Afghan farmers earn about $1 bln from opium: IMF

WASHINGTON (Reuters) - Afghan farmers earned about $1 billion from opium production in 2007, by far the country's largest cash crop, the International Monetary Fund said on Wednesday.

The IMF said opium production in Afghanistan had spiraled up to 8,200 tons in 2007 from 185 tons in 2001.

It said Afghanistan's share of world supply increased to about 93 percent in 2007 from 52 percent in 1995, making it the world's largest opium producer despite efforts to bring production under control since the fall of the Taliban six years ago.

The IMF said it was not well qualified to comment on Afghanistan's opium production, and cited figures from the United Nations Office on Drugs and Crime that estimate the total value of the opium harvest in Afghanistan was worth about $4 billion in 2007, compared with $2.7 billion in 2005.

"Given the size of the opium economy, clearly a good part of it is injected though either consumption or higher savings in the economy," Mohamad Elhage, mission chief for Afghanistan, told a conference call with reporters.

While opium production has flourished in the south and west of the country, Elhage said the worsening security situation in Afghanistan was having a broad impact on the overall economy, in particular on foreign direct investment.

"We have seen a reduction to some extent in foreign direct investment and implications on the budget because more spending will be allocated to security either through the central government budget or through the external budget, which is funded by donors," Elhage said.

"So clearly the security situation is not in terms of achieving fiscal sustainability in the period ahead and also it is having an impact on the investment climate," he added.

(Reporting by Lesley Wroughton; Editing by Chizu Nomiyama)