KABUL (Pajhwok): A number of economists say Afghanistan’s economy had not collapsed despite the suspension of international aid after the political change. But banking restrictions caused the economy to suffer more than ever before.
In August, 2021, the previous government collapsed and the Islamic Emirate surged back to power after two decades of insurgency.
After the IEA return to power, the US froze more than nine billion dollars in Afghan assets belonging to Da Afghanistan Bank.
In its latest report titled “Afghanistan Economic Monitor”, the World Bank reviewed the economic situation in Afghanistan and announced that the inflation rate in the country was decreasing.
The World Bank said despite improvement in Afghanistan’s economic situation, the country’s trade balance deficit exceeded two billion dollars.
Revenue collection for the first four months of fiscal year 2023 was healthy, totaling 63 billion afghanis —16 percent up compared to the same period in the previous fiscal year.
Afghanistan’s total exports from Jan-May 2023 rose by 9 percent to reach US$ 0.73 billion, with coal exports being the main contributor. Vegetable exports saw a slight 1 percent increase during the period. Pakistan remains Afghanistan’s largest export market, followed by India.
Imports during Jan-May 2023 stood at US$ 3.1 billion, reflecting a substantial 36 percent growth compared to the same period in 2022, with the major components being food and minerals. The trade deficit for Jan-May 2023 widened to US$ 2.4 billion.
The primary reason for the revenue growth is border taxes such as Customs Duties and Business Receipt tax, which saw a 23 percent increase compared to the first four months of fiscal year 2022. The increased merchandise import has played a significant role in the higher collection at borders.
On the other hand, SIGAR said in its latest report that the United States was still the largest donor to the people of Afghanistan and after leaving the country, the US helped Afghanistan with more than 2.35 billion dollars.
Abdul Nasir Reshtiya, an expert on economic affairs and the executive head of the Union of Smelting Factories, told Pajhwok that despite all challenges and problems, Afghanistan’s economy did not collapse.
According to him, since Afghanistan’s economy was dependent on foreign aid and restrictions were imposed and aid was completely cut off, but Afghanistan’s economic situation improved day by day.
He said corruption had decreased and overall security ensured in Afghanistan. He said the investment process scaled up after life and financial safety of businessmen was guaranteed.
According to him, the situation could further improve if economic restrictions on Afghanistan are lifted.
Reshtiya said in these two years, the caretaker government announced stout support fpr traders, especially in the production sector and domestic goods, Afghanistan’s imports were managed, and the smuggling of raw materials also significantly decreased.
According to him, some factories that stopped operating during the previous government were reopened and the country was able to reach self-sufficiency or semi-self-sufficiency in 71 types of materials and goods.
Meanwhile, Eng. Nazmir Ziyarmal, an expert on economic issues, said Afghanistan had a weak economy from the past and had problems in terms of infrastructure.
He said in last two decades, huge of amount of aid flowed into Afghanistan from international community, which was good as far as the economic situation was concerned. However, no major improvement was made in this field.
According to him, after the political change in the country, a large number of people became unemployed and this phenomenon is directly related to the economic dilemma.
Ziarmal said the political change and restrictions on banking system inside and outside the country made the Afghan economy to suffer more than ever before.
He added private banks also faced problems and their customers were unable to withdraw money.
According to him, the continuation of this situation could push the country’s economy into a crisis.
Shabir Bashiri, an expert on economic issues, also told Pajhwok that contrary to public opinion and statistics provided by the UN about the depth of the humanitarian crisis, poverty and destitution in the country, Afghanistan’s national economy did not collapse in the last two years.
He added it was believed that the economy of Afghanistan would hit hard, but nothing got worse and all business and economic interactions were going on at a large and small level.
According to him, in addition to these issues, several other economic advantages such as maintaining the value of the afghani and controlling inflation and increasing exports have been preserved.
Also, Naqibullah, a resident of Kabul city, said he plans to go through smuggling routes from Nimroz to Iran and then to Iraq and Turkey.
According to him, most young people go to other countries due to unemployment, economic problems and poverty, and his goal is to make a living in other countries.
However, Abdulrahman Habib, the spokesman of the Ministry of Economy, told Pajhwok that despite banking restrictions for two years and the suspension of a number of development projects financed by foreign institutions, Afghanistan witnessed achievements in the economic field.
He pointed out that the freezing of the country’s assets, which has the status of a trade credit card with the countries of the world, has directly caused a decrease in commercial activities and foreign investments.
According to him, the continuation of this situation has a direct impact on the economic and living conditions of the country’s citizens.
Reconstruction
Work on mega projects such as Qush Tepa canal, Salang highway and Kabul-Kandahar highway has been launched after the establishment of the caretaker government in the country.
But Eng. Khoshal Sadat Yousafzai, an expert on reconstruction issues, said the incumbent government completed projects which had been 80 or 90 percent completed by the previous government.
He urged the caretaker government to appoint professionals to key positions so that all the reconstruction work could proceed in a standard way.
However, Rashad Azizi, one of the engineers in Kabul city, told Pajhwok that in the last two years, the reconstruction work was progressing well in different areas of Kabul and other provinces.
He called for the launch of more reconstruction projects in order to give jobs to the jobless.
According to him, now that the war is over, part of the government’s war budget should be used for reconstruction in different parts of the country.
Solution:
Abdul Nasir Reshtiya told Pajhwok that efforts should be made to increase Afghanistan’s political interactions with countries of the world, especially neighboring and regional countries, because this issue was directly related to the economy.
He urged the caretaker government to support investors more than before and use domestic products in government offices and support the local industry.
Meanwhile, the spokesperson of the Ministry of Economy also said that stabilizing GDP growth by prioritizing the agriculture, industry and mining sector, the main drivers for employment and production, was one of the goals of the ministry.
According to the ministry, encouraging domestic and foreign investors by using legal tools and tax incentives is one of the other long-term goals of this ministry.
He added that if banking sanctions were lifted and the country’s foreign exchange reserves released, Afghanistan would witness positive economic developments and GDP growth.
Earlier, the World Food Organization published a report saying that after the re-establishment of the Islamic Emirate in Afghanistan, about 23 million Afghans have faced economic problems.
Mullah Abdul Ghani Baradar, deputy prime minister for economic affairs, last week visited Turkey to attract investors.
sa/ma
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