IMF Approves New Credit Program for Afghanistan

Posted November 15th, 2011 at 11:55 am (UTC-5)
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The International Monetary Fund has approved a nearly $134 million loan for Afghanistan, more than a year after the Kabul Bank crisis prompted the group to suspend its credit program for the country.

The IMF announced the three-year loan arrangement Tuesday, saying it will support Afghanistan's economic reforms.

The U.N. agency says the program will help address Afghanistan's challenges as foreign troops withdraw, foreign aid declines and the government shoulders more security spending. The Afghan government will get $18.9 million of the loan immediately.

The IMF halted its credit program for Afghanistan in September of last year after Kabul Bank, then the nation's largest private financial institution, nearly collapsed because of mismanagement, cronyism and questionable lending. Foreign donor nations who look to the IMF for its seal of approval subsequently suspended tens of millions of dollars in aid to Afghanistan.

The IMF has said Afghan authorities have made “important progress” in managing the crisis at the bank, which lost more than $900 million in funds. But the IMF's deputy managing director said in Tuesday's statement that asset recovery and legal actions against those responsible for the fraud must be “pursued more forcefully.”