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IMF approves new credit program for Afghanistan

The International Monetary Fund says it has approved a nearly $134 million loan for Afghanistan, saying its government has made progress in addressing governance and accountability issues during the Kabul Bank crisis.

Afghanistan has been without IMF backing for more than a year.

The IMF suspended its credit program for the country because of mismanagement at Kabul Bank -- the country's largest private financial institution -- that made hundreds of millions of dollars in fraudulent and questionable loans.

The IMF's country director, Axel Schimmelpfennig, said on Tuesday the Afghan government had taken steps to minimize the scandal's fallout, was working to repay loans and implement economic and banking reforms.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

KABUL, Afghanistan (AP) -- The Afghan government said Tuesday that the International Monetary Fund had decided to reinstate a credit program for the country -- a move that will revive the flow of international aid that was suspended over the Kabul Bank crisis.

Afghanistan has been without IMF backing for more than a year. Some donor nations had already stopped authorizing payments to Afghanistan.

The IMF had suspended the credit program in 2010 after the Kabul Bank, then the largest private financial institution in Afghanistan, nearly collapsed because of mismanagement and hundreds of millions of dollars in questionable loans.

The restoration of credit now allows Afghanistan's international partners to re-engage in the nation's development agenda.

The Afghan Finance Ministry said the IMF had approved a three-year $129 million loan that will allow the government to undertake critical reforms in the banking and financial sector, further fiscal reforms in the customs and revenue departments and improve public financial management.

The IMF is expected to formally announce its decision later Tuesday.

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