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Opinion

Remembering Afghanistan's Successes Is Important

In such challenging times, it’s all the more important to take note of successes that will ultimately lead to stability, prosperity and self-reliance in Afghanistan.

News reports in recent weeks have told an unsettling story about developments in Afghanistan. The massive explosion in Kabul on May 31st, in which so many lost their lives, was followed by attacks elsewhere in the country.

Political tensions are threatening to derail efforts to arrive at a durable peace, without which a robust economic recovery will remain elusive. 

In such challenging times, it’s all the more important to take note of successes that will ultimately lead to stability, prosperity and self-reliance in Afghanistan. 

Growth increased last year, inflation remains in single digits, and exports started to grow, even if from a low base.

Last month, Afghanistan was removed from the list of countries perceived to be non-cooperative in the global fight against money laundering and terrorist financing. And in May, based on measures taken by the government of Afghanistan to strengthen macroeconomic management and tackle corruption, the first review of an economic reform program supported by a financial arrangement with the International Monetary Fund (IMF) was completed successfully.

This led to a disbursement of $6 million by the IMF for a total of over $12 million since the inception of the arrangement. It also signaled to the donors that economic reforms are on track. 

Many people in Afghanistan, worried about security and maintaining a livelihood, are probably unaware of the IMF’s role in supporting Afghanistan’s government implement much-needed economic reforms. Let us explain what that role is. 

Afghanistan has been a member of the IMF since 1955, and our involvement deepened in 2002 when IMF support was instrumental in helping erase nearly all of Afghanistan’s external debt.

Since then, the IMF has continued to help rebuild the economy and advise the government on economic reform policies, based in part on our extensive experience with fragile and post-conflict states. Our presence in the country did not come without human cost: one of our staff members, and a friend to so many in Afghanistan, Wabel Abdallah, was tragically killed in Kabul in 2014.

The IMF stepped up its engagement with Afghanistan after economic challenges intensified with the drawdown of international troops in 2014. We would like to highlight three particularly important aspects of the current IMF support to Afghanistan’s reform agenda:

Fighting corruption, which is still rampant in Afghanistan. The IMF is helping the government strengthen its legal framework to ensure that corruption is criminalized in line with international standards, and that high-level government officials are held accountable to the public—for example, with the public declaration of their assets at http://anti-corruption.gov.af/en/page/test/14010. While Afghanistan has made progress on both fronts, more needs to be done.

Replenishing Afghanistan’s coffers. Since 2014, with the help of the IMF, the government has succeeded in increasing revenue by more than 50 percent. This was achieved through reforms in the revenue and customs departments and modifications to the tax regime.

Increased revenues are now spent on health, education and infrastructure projects. In addition to helping the economy become more self-reliant, this achievement sends a powerful signal to donors that the Afghanistan project is a viable one. 

Strengthening the banking sector. The IMF has been supporting the Ministry of Finance and Da Afghanistan Bank to overcome the negative legacy of the 2010 Kabul Bank crisis in which the Afghan people were defrauded out of one billion US dollars.

The crisis left a substantial gap in Da Afghanistan Bank’s balance sheet, as it lent the government money to help Kabul Bank depositors recover their funds. The program supported by the IMF aims to fill this gap by end-2019, replenishing the DAB’s reserves and strengthening its role in ensuring the stability of the Afghan financial system. While it is early days, the government is on track in realizing this objective.

The task of building a prosperous future is enormous. It requires dedication and hard work both from the people of Afghanistan and from the international community.

The IMF is deeply committed to this goal and is working closely not only with Afghanistan but also with international partners, especially the World Bank, which is doing vital work in Afghanistan, to achieve it. While peace has so far proven elusive, we are helping to build its economic foundations through strong institutions. In turn, these will allow for effective use of the substantial foreign aid flowing into the country and will help establish a dynamic private sector to invest and create the jobs needed to set Afghanistan on a path towards prosperity. 

