Business
Afghanistan’s economy under the spotlight on eve of 1401, the new solar year
On the eve of Afghanistan’s new solar year, Nowruz, the year 1400 has proven to be one of increased economic hardships that ultimately led to a financial crisis in the country.
In August, the former government collapsed which sparked widespread panic among Afghans who rushed to banks to draw their money.
People queued for hours, for days and even weeks but as the Ashraf Ghani government tumbled and foreign troops withdrew, foreign funding that propped up the country came to a sudden halt and the banking system froze.
In order to prevent the complete collapse of the banking system, the Islamic Emirate of Afghanistan (IEA), which had swept to power, stepped in and imposed strict restrictions on the amount of cash people could withdraw.
Global sanctions added to the mix and made life even more difficult for Afghans – so much so that the IEA was unable to pay government employees their salaries for the first few months.
Gradually, the economic situation stopped its freefall and leveled out. Humanitarian aid helped ease hunger and shipments of cash from the United Nations has continued to come in to the country. Although sanctions are still in place, the UN has stepped in to assist with regards to the economy.
On a more positive note, some development projects have been kickstarted by the IEA these past few months – especially transit projects connecting Afghanistan to Central Asia.
However, Afghanistan’s economic situation is still critical.
Key problems are as follows:
• No new investments have been made in 1400 in the country
• With the coming to power of the Islamic Emirate, banking activities were suspended for a significant period of time
• International organizations stopped major projects they had been funding, leaving many projects unfinished
• Global sanctions were imposed on the country’s economic system
• Trade between Afghanistan and its neighbors stalled due to a lack of funding and political uncertainty for some time
• The Afghani (AFN) plummeted to a low of 130 AFN to the US dollar. It has since recovered somewhat
• Food and fuel prices have risen unprecedentedly
• About $9 billion of foreign assets were frozen by the United States
Despite all these challenges, the IEA has stepped up efforts to stabilize the economy and to improve the situation. The IEA came out in support of the private sector and worked hard to save the country’s economy from collapsing altogether.
The Ministry of Finance meanwhile said the economic situation in the country has improved slightly in the past few months and that the Islamic Emirate will take major steps to boost the economy in the new year (1401). The IEA also said it will launch some key development projects.
The Ministry of Finance, however, was unable to finance the budget for the new fiscal year from domestic revenue. This is not however new, as a major part of the budget has been funded by the international community for the past 20 years.
Economic experts believe the Islamic Emirate has taken effective steps to stabilize the economy, but many have said government needs to facilitate new investments.
Afghanistan’s private sector has in addition called on the Islamic Emirate to invest in agriculture and mining; to generate electricity; and develop transit, telecommunications, fiber optics and telecommunication sectors.
Business
Tajik investors express interest in cement production in Afghanistan
A delegation of Tajikistani investors has expressed interest in establishing a cement production factory in Afghanistan, signaling renewed economic engagement between the two neighbors after four years of limited activity.
The delegation met with Hedayatullah Badri, Afghanistan’s Minister of Mines and Petroleum, to discuss potential investment opportunities in the country’s mining and industrial sectors. Officials said the visit reflects Tajikistan’s increasing willingness to expand economic cooperation with Afghanistan.
During the meeting, the Tajik investors praised the Islamic Emirate for what they described as improved security and a more conducive investment environment across Afghanistan.
Minister Badri welcomed the investors’ proposal and assured them of the government’s full support, emphasizing that Afghanistan is ready to facilitate investment through streamlined procedures and favorable conditions.
Representatives of Afghanistan’s private sector also view the development as a positive step toward strengthening bilateral economic ties.
Abdul Jabbar Safi, head of the Afghanistan Industries Association, said:
“After four years, Tajikistan is looking to take part in Afghanistan’s economic sector. This is encouraging news for the governments and the people of both countries.”
Economic experts believe that deeper economic engagement between Afghanistan and Tajikistan could unlock significant mutual benefits.
Nazir Ahmad Khalil, an economic analyst, said: “Tajikistan and Afghanistan share language, culture and geography. Expanding trade and investment between the two countries can meaningfully improve their economic situations. Building trust will be essential for long-term cooperation, and such investment can play a major role in poverty reduction and confidence-building.”
This new chapter of economic cooperation between Afghanistan and Tajikistan comes at a time when, since the return of the Islamic Emirate to power, several major projects have been launched between Afghanistan and Central Asian states.
