Business
EU helps Afghanistan with debt relief amid ongoing pandemic
The EU announced Tuesday it will provide Afghanistan with 2.9 million Euros in grant funding to be used towards debt relief in a bid to help the country maintain its commitment and path towards reaching its Sustainable Development Goals.
The EU said in a statement the ongoing pandemic has carried severe health, social and economic consequences around the world, including in Afghanistan. In many developing countries, debt levels were already high before the crisis and are now at risk of becoming unsustainable.
“Afghanistan has to cope with sharply declining revenue as a consequence of the crisis, driven by restrictions on economic activity and trade. Tax revenue dropped by 40 percent in April–May 2020 while the expenditure burden for health and other social services increased,” the statement read.
“The Afghan government successfully managed to borrow considerable amounts in highly concessional loans from the IMF to cover its fiscal deficit during the crisis. Although Afghanistan’s debt level still remains low, the current revenue position increased vulnerability,” read the statement.
EU Chargé d’ Affaires Arnout Pauwels meanwhile said: “Today’s announcement is good news for Afghanistan, as this additional funding will free space to increase the social, health and economic spending in response to the COVID-19 crisis.
“This comes in addition to the substantial support the EU has already provided to Afghanistan to tackle the pandemic, both bilaterally and through the COVAX facility,” he said.
The support announced Tuesday will also contribute to Afghanistan’s macro-economic stability. This comes at an important moment, as the EU’s assessment of the government’s performance on the 2020 State and Resilience Budget Support begins. For years, economic stability and sound public finance management have been at the heart of the EU’s dialogue with countries receiving EU budget support.
Since the start of the pandemic, the EU has mobilised almost 147 million euros to Afghanistan to address the immediate health crisis and provide humanitarian assistance to the people in need. As the largest donor to the COVAX facility, the EU and its member states have also enabled the delivery of almost 500,000 doses of vaccine to Afghanistan.
Ariana Afghan Airlines has announced a reduction in cargo service rates on the Kabul–Delhi route as part of efforts to support Afghanistan’s trade and export sector.
The airline said the new cargo rate has been set at $1.20 per kilogram, a move intended to make air freight more affordable and accessible for Afghan traders and exporters.
Bakht-ur-Rahman Sharafat, head of Ariana Afghan Airlines, said the decision is expected to play a significant role in increasing exports of domestic products and strengthening commercial activity between Afghanistan and India.
He added that Ariana will continue to introduce new measures in the future to improve its services and better meet the needs of its customers.
Thirteen trade and investment memorandums of understanding (MoUs) worth more than $100 million were signed between private sector representatives of Afghanistan and Uzbekistan during a conference held in Kabul on Saturday.
The conference, which brought together business leaders and officials from both countries, focused on expanding bilateral economic cooperation, increasing trade volume, and identifying new investment opportunities.
Speaking at the event, Nooruddin Azizi, Minister of Industry and Commerce of Afghanistan, said economic relations between Afghanistan and Uzbekistan have gained notable momentum in recent months. He stressed that Afghanistan is actively working to strengthen regional trade ties and create a more favorable environment for investors.
Azizi added that Afghanistan offers significant investment potential, particularly due to its available workforce and emerging opportunities across multiple sectors, and is ready to welcome joint ventures with foreign partners.
Officials from the Ministry of Industry and Commerce of Afghanistan said the government has facilitated around $2 billion in investment across various sectors over the past year, reflecting growing investor interest in the country’s economy.
The Uzbek delegation also reiterated its commitment to expanding economic relations with Afghanistan, describing the agreements as an important step toward deeper regional cooperation.
Amanbay Orynbayev, head of Uzbekistan’s Karakalpakstan delegation, said his country places strong emphasis on long-term, transparent, and reliable economic partnerships. He encouraged Afghan traders to take advantage of joint investment opportunities to access new regional markets.
The Afghan private sector welcomed the agreements, expressing hope that increased trade engagement and business exchanges will further strengthen economic ties between the two neighboring countries.
Officials noted that the total value of agreements signed between Afghanistan and Uzbekistan has now exceeded $1.5 billion. If implemented effectively, these commitments are expected to contribute to increased trade flows and broader economic growth in Afghanistan.
A new multimodal freight corridor linking China and Afghanistan via Turkmenistan has been officially launched, aiming to improve the speed and efficiency of overland cargo transportation across Central Asia.
According to the Turkmenistan Embassy in London, the country has become part of a newly established route designed to accelerate freight deliveries between China and Afghanistan.
The corridor, developed with the involvement of Uzbekistan Railways’ subsidiary Uztemiryulcontainer, covers approximately 7,400 kilometers and is expected to reduce transit time to around 30 days, improving overall logistics efficiency.
Under the new route, containers are transported by rail from China through the Altynkol station in Kazakhstan, continuing via Uzbekistan to a logistics hub in Bukhara. From there, cargo is transferred to road transport and moved across Turkmenistan before reaching Herat in Afghanistan.
Officials say the new system integrates rail and road networks into a unified logistics chain, making transport more predictable and efficient.
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