Publication: Islamic Republic of Afghanistan - Joint World Bank-IMF Debt Sustainability Analysis
Date
2018-12
ISSN
Published
2018-12
Author(s)
World Bank
International Monetary Fund
Abstract
This debt sustainability analysis (DSA)
concludes that Afghanistan’s external and overall risk of
debt distress continues to be assessed as high.
Afghanistan’s debt sustainability hinges on continued donor
grants inflows (currently around 40 percent of GDP) against
substantial fiscal and external deficits and downside risks
to the economic outlook. A gradual replacement of grants by
debt financing leads to high risk of debt distress in the
long run and is captured by mechanical risk ratings based on
an extended 20-year period rather than the standard 10-year
period. Significant downside risks include the fragile
security situation, political uncertainty, domestic revenue
shortfalls, weather related risks, and regional economic
instability. The authorities should continue their efforts
to mobilize revenue and implement reforms, while donors
should continue to provide financing in the form of grants.
Debt management capacity, including the monitoring of
contingent liabilities emanating from state-owned entities
and public-private partnerships (PPPs), should be strengthened.
Citation
“World Bank; International Monetary Fund. 2018. Islamic Republic of Afghanistan - Joint World Bank-IMF Debt Sustainability Analysis; Islamic Republic of Afghanistan - Joint World Bank-IMF Debt Sustainability Analysis. © World Bank, Washington, DC. http://openknowledge.worldbank.org/handle/10986/32571 License: CC BY 3.0 IGO.”