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IMF, Afghanistan reach preliminary agreement over Extended Credit Facility

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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.

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Iraqi intelligence report alleges oil smuggling network supplying Afghanistan and Turkey through Iran

The report highlights broader challenges facing regional authorities in combating illicit oil trade and enforcing international sanctions.

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An Iraqi intelligence report obtained by Sky News Arabia has revealed alleged large-scale crude oil smuggling operations from northern Iraq into Iran, where the oil is reportedly refined and later sold in regional markets, including Afghanistan and Turkey.

According to the report, shipments of crude oil are transported through land routes and unofficial trade channels into Iranian territory, where they undergo refining and processing before being re-exported to foreign markets.

The intelligence findings suggest that the alleged network is designed to bypass international sanctions and facilitate the movement of petroleum products outside official trade and financial monitoring systems.

The report further indicates that smuggling networks rely on informal transportation routes and cross-border commercial channels to maintain the collection, processing and distribution of oil products while avoiding regulatory oversight.

The revelations have raised concerns over cross-border smuggling, the loss of national resources and the potential impact of illicit oil trade on regional economies.

Security and political observers say the reported activities could put additional pressure on Iraqi authorities to strengthen border controls, monitor oil transportation routes and improve coordination with regional and international partners.

However, the allegations outlined in the intelligence report have not been independently verified, and further details about the networks involved, the quantities of oil transported and the scale of supplies reaching Afghanistan and Turkey remain unclear.

The report highlights broader challenges facing regional authorities in combating illicit oil trade and enforcing international sanctions.

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$30 million pharmaceutical investment launched in Herat as new production line opens

Meanwhile, the newly inaugurated serum and injectable production line is capable of producing up to 100,000 packages of serum per day.

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The foundation stone has been laid for three new pharmaceutical production blocks at Ovison Pharma in Herat, with an investment of $30 million, while the factory’s new serum and injectable production line has also been inaugurated.

The new production blocks will be constructed on a 3,000-square-metre site, with each facility planned to have five floors. Equipped with advanced machinery and designed to meet international standards, the expansion is expected to significantly increase the factory’s pharmaceutical production capacity.

Meanwhile, the newly inaugurated serum and injectable production line is capable of producing up to 100,000 packages of serum per day.

The expansion marks a significant step toward strengthening Afghanistan’s pharmaceutical industry, increasing domestic production and reducing the country’s reliance on imported medicines.

The investment is also expected to support the development of local manufacturing capacity and improve access to domestically produced pharmaceutical products.

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Afghanistan approves new foreign investment policy in bid to attract international investors

The decisions have been forwarded to the office of the Supreme Leader of the Islamic Emirate for final approval.

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Afghanistan’s Economic Commission has approved a new foreign investment policy aimed at attracting international investors, improving investment opportunities and supporting the country’s economic growth.

The decision was made during the commission’s regular meeting, chaired by Mullah Abdul Ghani Baradar, Deputy Prime Minister for Economic Affairs, at the Marble Palace on Monday.

According to the Deputy Prime Minister’s Office for Economic Affairs, the proposed policy was presented by a committee established under the leadership of the economic deputy office. Following a comprehensive review and consideration of the commission’s recommendations, the policy was approved.

The policy aims to regulate foreign investment activities, facilitate investment procedures, create a favourable environment for investors, ensure investment security and promote Afghanistan’s economic growth and development.

During the meeting, the commission also approved a proposal concerning the payment of fixed taxes by commercial import companies at the country’s customs offices.

Officials said implementing the proposal would create additional facilities and simplify procedures for importing businesses.

The decisions have been forwarded to the office of the Supreme Leader of the Islamic Emirate for final approval.

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