The European Union announced on Tuesday that it will provide Afghanistan with €2.9 million in debt relief. This is to assist the country in maintaining and progressing toward sustainable development goals.
According to the EU, the ongoing COVID-19 pandemic has had severe health, social, and economic consequences around the world. Reports from the EU stated that the debt levels in developing countries are causing a risk of becoming unsustainable.
“Afghanistan must cope with sharply declining revenue as a result of the crisis, which is exacerbated by restrictions on economic activity and trade,” according to the statement. Moreover, In April–May 2020, tax revenue decreased by 40%, while the expense of health and other social services increased.
During the crisis, the Afghan government took monetary help from IMF in extremely concessional loans to cover its fiscal deficit. While Afghanistan’s debt level remains low, the country’s current revenue situation has increased its vulnerability, according to the release.
Good news for Afghanistan
Today’s announcement is encouraging for Afghanistan, it opens a way for increased social, health, and economic investment. A ray of hope amidst the COVID-19 crisis. This comes on top of the significant support the EU has already provided Afghanistan to fight the pandemic. The EU has helped both bilaterally and through the COVAX facility.
“The EU funds are channelled into the IMF’s Disaster Containment and Relief Trust (CCRT), of which the EU and its Member States (Team Europe) are the main contributors, with EUR 335.9 million in total funding, accounting for 51 per cent of the relief fund. Apart from Afghanistan, 27 of the world’s most needy countries will benefit from debt relief.
According to the announcement, this assistance comes at a crucial time, as the EU begins to evaluate the government’s success on the 2020 state and resilience budget support. The announced assistance will also aid Afghanistan’s macroeconomic stability.
Lastly, the statement concluded that after the outbreak, the EU has sent nearly 147 million euros to Afghanistan. The EU has helped Afghanistan deal with the immediate health crisis and provide humanitarian aid to those in need. The EU and its member states, as the largest donors to the COVAX facility, have also supported the delivery of nearly 500 000 vaccine doses to Afghanistan.