Da Afghanistan Bank Holds a Press Conference to Announce Successful Implementation of Monetary Policies

Da Afghanistan Bank organized a press conference on Saturday - 31 Dec. 2016 - to announce its latest achievements towards implementation of monetary and currency policies in the effort to ensure transparency and accountability to people.

In the conference, while referring to the success of Da Afghanistan Bank in attaining all the defined objectives of the bank as to monetary and currency policies during FY 1395, Khalil Sediq the governor of Da Afghanistan Bank said, "despite a great deal of challenges arisen out of an atmosphere of uncertainties in economy, lack of currencies’ inflows and persistent trade deficit, we managed to protect the stability of exchange rate and maintain fluctuation at its lowest level over 1395 by adopting prudent monetary and currency policies commensurate with country’s economic conditions and developments".

The following section provides full transcript of Khalil Sediq’s speech in the event:

Da Afghanistan Bank, the Central Bank of Afghanistan, is honored to proclaim the most significant gains in successful implementation of monetary policy over FY 1395 considering observing the principle of ensuring transparency and accountability towards the nation.

1. Da Afghanistan Bank has successfully hit all the bank’s targets of conducting monetary and currency policies in the FY 1395 by taking proper measures.
2. Da Afghanistan Bank has lived up to all its commitments towards monetary and banking affairs under economic program between Government of Afghanistan and the IMF. In the year at stake, the target for the growth of reserve money as operational objective of monetary policy was ten percent. Da Afghanistan Bank fortunately managed to preserve the growth level of reserve money below target even though the government expenditures took surge towards end of the year.
3. Even as a basket of currencies of many world economies went through sharp fluctuations and some major currencies depreciated substantially in the FY 1395, Da Afghanistan Bank strived to maintain stability of Afghani exchange rate and keep its fluctuation at its minimum by adopting appropriate monetary and currency policies consistent with the country’s economic situation and changes despite a mass of hindrances raised by dominance of uncertainties over the country’s economy, decline in cash inflows and sustained trade deficit. Afghani appreciated 2.3 per cent, 5.5 per cent and 21.73 per cent against US dollar, euro and sterling pound respectively.
4. An amount of US$ 50 million was set to be collected through foreign reserves. By striking a reasonable balance between supply of money and collection of extra money from market, plus 24 per cent decrease in annual auction of US dollar over the past year, Da Afghanistan Bank has been able to add an additional amount of US$ 350 million on the country’s currency reserves. However, last year the bank was forced to undergo a decline of US$ 250 million in its currency reserves.
5. In the year ended, Da Afghanistan Bank made an effective use of capital notes and slightly released itself from obligation of auctioning foreign currencies and brought the outstanding capital notes of the bank to AF 43 billion at the end of FY 1395.
6. Da Afghanistan Bank worked hard to prevent weakening of public purchasing power and imposition of inflation-related taxes by regulating the level of money supply in line with level of economic growth as well as a bearable and undisruptive rate of inflation. In the beginning of the fiscal year, the inflation rate entered into positive range and covered an upward trajectory in the next nine months. In the meantime, the price growth dropped at the end of the year. According to the recent figures, annual growth rate of inflation was recorded 4.6 per cent in Qaws 1395.
7. Aside from these achievements, Da Afghanistan Bank also undertook suitable and required steps to develop a legal and regulatory framework and stabilize and strengthen the financial and banking sectors, improve the payment system, manage and govern the country’s currency reserves. Da Afghanistan Bank specifically drafted and approved or reviewed a handful of regulations including Corporate Governance Regulation, Asset Classification and Provisioning Regulation, Related Person Regulation, Fit and Proper Person Regulation, E-Money Institutions Regulation, Anti-Money Laundering and Proceeds of Crime Law – Preventative Measures for Financial Institutions Regulation, Money Service Providers Regulation, Financial Lease Regulation to develop legal and regulatory framework of the country’s financial sector.
8. For the fiscal year 1396, Da Afghanistan Bank is committed to play a marked and effective part in facilitating a favorable and conducive environment for money aimed to maintain stability and strengthen economic sustainability by adopting reasonable policies.