KABUL - The EU announced Tuesday it will provide Afghanistan with 2.9 million Euros in grant funding to be used towards debt relief in a bid to help the country maintain its commitment and path towards reaching its Sustainable Development Goals.
The EU said in a statement the ongoing pandemic has carried severe health, social and economic consequences around the world, including in Afghanistan. In many developing countries, debt levels were already high before the crisis and are now at risk of becoming unsustainable.
“Afghanistan has to cope with sharply declining revenue as a consequence of the crisis, driven by restrictions on economic activity and trade. Tax revenue dropped by 40 percent in April–May 2020 while the expenditure burden for health and other social services increased,” the statement read.
“The Afghan government successfully managed to borrow considerable amounts in highly concessional loans from the IMF to cover its fiscal deficit during the crisis. Although Afghanistan’s debt level still remains low, the current revenue position increased vulnerability,” read the statement.
EU Chargé d’ Affaires Arnout Pauwels meanwhile said: “Today’s announcement is good news for Afghanistan, as this additional funding will free space to increase the social, health and economic spending in response to the COVID-19 crisis.
“This comes in addition to the substantial support the EU has already provided to Afghanistan to tackle the pandemic, both bilaterally and through the COVAX facility,” he said.
The support announced Tuesday will also contribute to Afghanistan’s macro-economic stability. This comes at an important moment, as the EU’s assessment of the government’s performance on the 2020 State and Resilience Budget Support begins. For years, economic stability and sound public finance management have been at the heart of the EU’s dialogue with countries receiving EU budget support.
Since the start of the pandemic, the EU has mobilised almost 147 million euros to Afghanistan to address the immediate health crisis and provide humanitarian assistance to the people in need. As the largest donor to the COVAX facility, the EU and its member states have also enabled the delivery of almost 500,000 doses of vaccine to Afghanistan. (ATN)