The leadership of the Islamic Emirate has repeatedly emphasized that it seeks to strengthen economic relations with neighboring countries, the region, and the wider world on the basis of mutual respect.
Business
Trade bodies warn almost 11,000 Afghan transit containers stuck at Karachi port
SCCI officials urged authorities to separate trade from political tensions and immediately launch dialogue to restore commercial traffic between the two countries.
Trade bodies report that nearly 11,000 Afghan transit trade containers are stranded at Karachi port, while thousands more— including shipments of perishable goods—remain stuck at the Ghulam Khan, Spin Boldak, Kharlachi, and Torkham crossings between Afghanistan and Pakistan.
Traders involved in Pakistan–Afghanistan bilateral and transit commerce say they have suffered billions of Pakistani rupees in losses as the prolonged border shutdown continues to stall the movement of goods. Perishable food items have already begun to spoil, compounding financial losses.
They also report a sharp drop in bilateral trade volumes. Exporters who were already issued Form-E certificates have been unable to dispatch consignments, with the closure now nearing two months.
Sarhad Chamber of Commerce and Industry (SCCI) President Junaid Altaf said trade—already limited—has deteriorated further due to the closure of crossings. He estimated losses of roughly $45 million since the Torkham closure began, adding that the halt is damaging for both economies and directly affecting families whose livelihoods depend on trade.
SCCI officials urged authorities to separate trade from political tensions and immediately launch dialogue to restore commercial traffic between the two countries.
In recent weeks, repeated closures of the Pakistan–Afghanistan crossing have also brought pharmaceutical exports to a halt, putting nearly $200 million worth of medicines at risk. Hundreds of trucks carrying antibiotics, insulin, vaccines, and cardiovascular drugs remain stuck at Torkham and Chaman, with temperature-sensitive supplies facing potential spoilage.
The Pakistan Pharmaceutical Manufacturers Association (PPMA) warned that the disruption extends far beyond Afghanistan’s medicine supply. Afghanistan is Pakistan’s main overland route to Uzbekistan, Tajikistan, Turkmenistan, and Kazakhstan, and ongoing shutdowns are undermining key regional connectivity projects, including the Pakistan–Uzbekistan–Afghanistan railway.
Stakeholders are calling for urgent steps to reopen the crossings, warning that prolonged closures threaten not only pharmaceutical exports but Pakistan’s broader economic engagement across the region.
Business
Pakistan’s citrus export crisis deepens amid ongoing Afghanistan trade route closure
Afghanistan, which absorbs around 60% of Pakistan’s citrus exports, has remained closed to trade since mid-October.
Pakistan’s citrus sector is facing a worsening export crisis as the closure of the Afghanistan crossing continues to block access to its largest market.
Despite the start of the 2025 citrus season, exports are set to fall further from an already steep decline — dropping from $211 million in fiscal year 2021 to just $92.5 million in fiscal year 2025.
Afghanistan, which absorbs around 60% of Pakistan’s citrus exports, has remained closed to trade since mid-October.
This year alone, Pakistan shipped 153,683 tonnes of citrus to Afghanistan, while exports through the Afghan transit route also supply Russia, Kazakhstan, and Uzbekistan. With that corridor shut, exporters warn that the bulk of Pakistan’s kinnow harvest could go unsold.
A temporary policy exemption now allows citrus shipments to transit through Iran, but exporters say volumes to Central Asia and Russia cannot compensate for the loss of the Afghan market.
The crisis, however, goes deeper than the current crossing closure situation. Pakistan’s citrus industry continues to suffer from long-standing structural challenges — including reliance on the outdated, seeded kinnow variety that makes up over 90% of exports.
Climate change, rising pest pressure, shrinking yields, and declining A-grade fruit quality have all eroded competitiveness. Yields have fallen to about six tonnes per acre, and nearly half of kinnow processing units have closed.
Global competitors such as Egypt, China, Spain, Morocco, and Brazil have overtaken Pakistan by introducing new seedless, high-yielding varieties with longer harvest windows. As profits shrink, farmers are abandoning citrus orchards: the cultivated area has dropped 16% in the past five years.
Experts say Pakistan must urgently invest in developing seedless, climate-resilient varieties and strengthen existing research centres. At the same time, trade officials need to diversify export destinations by securing new sanitary and phytosanitary agreements to reduce dependence on a single market.
Without structural reforms and diversified access, Pakistan’s signature fruit risks losing its place in global markets — and its farmers risk losing their livelihoods.
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