Press Release: Islamic Republic of Afghanistan—IMF Management Completes Second Review of Staff-Monitored Program

May 13, 2016

Press Release No. 16/218
May 13, 2016

On April 13, 2016, the Management of the International Monetary Fund (IMF) completed the second and final review under the Staff-Monitored Program (SMP)1 with Afghanistan. The focus of the nine-month SMP was on addressing fiscal and banking vulnerabilities, preserving macroeconomic stability, improving prospects for inclusive growth, and building a track record for a possible future IMF financial arrangement. Despite difficult circumstances, the authorities implemented the program successfully and hence IMF management completed the SMP on schedule.

Notwithstanding this progress, Afghanistan’s economic situation remains very difficult. Security and political uncertainties and the drawdown of international troops, together with weak governance and institutions, have held back growth and employment, and recently contributed to increased emigration. The outlook is challenging, with real GDP growth projected at 2 percent in 2016, only marginally higher than in 2015. A further deterioration in security conditions and shortfalls in donor aid pose important downside risks, while the banking system continues to face several challenges despite key reforms and measures taken by the central bank to address the vulnerabilities in the financial sector.

To help address these difficult issues, the Afghan authorities recently requested a Fund financial arrangement (Extended Credit Facility—ECF). The ECF would help tackle some of the challenges and thus assist in improving the conditions for sustainable growth and in catalyzing support from donors. IMF management welcomes this request, and discussions on the new arrangement are slated to begin in May 2016.


Islamic Republic of Afghanistan: Selected Economic Indicators, 2013–16
(Quota: SDR 323.8 million)
(Population: 30.6 million)
(Per capita GDP: US$654; 2014)
(Poverty rate: 35.8 percent; 2011)
(Main exports: opium, US$2.7 billion; carpets, US$83.4 million; 2014)
 
  2013 2014 2015 2016

 

 Act. Act. Est. Proj.
 

Output and prices1

 (Annual percentage change, unless otherwise indicated)

Real GDP

 3.9 1.3 1.5 2.0

Nominal GDP (in billions of Afghanis)

 1,117 1,173 1,174 1,234

Nominal GDP (in billions of U.S. dollars)

 20.2 20.4 19.2 …

Consumer prices (period average)2

 7.4 4.7 -1.5 3.0

Public finances (central government)3

 

  (In percent of GDP)

Domestic revenues and grants

 24.3 23.9 25.7 29.8

Domestic revenues

 9.8 8.5 10.4 10.7

Grants

 14.6 15.4 15.2 19.1

Expenditures

 25.0 25.6 27.1 29.0

Operating4

 17.8 19.4 20.0 21.0

Development

 7.2 6.2 7.1 8.0

Operating balance (excluding grants)5

 -8.0 -10.9 -9.6 -10.3

Overall balance (including grants)

 -0.6 -1.7 -1.4 0.8

Public debt6

 6.8 6.4 6.8 7.8

Monetary sector

 (Annual percentage change, end of period, unless otherwise indicated)

Reserve money

 12.4 13.3 3.1 8.0

Broad money

 9.4 8.3 3.3 9.7
         

External sector1

 (In percent of GDP, unless otherwise indicated)

Exports of goods (in U.S. dollars)

 719 783 670 740

Exports of goods (annual percentage change)

 18.0 9.0 -14.5 10.5

Imports of goods (in U.S. dollars)

 9,168 8.711 8,063 8,350

Imports of goods (annual percentage change)

 -9.3 -5.0 -7.4 3.6

Current account balance

        

Excluding official transfers

 -35.0 -35.5 -35.7 -41.2

Including official transfers

 7.9 7.8 4.5 3.3

Foreign direct investment

 0.5 0.6 0.7 1.0

Total external debt6

 6.9 6.4 7.6 7.8

Gross international reserves (in millions of U.S. dollars)

 6,886 7,248 6,786 6,786

Import coverage of reserves7

 7.8 9.4 8.5 8.5

Exchange rate (average, Afghanis per U.S. dollar)

 55.4 57.4 61.1 ...
 

