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Afghan, Uzbek officials sign power transmission agreement

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(Last Updated On: August 29, 2020)

Afghanistan and Uzbekistan officials signed a power transmission agreement on Friday at a ceremony in Tashkent, Uzbekistan.

According to the agreement Afghanistan can now import electricity from Uzbekistan for the next ten years.

The Afghanistan Ministry of Foreign Affairs said in a statement that based on the agreement, which was signed between Chief Executive of Da Afghanistan Breshna Sherkat Ahmad Dawood Noorzai and Dadajon Isakulov, Chairman of the state-owned National Electric Networks of Uzbekistan, a 500-kV electricity transmission line will be built by an Uzbek company with funding of $100 million from the Asian Development Bank.

The ministry said in the first two years, 4.25 GW of electricity per hour will be exported to Afghanistan and it will be increased by 6 GW per hour thereafter.

“With the implementation of this agreement, electricity will be provided 24 hours a day to the northern, central, southern and southwestern provinces and the capital of the country,” the statement read.

Chief of Staff in President Ashraf Ghani’s office Mohammad Shakir Kargar, Acting Minister of Transport Mohammad Yamma Shams, Acting Deputy Minister for Industry and Commerce Abdul Karim Malikyar, Chief Executive of Da Afghanistan Breshna Sherkat Ahmad Dawood Noorzai, and Abdul Bari Sediqi, head of the Afghanistan Railway Authority attended the ceremony.

The development comes at a time Afghanistan is reliant on imported electricity, from its neighbors, including Tajikistan, Uzbekistan, and Iran.

The agreement also coincides with Acting Foreign Minister Mohammad Haneef Atmar’s two-day visit to Tashkent to discuss ways to expand bilateral ties and cooperation in various sectors including irade and transport.

Uzbekistan’s Foreign Minister Abdulaziz Kamilov said Friday: “We hope that this historic trip will further enhance political and economic cooperation between the two countries and strengthen our relations in the fields of trade, transport, electricity, and energy.”

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Joint economic commission planned between Afghanistan and Iran

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(Last Updated On: October 11, 2020)

Afghanistan’s acting Foreign Minister Haneef Atmar said Sunday he held a “valuable” virtual meeting with Iran’s Minister of Energy Reza Ardakanian on a number of issues including that of permanent transmission of electricity to Afghanistan. 

Atmar said they also discussed holding a joint economic commission, opening the Khaf-Herat railway line, setting preferential tariffs on importing electricity, custom tariffs, and expanding trade. 

“We are committed to strengthening relations and expanding cooperation with our friendly and brotherly country Iran,” Atmar tweeted.

Iran’s Mehr news agency said the Iranian energy minister emphasized his country’s support for cooperation with Afghanistan, especially in the field of energy production and transmission.

Last month, a delegation from the Iranian ministry of energy traveled to Afghanistan to strengthen relations and discuss joint ventures in the electricity sector.

Afghanistan currently imports electricity from neighboring Iran, Turkmenistan, Uzbekistan and Tajikistan.

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World Bank warns of increased poverty due to COVID-19 shock 

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(Last Updated On: October 8, 2020)

The World Bank has stated that a clear commitment from international partners to continue grant support would help reduce uncertainty and improve investor confidence in Afghanistan which would in turn enable the country to recover from the severe impacts of the COVID-19 crisis.

In its twice-yearly report, the World Bank stated that South Asia as a whole is set to plunge into its worst-ever recession due to the pandemic which will take a heavy toll on informal workers and push millions of people in the region into extreme poverty. 

According to the report, although Afghanistan experienced moderate growth in 2019 as the agricultural sector recovered from the impacts of drought, the economy is estimated to have contracted sharply in the first half of 2020 due to economic disruptions associated with nation-wide lockdowns, border closures, and declining remittance inflows. 

In addition, the report stated that medium-term prospects are subject to high levels of uncertainty, related to the COVID-19 pandemic, peace talks and future international security and aid support.

“Given the shock to the economy, poverty is expected to increase in 2020,” the report stated. 

