Press Release No. 16/111

Press Release: IMF Staff Completes Mission for a Staff-Monitored Program to Afghanistan

March 15, 2016

An International Monetary Fund (IMF) team led by Mr. Christoph Duenwald met with the Afghan authorities in Istanbul during February 24 – March 4, 2016 to discuss the second and final review of Afghanistan’s Staff Monitored Program (SMP). Following the mission, Mr. Duenwald issued the following statement:

“The mission reviewed Afghanistan’s performance under the SMP, which focused on improving government revenues, strengthening the banking system, and building a track record for a future IMF financial arrangement. Staff found performance to have been satisfactory, with all end-December 2015 quantitative targets met and significant progress on structural benchmarks, including in the financial sector area. The mission commended the authorities for taking action on these outstanding commitments under challenging circumstances.

“Political and security uncertainties have been a drag on economic activity in Afghanistan, and have worsened unemployment and poverty. Continued attacks by insurgents have complicated the implementation of reforms, undermined private sector confidence and economic activity, and contributed to increased emigration.

“For 2016, staff expects that the growth of real GDP would be marginally higher than that of 2015, with inflation picking up to 3 percent following the depreciation of the Afghani in 2015. The budget is projected to deliver a small surplus this year, in part due to an increase in disbursement of grants following a re-phasing from 2015 to 2016. The external current account (after grants) is expected to remain in surplus, implying that international reserves should remain at a comfortable level.

“Staff will present IMF management with a report on the second and final review of Afghanistan’s SMP next month. 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, including their desire for engagement with the Fund on a possible subsequent financial arrangement.”