Afghan Parliament OKs Reform Proposal Needed for Release of IMF Funds

The Afghan parliament has agreed to start repaying the country’s central bank the funds provided to bail out Kabul Bank, a decision expected to help free up billions of dollars worth of foreign aid from the International Monetary Fund and other donors.

Repayment of the $825 million spent by Da Afghanistan Bank, the country’s central bank, to save Kabul Bank, is among the conditions set by IMF for the renewal of the loan program it suspended in September 2010, when news of corruption and fraud at the country’s largest private bank first emerged, Reuters reports.

The IMF’s continued engagement in Afghanistan, meanwhile, is a prerequisite sought by most other donors before pledging or disbursing aid to the Asian country. Several donors, including Norway, have already suspended their aid programs in Afghanistan until the resolution of the Kabul Bank controversy.

The Afghan parliament’s approval on Oct. 15 of a reform proposal to repay Da Afghanistan Bank over eight years, starting with a first payment of $51 million, follows a staff-level agreement between the IMF and Afghan government officials on a three-year loan program worth $129 million. The IMF board is expected to discuss whether or not to approve this program in November.

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About the author

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    Ivy Mungcal

    As former senior staff writer, Ivy Mungcal contributed to several Devex publications. Her focus is on breaking news, and in particular on global aid reform and trends in the United States, Europe, the Caribbean, and the Americas. Before joining Devex in 2009, Ivy produced specialized content for U.S. and U.K.-based business websites.