While there was significant growth in wheat production, the World Bank said this was not enough to offset the large negative impact of COVID-19 on other sectors of the economy. 

The World Bank stated that while inflation was low in 2019 (averaging 2.3 percent) it increased significantly in 2020. 

One reason was that in March and April 2020 – during lockdown – panic buying and import disruptions resulted in a sharp increase in food prices, which led government to adopt administrative measures to prevent price gouging.

Government also initiated an emergency wheat distribution program that resulted in a food inflation decline in the months that followed. 

In the first quarter of 2020 Afghanistan registered a growth in exports of 11 percent year-on-year, which reflected the improved performance of air corridors. However, a weak domestic demand led to a 14 percent decline in imports. 

“In the second quarter of 2020, both imports and exports fell precipitously given border closures and disruptions to trade and transportation, with greater absolute declines in imports driving an improvement in the trade and current account balances,” the report read. 

With the onset of the COVID-19 crisis, weak economic activity, disruptions to trade and compliance, revenue performance deteriorated significantly and revenue estimates for 2020 were revised downward by over 30 percent (from Afs 209 billion to 144 billion) in the budget mid-year review. 

“Total domestic revenue collection at end-June reached Afs 74.7 billion, 20 percent lower than the initial budget target,” the report stated. 

Poverty meanwhile is believed to have worsened in 2019 surpassing 54.5 percent amid continued violence and political uncertainty and “in the first half of 2020, with declining household incomes due to economic hardship, higher food prices due to COVID-19, a significant fall in remittances, and high returnee flows, poverty is estimated to have further increased,” the report read. 

According to the report, the outlook for the rest of 2020 was grim as the GDP is expected to contract by 5.5 percent – again largely due to the impact of the pandemic. 

“In following years, the pace of recovery is expected to be constrained in a context of continued insecurity, uncertainties regarding the outcome of planned peace talks, and questions about the level and duration of international security and aid support. 

“The trade deficit is projected to narrow to 26 percent of GDP down from 30.4 percent in 2019. While exports are projected to fall by 24 percent, imports are expected to decline by around 18 percent,” read the report. 

World Bank analysis meanwhile suggests that the combination of reduced incomes and higher prices could drive the poverty rate to as high as 72 percent in the medium term. 

“Over the medium term, the poverty outlook hinges on the pace of economic recovery and the continued provision of international aid and humanitarian support,” the report read. 

“The main source of downside risk to the outlook stems from possible further adverse COVID-19 developments,” the World Bank stated adding that additional sources of risk include further political instability, a deterioration of security conditions, uncertainties associated with the planned peace agreement with the Taliban, and precipitous reductions in aid flow. 

“By contrast, on the upside, a sustainable and credible political settlement with the Taliban could help boost growth, confidence and private investment,” the bank stated. 

In terms of recommendations, the World Bank stated that given Afghanistan’s declining revenues and constrained fiscal potential, public expenditures need to be carefully directed to protecting the vulnerable, limiting long-term economic damage, and establishing solid foundations for economic recovery. 

“To support households, the government should prioritize: i) targeted social protection measures; and ii) ensuring the continued provision of basic services, especially healthcare. 

“To support the private sector, priorities include: i) pursuing business regulatory reforms to facilitate new investment; ii) expanding access to credit; iii) ensuring the continued provision of basic infrastructure; and iv) avoiding accumulating arrears to private sector vendors.”

 

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Iran exports over $1 billion in goods through Dogharoon to Afghanistan

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(Last Updated On: October 3, 2020)

Iran has exported over $1 billion worth of goods to Afghanistan, through Dogharoon Special Economic Zone, over the past six months. 

From March 20, the value of exports has increased by 33 percent compared to the same period last year, IRNA reported. 

Mohammad Rostami, head of the Dogharoon economic zone, said thousands of trucks transported the goods to Afghanistan through Herat province. 

He said construction material and food products were among the goods that transitted through the economic zone. 

Afghanistan in turn exported $2.5 million worth of goods to Iran.

 

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