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ADB Approves $100 Million Grant to Support Afghanistan’s COVID-19 Response

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(Last Updated On: December 3, 2020)

The Asian Development Bank (ADB) on Wednesday approved a $100 million grant to help the Government of Afghanistan respond to the coronavirus disease (COVID-19) pandemic, the statement said.

“ADB reaffirms its full commitment to supporting Afghanistan in its fight against COVID-19 and reducing the adverse impact of the pandemic on the lives of Afghans and the economy,” said ADB President Masatsugu Asakawa. “The assistance will help strengthen the health system, expand social protection for the poor and vulnerable population while ensuring gender mainstreaming, and support macroeconomic stabilization and job creation in Afghanistan.”

Afghanistan’s economic outlook has deteriorated during the COVID-19 pandemic because of business lockdowns, a sharp drop in household incomes, and a downturn in regional trade and remittances. ADB forecasts Afghanistan’s gross domestic product (GDP) to contract by 5.0% this year. Nearly 250,000 micro, small, and medium-sized enterprises (MSMEs), accounting for over 80% of nonagricultural employment, have been hit hard. The unemployment rate is projected to rise to 37.9% in 2020 from 23.9% in 2019. The budget deficit including grants has nearly tripled, reaching 3% of GDP in 2020, compared to 2019. Spikes in food prices due to disruptions in the food supply have increased the food insecurity risks.

According to the statement the national poverty rate is projected to reach up to 72% this year from 55% in 2017, with an additional 6 million people falling into poverty. A health emergency of such magnitude has aggravated the pressure on the country’s inadequate health care system, compounded by increasing transmission risks from internally displaced persons, returning migrants, and refugees.

To mitigate the adverse impacts of the pandemic, the government rolled out its comprehensive countercyclical pandemic response package of $633.9 million, comprising health, social protection, and macroeconomic stabilization measures. ADB’s COVID-19 Active Response and Expenditure Support (CARES) Program grant will support the delivery of the government’s response package, read the statement.

The program has several components. It will support the government in conducting a nationwide gender-sensitive public awareness campaign for COVID-19, scaling up the capacity of medical facilities, including gender-sensitive treatment facilities and the availability of medical supplies and equipment.

It will help the government extend its targeted social safety nets, including daily bread assistance to at least 310,000 poor households; water and electricity bill coverage for at least 350,000 households in Kabul, with priority given to women-headed households; coverage of over 130,000 old-age pensioners and their female heirs, including biometric registration; one-time cash transfers of 6,000 afghanis ($78) to at least 41,500 internally displaced persons and refugees; and remuneration packages for at least 32,570 disabled persons and the families of people killed in conflicts.

The program will also support the implementation of stabilization measures covering state-owned enterprises, job creation in the agriculture sector, and MSMEs. The MSME support will comprise tax exemptions, subsidized lending, vocational training, and market access.

The grant also features measures to promote good governance and anticorruption, including having a monitoring and evaluation specialist at the Ministry of Finance (MOF) to support program implementation and reporting, electronic tracking of fund flows at the MOF, and auditing of pandemic-related spending by the Supreme Audit Office, which are built into the assistance. ADB had earlier provided technical assistance to strengthen debt management and monitoring of fiscal risks, as well as project management capacity, procurement systems, and safeguards compliance.

The CARES Program is funded through the COVID-19 pandemic response option (CPRO) under ADB’s Countercyclical Support Facility. CPRO was established as part of ADB’s $20 billion expanded assistance for developing member countries’ COVID-19 response announced in April. Visit ADB’s website to learn more about its ongoing response.

This comes after in May, ADB approved a $40 million emergency assistance grant for Afghanistan. It supports the construction of 15 and rehabilitation of 5 hospitals and medical facilities, adding more than 1,100 new hospital beds; procurement of urgent medicines, medical supplies, and equipment; and training of at least 3,000 health workers, including 900 women, in COVID-19 surveillance, prevention, and treatment.

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Rising wood prices a cause for concern in Kabul as winter looms

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(Last Updated On: October 21, 2021)

Kabul residents on Thursday raised concerns about rising prices of heating materials as people started shopping to prepare for winter.

During the winter, Afghan families typically keep warm by using a wood-burning bukhari, a drum-shaped stove made of thin metal, or a pit of burning coal under a small table covered by a heavy blanket.

Kabul resident Abdul Khaleq Hashemi urged the new Islamic Emirate of Afghanistan (IEA) government to bring prices under control.

