UPDATE 1-Afghanistan economy to grow 11 pct this year-IMF

Mon Nov 12, 2012 12:04pm EST

Related Topics

By Anna Yukhananov
    WASHINGTON, Nov 12 (Reuters) - Afghanistan's economy is set
to grow 11 percent this year, boosted by a larger than expected
grain harvest, the International Monetary Fund said on Monday.
    The IMF also said inflation was lower than forecast,
touching 5 percent year-on-year in September, after visiting the
country for a second performance review of its new loan program.
    "The economic outlook is broadly positive," IMF team leader
Paul Ross said after a two-week visit to the country. "Growth
and inflation have been better than expected ... notwithstanding
high international food prices."
    The IMF suspended the Afghan program in 2010 after reports
of corruption, bad loans and mismanagement at Kabulbank, forcing
the central bank to take over the major lender. A new loan
program was renegotiated in November 2011 when the Fund
re-engaged with the Afghan government.
     The IMF has demanded that some of the assets of Kabulbank
be recovered from shareholders, which include Afghanistan's
elite, such as sitting ministers and an ex-warlord.
    The IMF said the government still needs to do more to
collect revenues and reform the financial sector, though it has
made some progress. The next steps are to submit a new banking
law to parliament, and to continue the recovery of Kabulbank's
assets. Recovering these assets would help restore investor
confidence and support more inclusive growth, Ross said.
    The IMF said it would continue to discuss the loan program
with the government in coming weeks. It previously approved an
$18.2 million disbursement to Afghanistan in June, after the
first program review.
FILED UNDER: