IMF, World Bank announces $1.6 bn aid to Afghanistan

Ahead of the crucial London conference, the World Bank and the International Monetary Fund (IMF) today announced a $1.6 billion debt relief programme for Afghanistan.

The Boards of Directors of both institutions agreed that the country has taken the necessary steps to reach the "completion point" under the enhanced Heavily Indebted Poor Countries (HIPC) Initiative, an official statement said.

With this Afghanistan has become the 27th country to reach the completion point under the Initiative. "This will generate total debt service savings of $1.6 billion, which include $1.3 billion from the HIPC Initiative, $260 million from Paris Club creditors beyond HIPC, and $38.4 million from the Multilateral Debt Relief Initiative (MDRI)," it said.

"The Afghan government has demonstrated a very strong commitment to an ambitious reform programme since it reached its HIPC decision point in 2007," said Nicholas J Krafft, World Bank Country Director for Afghanistan.

"This is a very commendable achievement given the deteriorating security situation and political uncertainty over the recent election year. On a cautionary note, even after HIPC debt relief Afghanistan will remain a country under high risks of debt distress due to its reliance on donor funding," Krafft said.