Business
UNDP warns Afghan economy to contract by 6% due to COVID-19
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.
Nooruddin Azizi, Acting Minister of Commerce and Industry, met with representatives from the ministries of foreign affairs, defense and interior of Malaysia, along with other senior officials, on Wednesday and called on Malaysians to invest in Afghanistan.
The visiting delegation is being led by senior diplomat Dr. Shazelina Zainul Abidin.
According to the IEA’s foreign ministry, the two sides discussed bilateral trade, holding a business communication conference to strengthen trade relations between the two countries, the trade balance between Afghanistan and Malaysia, and creating a market for Afghan products, including carpets, cotton, and minerals.
According to the ministry, at the end of the meeting, the Acting Minister emphasized the increase of investment from regional countries in Afghanistan and called on Malaysian investors to also invest in Afghanistan.
The Ministry of Interior says that Afghanistan has started exporting goods to Turkey via the Herat-Khaf railway line.
In a post on X, the ministry said: “Afghanistan’s exports to Turkey started in a calm atmosphere through the Herat-Khaf railway line.”
The ministry added that one train will run daily for a month and then two trains will run daily.
According to the ministry, the security of Khaf-Herat railway line is provided by the guards of the National Public Protection Agency.
Khaf-Herat railway project not only connects Iran and Afghanistan by rail, but also completes a 2,000-kilometer route along the east-west rail corridor from China, through Uzbekistan, to Afghanistan, to Iran, and on to Turkey and Europe.
As a landlocked country, this railway network will provide a safe route to connect with Europe via Iran’s railway network and Iran’s southern ports.
This railway line is strategic for trade between Iran and Afghanistan and will allow six million tons of goods to be sent between the two countries.
A joint expo between Afghanistan and Kazakhstan will be held in Kabul in the next four days, officials said on Sunday.
Officials of the Ministry of Industry and Commerce said that the two-day expo will be held for the purpose of expanding and strengthening trade relations between the two countries.
“This expo will be held as a follow-up of the Kazakh-Afghan international expo, which was held in the city of Astana, Kazakhstan, with the participation of a large delegation of the government and the private sector of the Islamic Emirate of Afghanistan,” Abdulsalam Javad Akhundzadeh, the spokesman of the Ministry of Industry and Commerce, said.
“At this expo, domestic products from different sectors of Afghanistan and the Republic of Kazakhstan will be put on display for two days.”
According to officials, 40 large Kazakh companies, and 40 large Afghan companies will exhibit their products.
Mohammad Saber Latifi, head of the Afghanistan International Expo Center, said that fruits, minerals and commercial services will be displayed at the expo.
During the expo, various memorandums of understanding for the trade of goods are also expected to be signed by companies.
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