January 13, 2010
The Executive Board of the International Monetary Fund (IMF) today completed the sixth review of the Islamic Republic of Afghanistan's economic performance under the Poverty Reduction and Growth Facility (PRGF). The completion of the review allows for an immediate disbursement of SDR 5.65 million (about US$8.89 million), which would bring total disbursements under the arrangement to SDR 75.35 million (about US$118.53 million).
In completing the review, the Executive Board also granted a waiver for the nonobservance of a June 2009 quantitative performance criterion related to the accumulation of net international reserves. The Board also approved a three-month extension of the arrangement to end-June 2010, a rephasing of disbursements, and the modification of the quantitative performance criteria for March 20, 2010.
The PRGF arrangement for the Islamic Republic of Afghanistan was approved in June 2006 for an amount equivalent to SDR 81.0 million (about US$127.41 million) (see Press Release No. 06/144).
Following the Executive Board's discussion, Mr. Murilo Portugal, Deputy Managing Director and Acting Chair, stated:
"Despite a very difficult security and political situation, the Afghan authorities have been successfully implementing their 2009/10 economic program. The economy has been recovering from last year's drought, inflation has declined, and tax collection has exceeded expectations. Strong economic growth and favorable inflation developments should contribute to improving living standards and alleviating poverty.
"The revised economic program for 2009/10 aims at consolidating the progress made. The authorities intend to focus monetary policy on keeping inflation low, and fiscal policy on accommodating higher security spending, preserving pro-poor public spending, and improving the execution of development outlays. They also remain committed to taking further measures to boost tax revenues, improve the transparency and efficiency of public enterprises, and ensure the enforcement of banking regulations.
"While security remains paramount, economic stability, support from donors, and an ambitious economic reform program focused on good governance, fiscal sustainability, and public and private investments will be essential to foster economic development and reduce poverty. The authorities have expressed interest in seeking continued Fund support after the current program expires in June 2010," Mr. Portugal said.
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