“The flour, rice, and oil taxes are in the control of the Taliban (IEA) and they should all have a certain fixed price. Same for wood, it should have a certain fixed price, and this issue should be brought under control. It is not right for everyone to sell wood at any price they want,” he said.

Facing an economic crisis as winter approaches, IEA officials appealed to the international community to release frozen assets of more than $9 billion and increase shipments of humanitarian relief as the nation faces an economic crisis.

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IEA won’t be allowed access to Afghan central bank reserves: US

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(Last Updated On: October 20, 2021)

Deputy U.S. Treasury Secretary Wally Adeyemo on Tuesday said he sees no situation where the Islamic Emirate of Afghanistan (IEA) who regained power in Afghanistan in August, would be allowed access to Afghan central bank reserves, which are largely held in the United States.

The IEA have called for the United States to lift a block on more than $9 billion of Afghan central bank reserves held outside the country as the government struggles to contain a deepening economic crisis.

“We believe that it’s essential that we maintain our sanctions against the Taliban (IEA) but at the same time find ways for legitimate humanitarian assistance to get to the Afghan people. That’s exactly what we’re doing,” Adeyemo told the Senate Banking Committee.

The IEA took back power in Afghanistan in August after the United States pulled out its troops, almost 20 years after the IEA were ousted by U.S.-led forces following the Sept. 11, 2001, attacks on the United States.

Washington and other Western countries are grappling with difficult choices as a severe humanitarian crisis looms large in Afghanistan. They are trying to work out how to engage with the IEA without granting them the legitimacy they seek, while ensuring humanitarian aid flows into the country.

“Our goal is to make sure that we are implementing our sanctions regime against the Taliban (IEA) and the Haqqani network, but at the same time allowing for the permissible flow of humanitarian assistance into the country,” Adeyemo said.

The Haqqani network is a group affiliated with the IEA based near the border with Pakistan and blamed for some of the worst suicide attacks of the war.

Adeyemo said the Treasury was taking every step it could within its sanctions regime to make clear to humanitarian groups that Washington wants to facilitate the flow of aid to the Afghan people, but warned that for humanitarian assistance to flow, the IEA have to allow it to happen within the country.

The Treasury last month further paved the way for aid to flow to Afghanistan despite U.S. sanctions on the IEA when it issued two general licenses.

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Afghanistan’s economic collapse could prompt refugee crisis: IMF

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(Last Updated On: October 19, 2021)

Afghanistan’s economy is set to contract up to 30% this year and this is likely to further fuel a refugee crisis that will impact neighbouring countries, Turkey and Europe, the International Monetary Fund said on Tuesday.

With non-humanitarian aid halted and foreign assets largely frozen after the Islamic Emirate of Afghanistan (IEA) seized power in August, Afghanistan’s aid-reliant economy “faces severe fiscal and balance-of-payments crises”, it said in its regional economic outlook update.

“The resulting drop in living standards threatens to push millions into poverty and could lead to a humanitarian crisis.”

The IMF said the turmoil in Afghanistan was expected to generate important economic and security spillovers to the region and beyond and was “fueling a surge in Afghan refugees”, although it gave no estimates of potential numbers.

“A large influx of refugees could put a burden on public resources in refugee-hosting countries, fuel labor market pressures, and lead to social tensions, underscoring the need for assistance from the international community,” it said.

Assuming a million more Afghans flee their homeland and settle in other countries in a way that is proportional to the existing spread of Afghan refugees, the annual cost of hosting them would amount to $100 million in Tajikistan (1.3% of gross domestic product), about $300 million in Iran (0.03% of GDP) and more than $500 million in Pakistan (0.2% of GDP), the IMF said.

Tajikistan said last month it could not afford to take in large numbers of refugees unless it received international financial assistance.

Other Central Asian nations have also said they have no plans to host refugees.

Another channel through which Afghanistan’s economic troubles could affect its neighbours is trade.

“Exports to Afghanistan are macroeconomically and socially relevant for Iran, Pakistan, Turkmenistan, and Uzbekistan,” the Fund said.

Afghanistan previously served as a source of cash dollars, through both legitimate and possibly illicit cross-border flows, due to its status as a beneficiary of large donor funds, but now even larger amounts of dollar banknotes could start flowing into the country due to its shortages, the IMF said.

The goods they are exchanged for are likely to raise new concerns over money laundering and the financing of terrorism, it added.

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