Business
SIGAR issues pessimistic economic forecast for Afghanistan
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.
Business
Afghani strengthens nearly 10% against US dollar amid banking sector reforms
The bank said it has expanded oversight of financial institutions and private lenders, improving transparency and promoting more consistent standards across the sector.
Afghanistan’s central bank, Da Afghanistan Bank, says the national currency has appreciated by 9.93% against the US dollar during the year 1404, citing steady progress in the country’s financial and banking systems.
Officials attributed the gains to cautious monetary policies that have helped stabilise the Afghani against major global currencies while also boosting its value against the dollar.
The bank said it has expanded oversight of financial institutions and private lenders, improving transparency and promoting more consistent standards across the sector.
As part of efforts to better manage liquidity, authorities also collected and destroyed worn-out banknotes in circulation. At the same time, officials reported growth in electronic banking, with digital payment usage rising in recent months.
Central bank spokesperson Haseebullah Noori said initiatives are underway to broaden access to banking services nationwide, including the wider rollout of Islamic banking options.
Analysts welcomed the stabilisation efforts but stressed the need to address ongoing challenges facing domestic banks, including the impact of international financial sanctions on Afghanistan.
They added that expanding Islamic banking could help draw more savings into the formal financial system, noting that a significant share of personal wealth remains outside banks. Bringing those funds into the sector, they said, could inject billions of Afghanis into the economy and further support financial stability.
Business
Uzbekistan delivers over 290 tons of aid to Afghanistan
The assistance, provided ahead of Eid al-Fitr, is intended to support vulnerable communities while reinforcing ties between the neighboring countries.
Uzbekistan has delivered more than 290 tons of humanitarian aid to Afghanistan, according to the country’s Ministry of Foreign Affairs.
The assistance, provided ahead of Eid al-Fitr, is intended to support vulnerable communities while reinforcing ties between the neighboring countries.
The shipment includes essential food supplies such as flour, rice, wheat, vegetable oil, instant meals, pasta, and confectionery. An official handover ceremony was held in the border town of Hairatan.
Local officials, including Balkh province representatives and authorities from Hairatan, expressed appreciation for the continued support, acknowledging Uzbekistan’s efforts to assist the Afghan people.
Among those present at the ceremony were Uzbekistan’s Ambassador to Afghanistan, Oybek Usmanov, and Surkhandarya regional governor Ulugbek Kosimov.
The aid delivery underscores Uzbekistan’s ongoing humanitarian engagement and its broader efforts to promote regional cooperation and stability.
Business
Turkmenistan, Afghanistan discuss steps to speed up land acquisition for TAPI pipeline
By the end of the year, the vessels are expected to deliver about 11,700 pipes as part of preparations for construction of the TAPI pipeline.
Officials from Turkmenistan and Afghanistan have held talks aimed at accelerating land acquisition for the long-planned Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline, according to Afghanistan’s Ministry of Agriculture, Irrigation, and Livestock.
The issue was discussed during a meeting between TAPI project head Murad Amanov, Afghanistan’s acting Minister of Agriculture, Irrigation, and Livestock Mullah Attaullah Omari, and Turkmenistan’s ambassador to Afghanistan Hoja Ovezov.
Amanov briefed Afghan officials on recent progress and emphasized the need to accelerate procedures related to land acquisition and the determination of land prices in line with the framework agreement signed by the four participating countries.
Meanwhile, vessels operated by the Azerbaijan Caspian Shipping Company (ASCO), part of AZCON Holding, have begun transporting pipes for the project. The shipments are being carried from the Port of Baku to the Turkmenbashi International Seaport.
By the end of the year, the vessels are expected to deliver about 11,700 pipes as part of preparations for construction of the TAPI pipeline.
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