Business
IMF, Afghanistan reach preliminary agreement over Extended Credit Facility
The International Monetary Fund (IMF) and the Afghanistan authorities have reached a preliminary agreement on an economic reform program to be supported by a new three-and-half year US$364 million Extended Credit Facility (ECF).
This announcement comes just three months before the United Nations’ donor pledging conference for Afghanistan gets underway.
In a statement issued by the IMF on Friday, the fund said the ECF will help mitigate the economic impact of the Covid-19 pandemic, maintain macroeconomic stability, and underpin reforms for economic resilience and good governance.
The fund also stated that continued financial assistance from international partners is critical to support objectives of Afghanistan’s National Peace and Development Framework for 2021-25, including inclusive growth, poverty reduction, and self-reliance.
Leading the IMF’s team was Azim Sadikov, and virtual discussions were held with Afghan officials through July and August on the country’s economic reform program.
Sadikov said however that the agreement is subject to the approval of the IMF’s Executive Board, which would possibly consider the agreement in October after preliminary conditions have been met by Afghan authorities, including the improvement of accountability and transparency in procurement processes.
“The new ECF arrangement will support authorities’ reform program to maintain macroeconomic stability and lay the ground for a sustained post-pandemic economic recovery while continuing to advance structural reforms,” Sadikov said.
He said the reform program aims to gradually reverse the fiscal decline due to the pandemic and instead create space for development sending while increasing self-reliance.
He stated improvements in customs collections and revenue administration need to be improved and the planned Value Added Tax (VAT) process needs to be implemented in 2022.
“Monetary policy will continue to focus on maintaining price stability and a flexible exchange rate regime, while fostering confidence in the Afghani,” Sadikov said.
He also said that reforms, in accordance with the new ECF arrangement, will focus on addressing issues that hamper economic growth and resilience.
“To that end, the program will aim to improve fiscal governance, strengthen the anti-corruption regime, and bolster the financial sector,” he said.
“Bolstering the financial sector, including by completing the reform of state-owned banks, will also be important to boost its capacity to contribute to growth.
“Coming before the November pledging conference, the ECF arrangement is expected to catalyze donor financing, which is critical to support Afghanistan’s reform and development objectives under the multi-year National Peace and Development Framework,” he said.
The pledging conference is organized every four years and was last held in 2016 in Brussels.
This year, Finland will host the conference, which will be organized by both the UN and Afghanistan.
Previous international financial commitments largely end by December of this year.
Ariana Afghan Airlines has increased cargo flights between Kabul and Delhi to facilitate the transportation of commercial goods and support Afghan traders.
In a statement issued Saturday, the airline said it will now operate two scheduled cargo flights daily on the Kabul-Delhi route, up from one flight per day previously.
The airline said Afghan traders and commercial companies can use the daily cargo services to transport their goods quickly, safely and reliably between Afghanistan and India.
Ariana Afghan Airlines said it is working to further expand and improve its air cargo services to support trade, meet the needs of Afghan traders and facilitate Afghanistan’s exports and imports.
Business
Afghanistan, Turkmenistan agree to establish joint road transport commission
The sides also agreed to establish a joint commission to address road transport issues and improve coordination.
Afghanistan and Turkmenistan have agreed to establish a joint commission on road transport and facilitate transit between the two countries following two days of talks in Herat.
Afghanistan’s Ministry of Transport and Civil Aviation said the meeting brought together technical delegations from both countries to strengthen bilateral transport and transit cooperation.
The talks focused on easing visa procedures for Afghan and Turkmen drivers and traders, operationalising the Lapis Lazuli transit corridor and increasing the movement of transit vehicles between the two countries.
The sides also agreed to establish a joint commission to address road transport issues and improve coordination.
Representatives from Afghanistan’s ministries of foreign affairs, industry and commerce and the railway authority attended the talks, alongside the Ministry of Transport and Civil Aviation. Railway links, bilateral trade and wider transit cooperation were also discussed, with private-sector representatives expected to participate in future discussions.
The agreement comes as Turkmenistan works to strengthen its role as a regional transport and logistics hub, using its road, rail and Caspian Sea infrastructure to connect Central Asia with markets to the west and south.
A key part of that network is the International Seaport of Turkmenbashi, which links Turkmenistan with Azerbaijan and onward routes towards the South Caucasus and Europe.
Turkmenistan’s transport infrastructure also forms part of the wider Middle Corridor, or Trans-Caspian International Transport Route, connecting China and Central Asia with Azerbaijan, Georgia and Türkiye before reaching European markets.
For Afghanistan, the Lapis Lazuli Corridor is particularly important. It connects Afghanistan through Turkmenistan and across the Caspian Sea to Azerbaijan, Georgia and Türkiye, providing a potential route towards European markets.
Rail links such as the Herat-Torghundi line could further connect Afghanistan’s markets with Turkmenistan’s wider transport network.
The latest agreement puts road transport and transit facilitation at the centre of efforts by the two neighbours to expand trade and strengthen regional connectivity.
Business
TAPI gas deliveries to Afghanistan and Pakistan expected to begin in 2027
Turkmenistan regards TAPI as a key project for diversifying its gas exports and strengthening regional economic cooperation.
Turkmenistan expects natural gas supplies to Afghanistan and Pakistan through the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline to begin in 2027, according to the Turkmen Embassy in Islamabad.
Turkmen Ambassador Atajan Movlamov said construction of the strategically important Serhetabat-Herat section of the pipeline is expected to be completed by the end of this year.
Movlamov made the remarks during an Ambassadors’ Dinner hosted by the Lahore Chamber of Commerce and Industry in Islamabad.
He said the implementation of TAPI and other regional energy projects could strengthen Pakistan’s energy security while creating new opportunities for industrial development and economic growth.
The planned 1,800-kilometre pipeline is designed to transport up to 33 billion cubic metres of natural gas annually from Turkmenistan’s giant Galkynysh gas field through Afghanistan to Pakistan and India.
Turkmenistan regards TAPI as a key project for diversifying its gas exports and strengthening regional economic cooperation.
The Galkynysh field, which is the main resource base for TAPI, is among the world’s largest gas fields, with estimated reserves of more than 27 trillion cubic metres.
The project has faced years of delays, but recent construction and developments in the regional energy sector have renewed attention to TAPI as a potential link between Central Asian gas resources and South Asian energy markets.
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