320 million in credit to Afghanistan to help it manage the Covid-19 health crisis and lay the foundation for an economic recovery after Covid-19.

The credit line will help the Central Asian country “anchor economic reforms and catalyse donor financing”, the fund said.

The amount disbursed is about 80 per cent of Afghanistan’s quota with the IMF and will support plans to preserve macroeconomic stability, support sustainable growth, reduce poverty and undo the fiscal damage caused by the health crisis.

“The Covid- 19 pandemic continues to weigh heavily on Afghanistan’s economy and livelihoods,” said Mitsuhiro Furusawa, deputy managing director and acting chairman of the fund’s executive board.

“The authorities’ determined response and expedient donor support have prevented a humanitarian crisis. However, the pandemic has set back progress toward self-reliance.”

Kabul will receive about $115m immediately, with the balance spread out over 42 months, pending semi-annual reviews.

Domestic revenue mobilisation, underpinned by tax and customs administration reforms, will be crucial to protecting development spending and will form the basis for a stronger social safety net, Mr Furusawa said.

The fund gave Afghanistan $220m in emergency assistance in May to help it cope with the economic fallout from the pandemic.

The amount was directed to help Afghan authorities plug an urgent balance of payments gap for this year and meet health and social relief expenses related to the pandemic.

Afghanistan’s gross domestic product in real terms is expected to shrink by 5 per cent this year, according to the Washington lender, and rebound by 4 per cent next year.

The virus had infected 42,033 Afghans and killed 1,556 as of yesterday, according to Worldometer.

Afghanistan’s gross domestic product in real terms is expected to shrink by 5 per cent this year, the IMF said