January 13, 2010
1. This statement contains information on the Islamic Republic of Afghanistan that has become available since the staff report was circulated on December 29, 2009. The information does not change the thrust of the staff appraisal.
2. Headline inflation (year-on-year) was minus 13.2 percent in December, reflecting recent declines in domestic food prices. Core inflation, measured by nonfood inflation, was 0.9 percent, up from minus 0.6 percent in November.
3. Fiscal data for the period March-November 2009 show that domestic revenues totaled Af 39 billion, suggesting that collection will comfortably exceed the envisaged indicative target for December of Af 41.1 billion. The strong revenue performance reflects the impact of the revenue measures implemented last year and the recovery of the economy.
4. Based on preliminary monetary data for December, the envisaged indicative targets for currency in circulation, net international reserves, and net central bank financing of the government were met, while the indicative target for reserve money was missed by a small margin (one percent).
5. The 2008/09 audit of the central bank has been finalized and posted on the central bank’s website. The auditors had found a minor error in the gold valuation. Based on advice from the Bank for International Settlements, the gold has been revalued by discounting US$2 per troy ounce from the official London price. The adjustment does not affect the measurement of the quantitative performance criteria on net international reserves.
6. The authorities have been unable to begin publishing operational and financial information on the state electricity company (structural benchmark for December 2009) because of difficulties in obtaining and reconciling financial information (the company has just been corporatized and its management replaced). The authorities intend to begin regular reporting in March 2010.
7. The authorities have implemented the HIPC completion point trigger on mining. World Bank staff has determined that the recently approved mining regulations are sufficient to consider the trigger to be implemented. Fund and Bank staffs are finalizing the documentation for immediate Board distribution. The authorities have requested an accelerated clearance process and an early Board meeting to be able to highlight debt relief and their achievements at the forthcoming International Conference on Afghanistan in London on January 28.