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UNDP warns Afghan economy to contract by 6% due to COVID-19

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United Nations Development Program (UNDP) Afghanistan launched its latest COVID-19 impact assessment report on Wednesday and said the pandemic has set back Afghanistan’s economic growth by several years.

The report, the 4th since the coronavirus outbreak, exposed structural and resource gaps in responding to unforeseen events such as pandemics. The country had to reallocate resources from long-term development priorities to fighting this health crisis.

In a statement issued by the UNDP, the organization said the report, titled “Fiscal Options in Response to Coronavirus Crisis”, focused on the fiscal implications of COVID-19.

The UNDP stated it estimates that due to a combination of external and internal shocks, the Afghan economy will contract by around six percent in 2020.

“Assuming the recovery starts in 2021 and growth performance to be positive between 2021 and 2024, it will be moderate, and well below the pre-pandemic level.

“Without well thought-out recovery-oriented policies, this amounts to a cumulative loss of around 12.5 percent in real GDP by 2024,” read the statement.

UNDP said Afghanistan witnessed a sharp decline in revenues in 2020 due to low economic activity, trade disruption and weaker compliance brought on by the pandemic.

“The government had to adjust the revenue estimates downwards from Afs 209 billion (US$2.71 billion) in 2019 to Afs 144 billion (US$1.87 billion) during the mid-year budget review.”

UNDP stated it estimated an average of 17 percent decline in corporate tax revenue and 18 percent decline in personal income tax revenue.

“Tax on international trade will be the worst hit and revenues may decline to as low as 19 percent due to the decrease in imports, while tax revenue on goods and services might decline by 10 percent,” the statement read.

Meanwhile, UNDP stated the fiscal deficit is expected to increase to around four percent of GDP in 2020.

“The Government of Afghanistan needs to opt for policies and programmes to generate more revenue to address the fiscal deficit.

“Given the economic slowdown, a second wave of the pandemic, continued conflict, and an uncertain peace process and political environment, the country will continue to need grant support from the international community to address the fiscal deficit and maintain its current level of expenditure on basic services,” read the UNDP’s statement.

The organization also stated that additional grants need to be directed at driving and implementing reforms to improve the business regulatory environment, improve governance, encourage investment and strengthen the private sector.

According to the statement, the UNDP and other stated along with other international development partners, it would continue to support Afghanistan in the run up to the donor pledging conference later this month.

However they urged the Afghan government to address the immediate fiscal impact of the pandemic and help reverse its negative effects.

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Afghanistan and Uzbekistan sign 20 trade MoUs worth $267 million

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Afghanistan’s Ministry of Industry and Commerce says 20 trade memorandums of understanding (MoUs) worth $267 million have been signed following business meetings between Afghan traders and private-sector representatives and officials from Uzbekistan’s Kashkadarya province.

The agreements were signed on the sidelines of a business networking conference between Afghan private-sector representatives and Kashkadarya in Kabul. Officials from Afghanistan’s Ministry of Industry and Commerce, representatives of Kashkadarya province, Uzbekistan’s ambassador to Kabul, and private-sector representatives from both countries attended the conference.

Ahmadullah Zahid, Deputy Minister of Industry and Commerce, said economic relations and trade between Afghanistan and Uzbekistan have increased following visits by delegations from both sides.

He stressed the need to simplify trade and transit procedures and remove existing obstacles. He also said Afghanistan is ready to discuss the transit of its export goods through Uzbekistan.

Shahret Muradov, Deputy Governor of Kashkadarya, said the province is ready to expand trade and industrial cooperation with Afghanistan and host Afghan delegations and traders.

The agreements cover sectors including food products, clothing, construction, livestock, electronic equipment, and furniture.

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Afghanistan transports more than 704,000 tonnes of goods by rail in August

The Hairatan railway route handled the largest share, with 464,767 tonnes, followed by Khaf–Herat with 137,687 tonnes, Torghundi with 62,015 tonnes, and Aqina with 39,831 tonnes.

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Afghanistan transported more than 704,000 metric tonnes of goods through its railway network in August 2026, the Ministry of Public Works said.

The ministry said 704,300 metric tonnes of petroleum products, non-petroleum goods and other materials were imported and exported through four major railway routes during the month.

The Hairatan railway route handled the largest share, with 464,767 tonnes, followed by Khaf–Herat with 137,687 tonnes, Torghundi with 62,015 tonnes, and Aqina with 39,831 tonnes.

The ministry said the railway network also supported Afghan exports during the month, including 3,751 tonnes of carbonated beverages shipped abroad.

According to the ministry, expanding rail transportation and exports could contribute to job creation, higher national revenues and greater economic stability and self-sufficiency.

The ministry added that the Islamic Emirate is working to improve trade conditions and expand transportation facilities for Afghan traders.

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TAPI pipeline nears first gas sales in Afghanistan

Herat Governor Mawlavi Islam Jar recently said construction of the TAPI pipeline in the province is expected to be completed within two months.

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The Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline is moving closer to its first commercial gas sales in Afghanistan after years of delays, with Herat expected to become the first Afghan market served by the project.

According to the Times of Central Asia, Turkmenistan plans to supply gas to Herat through the TAPI pipeline, while the timeline for extending the project to Pakistan and India remains uncertain.

The report says Turkmengaz and Afghan Gas signed a memorandum on August 10 covering the purchase of gas through TAPI. However, the agreement does not yet specify the price, supply volume or exact date for the start of commercial deliveries.

Afghan and Turkmen officials are also working to develop a gas distribution network in Herat to supply industrial facilities, power plants and households.

Meanwhile, Herat Governor Mawlavi Islam Jar recently said construction of the TAPI pipeline in the province is expected to be completed within two months.

According to the governor, Turkmen officials have completed their work on the project and will hand it over to Herat authorities once the remaining process is finalized.

Jar has also urged residents and factory owners in Herat’s industrial park to make the necessary preparations for the start of gas distribution and pipeline connections.

The TAPI project is designed to transport Turkmenistan’s natural gas through Afghanistan and Pakistan to India, with a planned annual capacity of 33 billion cubic meters.

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