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Afghanistan’s economy is ‘normal’, says finance ministry

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Last Updated on: February 3, 2025

Afghanistan’s Ministry of Finance said Wednesday that after a comprehensive assessment of various sectors, the country’s economic situation is in “its normal state”.

According to a statement issued by the ministry, a meeting was convened to assess financial trade, foreign humanitarian aid, the value of the afghani (AFN), and the impact of changes in foreign policies on the economy.

It was found that the import and export process is functioning smoothly, the banking sector remains stable, national revenues are being collected transparently, and essential government expenditures are being made regularly without any delays.

The ministry attributed the decrease in the value of the AFN against foreign currencies, particularly the US dollar, to widespread negative propaganda.

“Overall, all domestic economic factors are maintaining the value of the Afghan currency in a normal state,” the statement read.

Modest recovery

The Afghan economy is showing signs of moderate growth, but still faces significant headwinds, including fiscal constraints, trade imbalances, and a limited capacity for public investment, according to the World Bank’s latest Afghanistan Development Update.

The World Bank stated that Afghanistan has seen a modest GDP growth of 2.7% over the past two years – growth driven by private consumption. The update stated the economy had recouped only about 10% of past economic losses, indicative of the slow and fragile nature of the recovery.

“Afghanistan’s long-term growth prospects depend on tapping into the substantial potential of the domestic private sector and improving the overall business environment,” said Faris Hadad-Zervos, World Bank Country Director for Afghanistan in the update, which was issued last month.

“Key to this is increased investment, providing access to finance to small businesses, and supporting educated and skilled women entrepreneurs so their businesses can thrive. Without this, the country risks prolonged stagnation with limited prospects for sustainable development,” he added.

The World Bank also stated that the partial recovery, coupled with falling food prices, has contributed to a gradual improvement in household welfare.

But most Afghan households continue to struggle to meet basic needs and poverty remains widespread, the report read.

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‘Made in Afghanistan’ expo opens in Tashkent

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The Afghanistan Chamber of Commerce and Investment has announced that a major exhibition of Afghan products titled “Made in Afghanistan” is opening today (Wednesday) in Uzbekistan’s capital Tashkent.

According to the chamber, the expo—supported financially by the United Nations Development Programme—will run until Friday and aims to showcase Afghanistan’s production and export potential.

More than 60 booths have been set up by Afghan traders, featuring a wide range of products including carpets, dried and fresh fruits, saffron, pine nuts, cotton, precious and semi-precious stones, as well as beverages.

Officials from the chamber expressed hope that the expo will help expand trade relations between Afghanistan and countries in the region, particularly Uzbekistan.

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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.

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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.

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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.

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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.

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