Press Release No. 10/296

Press Release: IMF and Afghanistan Reach Staff-Level Agreement on New Three-Year Extended Credit Facility Program

July 20, 2010

A delegation from the International Monetary Fund (IMF), led by Mr. Masood Ahmed, Director of the Middle East and Central Asia Department, attended the Kabul International Conference on Afghanistan on July 20, 2010. At the conclusion of the visit, Mr. Ahmed issued the following statement:

“We were pleased to participate at the Kabul Conference, which provided an excellent platform to exchange views with Afghan officials and a wide range of representatives from the international community on Afghanistan’s efforts to improve security and put the country on a sustainable path of reconstruction and development.

“We are also pleased to announce that an agreement has been reached between the IMF staff and the authorities on a new three-year economic program that could be supported by the Extended Credit Facility (ECF). The main goals of the program are to move towards financial sustainability, ensure that the money spent is well used, and build capacity for policy implementation. The program will complement the broader development agenda that bilateral and multilateral partners will be supporting and will include a package of technical assistance from the IMF.

Mr. Gelbard, IMF mission chief for Afghanistan added “Despite serious constraints, Afghanistan has been making progress under its economic program. Growth has been strong, inflation has been controlled, and tax collection has grown significantly since 2009. The government is committed to consolidating these achievements under its new program. The program contains policies to keep inflation low, strengthen banking supervision and regulation, achieve sustained increases in fiscal revenues, ensure transparency in the mining sector, and improve efficiency in the budget process and public spending while protecting the poor.

The agreement reached with the authorities is subject to approval by IMF management and the Executive Board. Consideration of the program by the Executive Board is expected in late August. Access to Fund financing under the program would amount to SDR 85 million (US$125 million).