Sources: Afghan authorities; United Nations Office on Drugs and Crime; and Fund staff estimates and projections. 

1 Excluding the narcotics economy.  

2 Revised with improved coverage. 

3 Since 2013, the fiscal year runs December 22–December 21 (in most years), which is moved aligned with the Gregorian calendar year. 

4 Comprising mainly current spending. 

5 Defined as domestic revenues minus operating expenditures. 

6 Public sector only. Incorporates committed but not yet delivered debt relief. Debt relief recorded fully at time of commitment. 

7 In months of next year's import of goods and services. 

1 An SMP is an informal agreement between country authorities and Fund staff to monitor the implementation of the authorities’ economic program. SMPs do not entail financial assistance or endorsement by the IMF Executive Board.

Islamic Republic of Afghanistan: Selected Economic Indicators, 2013–16
(Quota: SDR 323.8 million)
(Population: 30.6 million)
(Per capita GDP: US$654; 2014)
(Poverty rate: 35.8 percent; 2011)
(Main exports: opium, US$2.7 billion; carpets, US$83.4 million; 2014)
 
  2013 2014 2015 2016

 

 Act. Act. Est. Proj.
 

Output and prices1

 (Annual percentage change, unless otherwise indicated)

Real GDP

 3.9 1.3 1.5 2.0

Nominal GDP (in billions of Afghanis)

 1,117 1,173 1,174 1,234

Nominal GDP (in billions of U.S. dollars)

 20.2 20.4 19.2 …

Consumer prices (period average)2

 7.4 4.7 -1.5 3.0

Public finances (central government)3

 

  (In percent of GDP)

Domestic revenues and grants

 24.3 23.9 25.7 29.8

Domestic revenues

 9.8 8.5 10.4 10.7

Grants

 14.6 15.4 15.2 19.1

Expenditures

 25.0 25.6 27.1 29.0

Operating4

 17.8 19.4 20.0 21.0

Development

 7.2 6.2 7.1 8.0

Operating balance (excluding grants)5

 -8.0 -10.9 -9.6 -10.3

Overall balance (including grants)

 -0.6 -1.7 -1.4 0.8

Public debt6

 6.8 6.4 6.8 7.8

Monetary sector

 (Annual percentage change, end of period, unless otherwise indicated)

Reserve money

 12.4 13.3 3.1 8.0

Broad money

 9.4 8.3 3.3 9.7
         

External sector1

 (In percent of GDP, unless otherwise indicated)

Exports of goods (in U.S. dollars)

 719 783 670 740

Exports of goods (annual percentage change)

 18.0 9.0 -14.5 10.5

Imports of goods (in U.S. dollars)

 9,168 8.711 8,063 8,350

Imports of goods (annual percentage change)

 -9.3 -5.0 -7.4 3.6

Current account balance

        

Excluding official transfers

 -35.0 -35.5 -35.7 -41.2

Including official transfers

 7.9 7.8 4.5 3.3

Foreign direct investment

 0.5 0.6 0.7 1.0

Total external debt6

 6.9 6.4 7.6 7.8

Gross international reserves (in millions of U.S. dollars)

 6,886 7,248 6,786 6,786

Import coverage of reserves7

 7.8 9.4 8.5 8.5

Exchange rate (average, Afghanis per U.S. dollar)

 55.4 57.4 61.1 ...
 

Sources: Afghan authorities; United Nations Office on Drugs and Crime; and Fund staff estimates and projections. 

1 Excluding the narcotics economy.  

2 Revised with improved coverage. 

3 Since 2013, the fiscal year runs December 22–December 21 (in most years), which is moved aligned with the Gregorian calendar year. 

4 Comprising mainly current spending. 

5 Defined as domestic revenues minus operating expenditures. 

6 Public sector only. Incorporates committed but not yet delivered debt relief. Debt relief recorded fully at time of commitment. 

7 In months of next year's import of goods and services. 

1 An SMP is an informal agreement between country authorities and Fund staff to monitor the implementation of the authorities’ economic program. SMPs do not entail financial assistance or endorsement by the IMF Executive Board.




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