{
  "title": "IMF Survey: Afghanistan to Get $133.6 Million IMF Loan",
  "publication": "IMF News, November 15, 2011",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/53/socar111511a",
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  "summary": "The IMF has approved a $133.6 million loan for Afghanistan to help the country maintain economic stability and begin laying the basis for fiscal sustainability and economic growth.",
  "publishDate": "2011-11-15",
  "sections": [
    {
      "heading": "Program overview and objectives",
      "content": "- The IMF has approved a $133.6 million loan for Afghanistan to help the country maintain economic stability and begin laying the basis for fiscal sustainability and economic growth.\n- The program is a three-year arrangement under the Fund’s Extended Credit Facility.\n- The program was endorsed by the IMF’s Executive Board on November 14.\n- Major program aims:\n  - Start addressing corruption, strengthen the banking system, and improve revenue collection.\n  - Make tangible progress on improving social conditions in one of the world’s poorest countries.\n  - Strengthen the hand of the economic team to push forward with difficult reform; acknowledge clear risks from vested interests that may oppose reforms."
    },
    {
      "heading": "Kabul Bank crisis and financial sector measures",
      "content": "- Crisis facts:\n  - Concerns about the soundness of Kabul Bank caused a run in September 2010, leading to the withdrawal of about half of its $1.3 billion in deposits.\n  - Kabul Bank represented nearly a third of the financial system’s assets.\n- Authorities’ actions taken:\n  - Kabul Bank put under receivership; its license revoked; shareholders’ rights and interests extinguished.\n  - A bridge bank—New Kabul Bank—established, with a business plan to put it up for sale in 2012.\n  - A comprehensive audit of Kabul Bank by an independent, internationally recognized firm is under way.\n- Program emphasis:\n  - Effectively manage the Kabul Bank crisis and strengthen the financial sector based on lessons learned."
    },
    {
      "heading": "Restoring stability, governance, and supervision",
      "content": "- Key requirements identified:\n  - Enforce rule of law in the banking sector to secure economic stability and donor engagement.\n  - Make faster progress on asset recovery and apply Afghan laws where crimes have been committed.\n  - Ensure the central bank is free from political interference to safeguard the banking system.\n- Legal and regulatory reform priorities:\n  - Revise existing banking law and regulations to align with the Basel Core Principles and Financial Action Task Force recommendations.\n  - Strengthen corporate governance, beneficial ownership, capital, large exposures, related parties, enforcement, and bank resolution.\n- Governance measures:\n  - Strengthen governance in the economic and financial sphere.\n  - Improve government capacity to deal with economic crime and tighten rule of law application in the financial sector.\n  - Reaffirmed commitment by Afghan authorities to critical anti-corruption and governance reforms."
    },
    {
      "heading": "Fiscal progress and revenue mobilization",
      "content": "- Recent progress:\n  - Domestic revenue amounts to about 11 percent of GDP, up from about 6½ percent of GDP collected in fiscal year 2005/06.\n- Medium-term fiscal targets:\n  - Authorities intend to increase revenues by another 4 percentage points of GDP over the next five years, including by introducing a value-added tax in 2014.\n- Fiscal risks and support needs:\n  - International troops scheduled to withdraw from the country by 2014, increasing government security spending and removing associated foreign spending.\n  - Donor support is expected to gradually decline over the medium term, adding to fiscal pressures.\n  - “The government cannot borrow to cover the financing gap. This would just lead to a fast and unsustainable buildup of debt,” said Axel Schimmelpfennig, IMF mission chief for Afghanistan.\n  - Continued donor support to the budget will be important for many years.\n- Debt relief:\n  - In early 2010, Afghanistan received $1.6 billion in debt relief from its official creditors under the Enhanced Heavily Indebted Poor Countries (HIPC) Initiative."
    },
    {
      "heading": "Growth potential and risks",
      "content": "- Growth projections and conditions:\n  - Afghanistan has the potential to grow by around 6 to 7 percent over the medium term, but this assumes a stable security situation and is subject to considerable uncertainty.\n- Key risks:\n  - Economic impact of troop withdrawal and evolution of the security situation; risks are clearly to the downside.\n  - Agriculture represents about 30 percent of GDP and is subject to weather fluctuations.\n- Mining sector opportunities:\n  - Afghanistan has rich mineral deposits not yet exploited; attracting large foreign investment requires security stabilization and improved legal framework.\n  - If mines are developed, associated roads and electricity infrastructure could benefit other businesses.\n  - Need for a strong fiscal regime and robust governance structures to harness benefits from mining."
    },
    {
      "heading": "Policy priorities under the program",
      "content": "- The government aims to achieve the following goals:\n  - Put Afghanistan on a medium-term path toward fiscal sustainability, including by increased domestic revenue mobilization.\n  - Contain inflation and ensure adequate central bank capitalization to allow it to follow its mandate.\n  - Improve governance to enhance the investment climate and lay the foundation for high and inclusive growth.\n  - Strengthen the financial sector by revising the legal and regulatory framework, including in the area of anti-money laundering, and enhancing supervision and enforcement.\n  - Achieve maximum recovery of Kabul Bank losses and apply Afghan law, as appropriate, in dealing with financial crimes.\n\nIMF Survey online, November 15, 2011.\n\n---\n\n\n References\n\n- https://www.imf.org/en/News/country-focus\n- PRESS CENTER\n- IMF Country Focus\n- In The News\n- Read press release\n- IMF blog on fragile states\n- Seminar on fragile states\n- Regional economic outlook\n- Afghanistan and the IMF\n- IMF program note on Afghanistan\n- Extended Credit Facility\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/53/socar111511a"
    }
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    "[Markdown version](/en/news/articles/2015/09/28/04/53/socar111511a/index.md)",
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    "Published: November 15, 2011",
    "The IMF has approved a $133.6 million loan for Afghanistan to help the country maintain economic stability and begin laying the basis for fiscal sustainability and economic growth.",
    "The program is a three-year arrangement under the Fund’s Extended Credit Facility.",
    "The program was endorsed by the IMF’s Executive Board on November 14.",
    "Major program aims:",
    "Crisis facts:",
    "Authorities’ actions taken:",
    "Program emphasis:",
    "Key requirements identified:",
    "Legal and regulatory reform priorities:",
    "Governance measures:",
    "Recent progress:",
    "Medium-term fiscal targets:",
    "Fiscal risks and support needs:",
    "Debt relief:",
    "Growth projections and conditions:",
    "Key risks:",
    "Mining sector opportunities:",
    "The government aims to achieve the following goals:",
    "[https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[IMF Country Focus](https://www.imf.org/en/news/country-focus)",
    "[In The News](https://www.imf.org/en/news/search)",
    "[Read press release](https://www.imf.org/external/np/sec/pr/2011/pr11412.htm)",
    "[IMF blog on fragile states](http://blog-imfdirect.imf.org/2011/09/07/finding-a-way-out-for-fragile-states/)",
    "[Seminar on fragile states](https://www.imf.org/external/pubs/ft/survey/so/2011/pol012411a.htm)",
    "[Regional economic outlook](https://www.imf.org/external/pubs/ft/survey/so/2011/CAR102511A.htm)",
    "[Afghanistan and the IMF](https://www.imf.org/external/country/AFG/index.htm)",
    "[IMF program note on Afghanistan](https://www.imf.org/external/np/country/notes/afghanistan.htm)",
    "[Extended Credit Facility](https://www.imf.org/external/np/exr/facts/ecf.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
  ],
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