Business
Political and security uncertainty slow Afghanistan’s economic recovery
Continued political uncertainty and a possible decline in international aid is slowing down Afghanistan’s economic recovery from COVID-19, the World Bank said Monday in its latest country update.
The World Bank’s report, Setting Course to Recovery, shows that robust agricultural growth has partially buoyed Afghanistan’s economy, which shrunk by around two percent in 2020 – a smaller contraction than previous estimates.
However, lockdowns, weak investment, and trade disruptions have hit services and industries, increasing hardship and unemployment in cities.
Growth is expected to reach one percent in 2021 and top around three percent in 2022 as the COVID-19 crisis fades. Per capita incomes are unlikely to recover to pre-COVID levels until 2025 due to fast population growth, the report noted.
“The current political and security uncertainties have created serious hurdles to Afghanistan’s economic recovery from the COVID-19 crisis. A slower pace of recovery means higher unemployment, lower government revenues, and – ultimately – more difficult living conditions for Afghans,” said Henry Kerali, World Bank Country Director for Afghanistan.
A full recovery will be challenging as many firms have closed and jobs were lost. Private sector confidence has weakened amid difficult security conditions, uncertainty about the outcome of the ongoing peace talks, the possible withdrawal of international troops, and potential sharp declines in future international aid support.
The report also noted that droughts are expected in 2021 and will likely reduce agricultural activity, further weakening growth prospects.
The report emphasizes that a strong and sustainable partnership between the Afghan government and its international partners is key to driving recovery and restoring private sector confidence.
In that effort, the government needs to accelerate reforms to improve governance, fight corruption, mobilize revenue, and boost business.
The report also noted that simultaneously, donors can support private sector confidence through clearer multi-year aid commitments and by defining measurable priority reforms that condition continued grant support.
Afghanistan’s state-owned Oil and Gas Company has announced a temporary adjustment to some technical standards for importing gasoline, diesel and liquefied petroleum gas (LPG) following a sharp rise in global oil and gas prices and their impact on the domestic market.
In a statement, the company said the committee responsible for preventing the import of substandard fuel had reviewed market conditions and domestic demand before deciding to temporarily apply revised limits to certain technical specifications and permissible standards for imported fuel under specific conditions.
The company said the move is an exceptional and temporary measure aimed at facilitating fuel imports, ensuring timely market supply, preventing shortages and reducing the impact of global price volatility. The revised standards will remain in effect until market conditions stabilize and relevant authorities issue further instructions.
The decision comes as fuel prices have risen sharply across Afghanistan in recent days, prompting widespread public concern and complaints.
The increase has been linked to a significant decline in Afghanistan’s fuel imports from Russia following recent Ukrainian attacks on Russian oil facilities, which have disrupted supplies.
Business
Iran, Afghanistan and Tajikistan sign agreement to boost regional transit
Officials said the agreement reflects the three countries’ shared commitment to improving regional connectivity, expanding trade and making more effective use of existing transit corridors.
Iran, Afghanistan and Tajikistan have signed a joint agreement aimed at strengthening regional connectivity and facilitating international transit and road freight cooperation among the three countries.
According to the Iranian Embassy in Dushanbe, the agreement was signed following a trilateral meeting held in the northeastern Iranian city of Mashhad, where officials discussed ways to expand regional transport and economic cooperation.
The agreement is designed to enhance cross-border freight transportation, facilitate international transit, strengthen economic ties and promote closer coordination in the field of international road transport.
The document was signed by Reza Akbari, Iran’s Deputy Minister of Roads and Urban Development and head of the Road Maintenance and Transportation Organization, Shayesteh Saeedmoradzadeh, Deputy Minister of Transport of Tajikistan, and Yar Mohammad Ramazan, Director General of Legal Affairs and Agreements at Afghanistan’s Ministry of Transport and Civil Aviation.
Officials said the agreement reflects the three countries’ shared commitment to improving regional connectivity, expanding trade and making more effective use of existing transit corridors.
The initiative is expected to support greater economic cooperation, facilitate the movement of goods and strengthen Afghanistan’s role as a key transit link between Central and South Asia.
Business
Iran, Afghanistan and Tajikistan discuss expanding regional transit cooperation
Officials from the three countries met in the northeastern city of Mashhad, the capital of Razavi Khorasan Province, on July 14 and 15.
Iran, Afghanistan and Tajikistan have held trilateral talks aimed at expanding cooperation in transit and road freight transportation as the three countries seek to strengthen regional connectivity and boost trade.
According to Iran’s Ministry of Roads and Urban Development, officials from the three countries met in the northeastern city of Mashhad, the capital of Razavi Khorasan Province, on July 14 and 15.
The discussions focused on enhancing cooperation in cross-border road freight transport, activating regional transit corridors, increasing trade exchanges and promoting broader economic cooperation.
The ministry said the initiative could facilitate international trade, strengthen regional connectivity and support sustainable economic development across the region.
It added that the meeting marked an important step toward making better use of the three countries’ shared transit potential, strengthening regional partnerships, enhancing the region’s role in international transport corridors and expanding transit infrastructure.
According to an analysis by Trend, the trilateral meeting could pave the way for the development of new logistics routes linking the three countries. The report said the initiative aligns with Iran’s broader strategy of strengthening connectivity with Central Asia and maximizing its role as a regional transit hub.
In recent years, Iran has expanded investment in key transport projects, including the International North-South Transport Corridor (INSTC), Chabahar Port, eastern border crossings and railway infrastructure. Increased freight cooperation with Afghanistan and Tajikistan is expected to improve access to Central Asian markets while contributing to higher regional trade and transit revenues.
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