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Afghanistan, Pakistan agree to abandon barter trade, establish banking relationships

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Afghanistan and Pakistan agreed to abandon barter trade and to establish banking relationships during the two-day talks in Kabul, the Islamic Emirate’s spokesman Zabihullah Mujahid announced late Thursday.

The agreement came during talks between Afghan delegation led by Acting Minister of Industry and Commerce, Nooruddin Azizi, and the Pakistani delegation led by Federal Secretary of Commerce Muhammad Khurram Agha.

It was agreed that the Pakistani side will facilitate the transfer of goods from international containers to regional containers in the ports of Karachi in the next six months, Mujahid said in a statement.

An agreement was made regarding preferential trade, where both sides will give tariff preferences to those 10 items of export goods, 8 of which are agricultural and 2 items are industrial.

The sides agreed on a temporary free license for truck traffic for one year as a trial period, which will be implemented from May 2024.

They also reached an agreement regarding the transfer of goods through the airports of the two countries in the form of multi-modal air transit, which will start in the next two months.

As part of Pakistan’s recent measures regarding Afghanistan’s transit goods, it was agreed that within a week, the mandatory bank guarantee should be removed and insurance should be used as before, in consultation with the parties, the necessary measures will be taken to remove other obstacles.

The export of coal from Afghanistan to Pakistan was also discussed and the Pakistani side expressed its readiness to buy it at the international price, according to the statement.

Earlier Pakistan’s Charge d’Affaires for Afghanistan, Ubaid-ur-Rehman Nizamani said in a video message on Wednesday that the recent trade talks in Kabul had been “successful” and that he hoped this would give fresh impetus to bilateral trade between the two countries.

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Russia almost doubles LPG exports to Central Asia, Afghanistan this year

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Russia has almost doubled exports of liquefied petroleum gas in the January – November period to ex-Soviet republics in Central Asia and Afghanistan to 1.016 million metric tons, Reuters reported citing sources on Friday.

Moscow has had to divert supplies of LPG, or propane and butane, from Europe, which introduced restrictions on LPG imports from Russia in December 2024 over the war in Ukraine.

Traders said supplies to Afghanistan, as well as to Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan now account for around 36% of Russia’s total LPG exports, up from 19% in 2024.

Afghanistan is Russia’s largest buyer of LPG in that region. In July, Russia accepted the credentials of a new ambassador of Afghanistan, making it the first nation to recognise the country’s Islamic Emirate government.

According to the sources, supplies of Russia’s LPG to the country, including from Kazrosgaz, a joint venture with Kazakhstan, have jumped 1.5 times in the first 11 months of the year to 418,000 tons.

Traders said that Russia’s LPG supplies to Afghanistan have increased partially at the expense of declining supplies from Iran, which has been sanctioned by the United States.

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Major power projects launched in Herat

Baradar urged contracting companies and technical teams to complete the projects with high quality and within the specified timeframe.

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Mullah Abdul Ghani Baradar, Deputy Prime Minister for Economic Affairs, on Thursday announced the launch of four major electricity projects and the inauguration of five others in Herat province, with a total investment valued at 3.98 billion afghanis.

Speaking at an official ceremony, Baradar described the projects as vital for Afghanistan’s industrial and economic development. He said that once completed, the projects will provide 24/7 electricity to all industrial parks in Herat, as well as to commercial centers, rural areas, and residential neighborhoods, ensuring stable and reliable power supply.

Baradar also pledged incentives for investors in cold storage facilities, announcing a five-year tax exemption and guaranteeing uninterrupted electricity supply by Afghanistan’s power utility. He encouraged both domestic and foreign investors to take advantage of these opportunities.

Emphasizing the Islamic Emirate’s balanced foreign policy, Baradar said the government’s main focus remains economic growth, security stability, and good governance, urging the international community to pursue engagement with Afghanistan instead of restrictive policies.

Among the projects inaugurated is a 130-kilometer-long 220-kilovolt power transmission line from Turkmenistan, along with the construction of four substations in the districts of Karukh, Pashtun Zarghun, Obey, and Chesht-e-Sharif, which will supply electricity to around 40,000 households.

Newly launched projects include the construction of the Pul-e-Hashemi substation, expansion of the 24 Hoot Martyrs substation, creation of a second line at the Noor-ul-Jihad substation, and the extension of power transmission lines linking the Pul-e-Hashemi, Noor-ul-Jihad, and 24 Hoot Martyrs substations.

Baradar urged contracting companies and technical teams to complete the projects with high quality and within the specified timeframe.

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Sharp drop in exports to Afghanistan drives Pakistan’s trade deficit surge

Meanwhile, Afghanistan is actively seeking alternative trade routes and partnerships to reduce future reliance on Pakistan’s commercial channels and strengthen its economic independence.

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Pakistan trade

Recent data from Pakistan’s central bank reveals that a sharp decline in exports to Afghanistan has become a key factor behind the country’s growing trade deficit, challenging previous claims by Pakistani officials that halting trade with Afghanistan would not harm their economy.

According to the State Bank of Pakistan, the trade deficit with nine neighboring countries increased by more than 39 percent in the first five months of the 2025–2026 fiscal year, rising from $4.4 billion to $6.2 billion. The report highlights that reduced exports to countries such as China and Afghanistan played a central role in this increase.

Exports from Pakistan to Afghanistan fell dramatically by over 94 percent during this period, dropping from $408 million last year to approximately $210 million. Economic analysts note that Afghanistan has historically been one of Pakistan’s key export markets, particularly for food items, cement, medicine, and daily-use goods—products that cannot be easily replaced.

The steep decline follows the complete suspension of trade between the two countries in October 2025. Despite previous statements by Pakistani officials asserting that reduced or halted trade with Afghanistan would not negatively impact Pakistan’s economy, the latest figures suggest otherwise.

Meanwhile, Afghanistan is actively seeking alternative trade routes and partnerships to reduce future reliance on Pakistan’s commercial channels and strengthen its economic independence.

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