Opinion

Remembering Afghanistan's Successes Is Important

In such challenging times, it’s all the more important to take note of successes that will ultimately lead to stability, prosperity and self-reliance in Afghanistan.

Thumbnail

News reports in recent weeks have told an unsettling story about developments in Afghanistan. The massive explosion in Kabul on May 31st, in which so many lost their lives, was followed by attacks elsewhere in the country.

Political tensions are threatening to derail efforts to arrive at a durable peace, without which a robust economic recovery will remain elusive. 

In such challenging times, it’s all the more important to take note of successes that will ultimately lead to stability, prosperity and self-reliance in Afghanistan. 

Growth increased last year, inflation remains in single digits, and exports started to grow, even if from a low base.

Last month, Afghanistan was removed from the list of countries perceived to be non-cooperative in the global fight against money laundering and terrorist financing. And in May, based on measures taken by the government of Afghanistan to strengthen macroeconomic management and tackle corruption, the first review of an economic reform program supported by a financial arrangement with the International Monetary Fund (IMF) was completed successfully.

This led to a disbursement of $6 million by the IMF for a total of over $12 million since the inception of the arrangement. It also signaled to the donors that economic reforms are on track. 

Many people in Afghanistan, worried about security and maintaining a livelihood, are probably unaware of the IMF’s role in supporting Afghanistan’s government implement much-needed economic reforms. Let us explain what that role is. 

Afghanistan has been a member of the IMF since 1955, and our involvement deepened in 2002 when IMF support was instrumental in helping erase nearly all of Afghanistan’s external debt.

Since then, the IMF has continued to help rebuild the economy and advise the government on economic reform policies, based in part on our extensive experience with fragile and post-conflict states. Our presence in the country did not come without human cost: one of our staff members, and a friend to so many in Afghanistan, Wabel Abdallah, was tragically killed in Kabul in 2014.

The IMF stepped up its engagement with Afghanistan after economic challenges intensified with the drawdown of international troops in 2014. We would like to highlight three particularly important aspects of the current IMF support to Afghanistan’s reform agenda:

Fighting corruption, which is still rampant in Afghanistan. The IMF is helping the government strengthen its legal framework to ensure that corruption is criminalized in line with international standards, and that high-level government officials are held accountable to the public—for example, with the public declaration of their assets at http://anti-corruption.gov.af/en/page/test/14010. While Afghanistan has made progress on both fronts, more needs to be done.

Replenishing Afghanistan’s coffers. Since 2014, with the help of the IMF, the government has succeeded in increasing revenue by more than 50 percent. This was achieved through reforms in the revenue and customs departments and modifications to the tax regime.

Increased revenues are now spent on health, education and infrastructure projects. In addition to helping the economy become more self-reliant, this achievement sends a powerful signal to donors that the Afghanistan project is a viable one. 

Strengthening the banking sector. The IMF has been supporting the Ministry of Finance and Da Afghanistan Bank to overcome the negative legacy of the 2010 Kabul Bank crisis in which the Afghan people were defrauded out of one billion US dollars.

The crisis left a substantial gap in Da Afghanistan Bank’s balance sheet, as it lent the government money to help Kabul Bank depositors recover their funds. The program supported by the IMF aims to fill this gap by end-2019, replenishing the DAB’s reserves and strengthening its role in ensuring the stability of the Afghan financial system. While it is early days, the government is on track in realizing this objective.

The task of building a prosperous future is enormous. It requires dedication and hard work both from the people of Afghanistan and from the international community.

The IMF is deeply committed to this goal and is working closely not only with Afghanistan but also with international partners, especially the World Bank, which is doing vital work in Afghanistan, to achieve it. While peace has so far proven elusive, we are helping to build its economic foundations through strong institutions. In turn, these will allow for effective use of the substantial foreign aid flowing into the country and will help establish a dynamic private sector to invest and create the jobs needed to set Afghanistan on a path towards prosperity. 

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