IMF approves $18.2 mln disbursement to Afghanistan

The International Monetary Fund (IMF) has approved an $18.2 million disbursement to Afghanistan under its loan program, saying that Kabul has made progress on structural reforms despite a difficult environment. The IMF said that Afghanistan had moved ahead on targets to draft a value-added tax law, set a strategy to fight economic crimes, and strengthen the central bank's capitalization framework. The IMF said it was releasing the second tranche of the $133.6 million loan program approved in November even though Kabul had not met a goal on fiscal revenues. "In a very difficult environment, Afghanistan has begun a transition toward greater macroeconomic stability and economic self-reliance," IMF deputy managing director Nemat Shafik said. "The authorities have also reported on asset recovery from Kabul Bank where cash recoveries have increased following a presidential decree," she added. The approval followed the IMF first performance review of the country's new loan program. The IMF suspended the Afghan program in 2010 after reports of corruption, bad loans and mismanagement at Kabulbank, forcing the central bank to rake over the major lender. A new loan program was renegotiated in November 2011. The IMF has demanded that some of the assets of Kabulbank be recovered from shareholders, which include Afghanistan's elite including sitting ministers and an ex-warlord. IMF Deputy Managing Director Nemat Shafik said no shareholder of Kabulbank had repaid the authorities in full and their cases had been referred to a special court. She said the IMF program would focus on strengthening the financial sector and building economic governance, while improving the country's finances. "While progress has been made on all these fronts, strong government ownership of the program remains crucial to resist opposition from vested interests," Shafik added.