Business

SIGAR issues pessimistic economic forecast for Afghanistan

Published

3 years ago

February 20, 2022

Afghanistan’s economy suffered severe contraction in 2021, with the UN Development Programme (UNDP) and IMF estimating up to a 20–30 percent drop, the US Special Inspector General for Afghanistan Reconstruction (SIGAR) reported.

According to SIGAR’s latest report, annual per capita income is estimated to have fallen from $650 in 2012, to $500 in 2020, and is expected to drop to $350 by 2022.

SIGAR stated that male unemployment in Afghanistan may nearly double from 15.2 percent in 2019 to 29 percent by 2022.

“In the worst-case scenario modeled by the Asian Development Bank, unemployment could increase by more than 40 percent in the short run and household consumption could contract by 44 percent,” read the report.

The devaluation of the afghani has also impacted the Afghan economy and further diminished Afghan households’ ability to purchase food and
other necessary items, because much foreign trade was settled in US dollars.

Since August last year, the afghani has depreciated against the US dollar, from approximately 77 afghani to the dollar to around 105 as of January
2, 2022.

SIGAR also reported that adding to the pressure on the country’s limited cash reserves, Afghanistan lacks the technical capabilities to print its own currency.
According to SIGAR, the IEA has not yet secured or developed a domestic printing source for afghani banknotes.

SIGAR reported that Afghanistan’s largely cash-based economy has continued to struggle with an acute cash shortage since November, which has limited day-to-day economic activities.

“Banks are at the center of a liquidity crisis, with lost access to international financing and depositors attempting to recover their funds,” read the report.

According to a UNDP report, Afghanistan’s banking system is in “existential crisis.” Total deposits had fallen to the equivalent of $2 billion as of
September 2021 from $2.8 billion the month.

As the Afghan economy has struggled to find areas of sustainable economic growth in recent years, the country has increasingly relied on remittances from Afghans working abroad, especially in neighboring Iran.

By 2019, remittances accounted for the equivalent of 4.3 percent of Afghanistan’s annual GDP, an increase from 1.2 percent in 2014, according to World Bank data.

However, officials from the UN’s International Organization for Migration estimate this figure could have been as high as 15–20 percent, given that many remittances are sent through the informal hawala money-transfer system.

According to officials at Médecins Sans Frontières, with the absence of a functioning banking sector, many NGOs have also been forced to rely on
hawalas to pay expenses within Afghanistan.

In November 2021, the IEA announced a complete ban on the use of foreign currency in Afghanistan, interfering with remittance activities and
worsening the country’s liquidity crisis.

However, SIGAR reported that indicators suggest that the currency ban is not being actively enforced against the US dollar, which continues to be widely used in Afghan markets.

Related Topics:#Income featured peace SIGAR

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Daily truck clearances at Torkham drop from 400-500 to 5-10

Published

1 week ago

December 13, 2024

Ariana News

Pakistan’s Sarhad Chamber of Commerce and Industry (SCCI) has said that daily truck clearances at Torkham crossing have declined from 400-500 to 5-10.

SCCI President Fazal Muqeem Khan said this at the signing ceremony of a memorandum of understanding (MoU) with the Pakistan-Afghanistan Joint Chamber of Commerce and Industry to promote bilateral trade and cooperation.

He said the volume of trade between Pakistan and Afghanistan had fallen from $3 billion to $1 billion annually.

Fazal Muqeem also highlighted the adverse impact of the 2% Infrastructure Development Cess (IDC) imposed by the Khyber-Pakhtunkhwa government on trade and transit.

Business

Turkish scholars, charity officials assess investment prospects in Afghanistan

Officials pledged to encourage Turkish investors to explore and capitalize on investment opportunities in Afghanistan

Published

2 weeks ago

December 10, 2024

Ariana News

Afghanistan’s Acting Minister of Energy and Water, Mullah Abdul Latif Mansoor, met with a delegation of Turkish scholars and officials from the Adif Charity Foundation on Tuesday to discuss various political, religious, and social issues.

According to the Ministry of Energy and Water, Mullah Mansoor praised Adif’s humanitarian efforts in Afghanistan and highlighted the country’s ample resources for energy production.

He emphasized that Afghanistan currently offers a favorable environment for investment in all sectors, assuring the Turkish delegation of the Islamic Emirate’s commitment to ensuring the safety and security of investors and their assets.

In response, Adif officials pledged to encourage Turkish investors to explore and capitalize on investment opportunities in Afghanistan, signaling a potential boost in economic and developmental cooperation between the two nations.

Business

Uzbek envoy to Pakistan discusses Trans-Afghan Railway project with Pakistani minister

The Trans-Afghan Railway project is expected to serve as a powerful stimulus for trade and economic integration among numerous countries in the region

Published

2 weeks ago

December 9, 2024

Ariana News

Regional connectivity projects including the Termez-Kabul railway line, the Trans-Afghan Railway, and the multimodal Belarus-Russia-Kazakhstan-Uzbekistan-Afghanistan-Pakistan transport corridor, are key to the region’s success, the Ambassador of Uzbekistan to Pakistan Alisher Tukhtayev said during a meeting with Pakistan’s Defense Minister Khawaja Asif on Friday.

The two officials discussed a range of issues as well as coordinating efforts to ensure stability and deepen economic integration in the region.

Asif however pointed out that Tashkent has become an important hub for regional cooperation, Pakistani media reported Monday.

Special focus was given to the implementation of the Trans-Afghan Railway project, which is expected to serve as a powerful stimulus for trade-economic integration to numerous countries.

The ambassador said the governments of Uzbekistan, Pakistan, and Afghanistan are actively cooperating in the implementation of joint economic and infrastructure projects and one of them is the construction of the Trans-Afghan Railway.

He said the “Termez-Kabul-Peshawar” railway project plays an important role in restoring ties of regional connectivity between Central and South Asia.

He added that once the project is launched, the volume of trade will increase significantly and shipping costs will decrease.

Tukhtayev said the railway connectivity will contribute hugely to regional stability and overall prosperity by aiding Afghanistan’s economic recovery.

He also said the project will facilitate the delivery of Uzbek goods to world markets through Pakistani ports and will open up a new route for Pakistan to export its products to Central Asian, and European markets.

According to him, the Trans-Afghan railway will be able to carry up to 20 million tons of cargo per year, and transportation costs will decrease by 30-35% and timing of deliveries will be cut from two weeks to three to four days.

He also stated that the international cooperation project on the development of the multimodal transport corridor Belarus-Russia-Kazakhstan-Uzbekistan-Afghanistan–Pakistan is being actively promoted.

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