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Exports to Pakistan increase sharply, thanks to coal and cotton

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Pakistan says its exports to Afghanistan have dropped and imports sharply increased in the current financial year, leading to a bilateral trade balance for the first time in favor of the war-torn neighbor, VOA reported.

This comes after Pakistan implemented trade-related concessions for Afghanistan earlier this year in a bit to help it overcome humanitarian and economic crises.

VOA reported that in the 11 months of the current financial year, Pakistani exports to Afghanistan have dropped to around $700 million from more than $900 million last year, a spokesperson for the commerce ministry in Islamabad said. 

According to the report, the change is attributed mainly to increased purchases of Afghan coal and good quality cotton by Pakistan in recent months.

The spokesperson said that imports from Afghanistan have increased to more than $700 million from $550 million last year.

The decline in Pakistani exports is attributed to U.S. sanctions on the interim Islamic Emirate of Afghanistan (IEA) government, the absence of banking channels and non-availability of dollars in Afghanistan, as well as a drop in demand for certain Pakistani goods, VOA reported.

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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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