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Outlook for Afghan economy ‘dire’ as household incomes shrink: World Bank
The outlook for Afghanistan’s economy is dire with per capita income having fallen by over a third in the last four months of 2021 after the Islamic Emirate of Afghanistan (IEA) seized power and foreign forces withdrew, the World Bank said on Wednesday.
“One of the poorest countries in the world has become much poorer,” said Tobias Haque, World Bank Senior Country Economist for Afghanistan.
“The isolation of the Afghan economy following last August’s political crisis risks…leading to grave poverty, displacement, fragility, and extremism threats,” he told a briefing for the release of the World Bank’s first development update on the country since August Reuters reported.
The IEA takeover prompted foreign governments, led by the United States, to cut development and security aid, and the strict enforcement of sanctions has debilitated the country’s banking sector.
The World Bank update said that incomes had dropped so starkly that around 37% of Afghan households did not have enough money to cover food while 33% could afford food but nothing more, Reuters reported.
An IEA failure to meet Western conditions, in particular access to education for all girls, has led the international community to withhold international assistance and keep financial sanctions in place, with exceptions for humanitarian aid.
“Under current conditions, the outlook for Afghanistan’s economy is dire,” the World Bank said in a statement accompanying the update.
If current conditions continued, the World Bank predicted, Afghanistan’s real gross domestic produce (GDP) per capita would decline by around 34% between the end of 2020 and the end of 2022, reversing all progress since 2007.
The United States cancelled planned meetings in March, some of which would have included the World Bank, to discuss key economic issues after the IEA sent all high school-aged girls home after they had arrived ready for classes.
The U-turn angered donors, foreign governments and many Afghans as IEA officials had previously said they were opening all schools.
Three foreign nationals and one Afghan were killed when gunmen opened fire in Afghanistan’s central Bamyan province on Friday, the Interior Ministry said.
Abdulmatin Qane, the spokesman of the Ministry of Interior, said that three Afghans and four foreigners were injured in the shooting.
He added that four people were arrested in connection with the incident.
Qani did not specify which country the foreigners belonged to.
There was no immediate claim of responsibility for the attack.
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China and Pakistan call for inclusive ‘political framework’ and ‘moderate policies’ in Afghanistan
According to the statement, Wang and Dar called for concerted efforts from the international community to help Afghanistan address challenges in areas such as the humanitarian situation and economic development.
“The two sides agreed to strengthen communication and coordination on the Afghanistan issue,” the statement read.
“They called for concerted efforts of the international community to help Afghanistan properly address challenges in such areas as the humanitarian situation and economic development, and encourage Afghanistan to build an inclusive political framework, adopt moderate policies, pursue good-neighborliness, and firmly combat terrorism, including not allowing its territory to be used for terrorist acts.
“Both sides agreed to play a positive and constructive role in helping Afghanistan achieve stable development and integrate into the international community,” the statement read.
Negotiations are ongoing between Afghanistan and Iran to sideline the US dollar in bilateral transactions, the deputy governor of the Central Bank of Iran (CBI) said this week.
According to media reports, Mohsen Karimi, the head of the CBI, said talks are ongoing between the two countries for the implementation of “offshore rial” in Afghanistan.
Karimi said the “offshore rial” is used with the aim of supporting the economic activity and exporters of the private sector of the country.
Recently, CBI Governor Mohammad Reza Farzin announced that Tehran plans to use the “offshore rial” for trade with Russia, Afghanistan and Iraq. He also said at the time that the idea of ditching the US dollar has produced positive results.
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