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SIGAR issues pessimistic economic forecast for Afghanistan

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Afghanistan’s economy suffered severe contraction in 2021, with the UN Development Programme (UNDP) and IMF estimating up to a 20–30 percent drop, the US Special Inspector General for Afghanistan Reconstruction (SIGAR) reported.

According to SIGAR’s latest report, annual per capita income is estimated to have fallen from $650 in 2012, to $500 in 2020, and is expected to drop to $350 by 2022.

SIGAR stated that male unemployment in Afghanistan may nearly double from 15.2 percent in 2019 to 29 percent by 2022.

“In the worst-case scenario modeled by the Asian Development Bank, unemployment could increase by more than 40 percent in the short run and household consumption could contract by 44 percent,” read the report.

The devaluation of the afghani has also impacted the Afghan economy and further diminished Afghan households’ ability to purchase food and
other necessary items, because much foreign trade was settled in US dollars.

Since August last year, the afghani has depreciated against the US dollar, from approximately 77 afghani to the dollar to around 105 as of January
2, 2022.

SIGAR also reported that adding to the pressure on the country’s limited cash reserves, Afghanistan lacks the technical capabilities to print its own currency.
According to SIGAR, the IEA has not yet secured or developed a domestic printing source for afghani banknotes.

SIGAR reported that Afghanistan’s largely cash-based economy has continued to struggle with an acute cash shortage since November, which has limited day-to-day economic activities.

“Banks are at the center of a liquidity crisis, with lost access to international financing and depositors attempting to recover their funds,” read the report.

According to a UNDP report, Afghanistan’s banking system is in “existential crisis.” Total deposits had fallen to the equivalent of $2 billion as of
September 2021 from $2.8 billion the month.

As the Afghan economy has struggled to find areas of sustainable economic growth in recent years, the country has increasingly relied on remittances from Afghans working abroad, especially in neighboring Iran.

By 2019, remittances accounted for the equivalent of 4.3 percent of Afghanistan’s annual GDP, an increase from 1.2 percent in 2014, according to World Bank data.

However, officials from the UN’s International Organization for Migration estimate this figure could have been as high as 15–20 percent, given that many remittances are sent through the informal hawala money-transfer system.

According to officials at Médecins Sans Frontières, with the absence of a functioning banking sector, many NGOs have also been forced to rely on
hawalas to pay expenses within Afghanistan.

In November 2021, the IEA announced a complete ban on the use of foreign currency in Afghanistan, interfering with remittance activities and
worsening the country’s liquidity crisis.

However, SIGAR reported that indicators suggest that the currency ban is not being actively enforced against the US dollar, which continues to be widely used in Afghan markets.

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Construction of 252 MVA substation in Kabul’s Tarakhel gets underway

The projects will be implemented by local companies with a total investment of $18.7 million. Once completed, the substation will supply 250,000 residential and business clients with electricity.

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Officials on Sunday inaugurated construction work of the 252 MVA substation in Kabul’s Tarakhel area and the 220 KV power line project from Chemtala to this substation.

The projects will be implemented by local companies with a total investment of $18.7 million. Once completed, the substation will supply 250,000 residential and business clients with electricity.

Speaking at the inauguration ceremony, Political Deputy Prime Minister Mawlawi Abdul Kabir said that controlling Afghanistan's waters, water supply, production of wind, solar and thermal energy and the development of agriculture are among the priorities of the Islamic Emirate, assuring neighbors that it will not affect them. He also noted that Afghanistan's soil has not been used against any country and the world also wants to engage with the Islamic Emirate.

"The world has recognized that a stable and self-sufficient Afghanistan will be possible only with the Islamic Emirate in power. The Islamic Emirate has proven in practice that no one is harmed from the soil of Afghanistan and today the world is interested in cooperation and engagement with Afghanistan,” he said.

Meanwhile, officials of Da Afghanistan Breshna Sherkat (DABS) said that two electricity transmission projects of 2,000 megawatts are underway from Turkmenistan and Uzbekistan.

"With the implementation of these projects, 24/7 electricity will be provided to all industrialists, businessmen and residential houses in Kabul,” said Abdul Bari Omar, the head of DABS.

According to the Ministry of Energy and Water, a large water dam in Zabul will soon be commissioned, the construction of Pashdan Dam has been completed and the clearing process for the handover of Shah wa Arus Dam in Kabul is underway.

This dam will provide drinking water to 20,000 families in the city, thousands of hectares of land will be irrigated and 2 megawatts of electricity will be produced.

 

 

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Energy minister, Indian company talk handover of Arghandi 500 KV substation

Arghandi substation project is scheduled to be completed within two years, and it will supply electricity to Kabul and 12 provinces.

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Acting Minister of Energy and Water Abdul Latif Mansour has met and discussed with the head of Indian company Good Rich Logistic about the handover of the Arghandi 500 KV substation.

According to a statement released by the ministry, Mansour instructed the officials of the ministry to make the necessary preparations for the handover of the substation and transfer of its transformers.

Arghandi substation project is scheduled to be completed within two years, and it will supply electricity to Kabul and 12 provinces.

“The capacity of this line is about 1,000 megawatts of electricity. It can transfer electricity from Turkmenistan and Uzbekistan directly to Kabul, and from Kabul it can supply electricity to eastern, southern and even central provinces,” said Amanullah Ghalib, the former head of national power utility Da Afghanistan Breshna Sherkat (DABS).

Experts say the substation will help address shortage of electricity.

“The problem is that a large part of Afghanistan's energy is supplied from neighboring countries, and whenever these countries need energy domestically, they cut off Afghanistan's energy, and houses and factories face a significant shortage of electricity, “Aminullah Ehsaas, an expert on economic affairs, said.

Although Afghanistan has abundant resources for generation of electricity, it imports a large part of its electricity needs from neighboring countries and pays more than 300 million dollars annually to Uzbekistan, Tajikistan, Iran and Turkmenistan.

 

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Baradar hails Termez Trade Center as a ‘new chapter’ in Afghan-Uzbek partnership

This will positively impact the economic relations between the two countries and establish the center as a key economic hub and commercial gateway for Central and South Asian nations, he said.

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In a ceremony to inaugurate an international trade center in Uzbekistan’s border city of Termez on Thursday, Mullah Abdul Ghani Bardar, Deputy Prime Minister for Economic Affairs, said that the center marks a new chapter of friendship, cooperation and partnership between Afghanistan and Uzbekistan, laying the groundwork for long-term prosperity and development of both countries.

Baradar noted that the center will enhance investment opportunities, commercial relationships, and job creation in both nations, and will introduce new markets for products and goods, and, overall, accelerate economic growth, according to a statement released by his office.

Highlighting the importance of this center, Mullah Baradar mentioned that the center's inauguration would facilitate the production, processing, and export of goods, making it easier to access regional and global markets.

This will positively impact the economic relations between the two countries and establish the center as a key economic hub and commercial gateway for Central and South Asian nations, he said.

Furthermore, the trade center will strengthen joint cooperation between the two countries in the fields of technology and innovation.

According to Mullah Baradar, the center will create essential facilities and opportunities for Afghan and Uzbek traders, enabling them to find suitable markets for their products and actively contribute to the region's economic development.

He called on the international community to establish appropriate reciprocal economic and trade relations with the Islamic Emirate of Afghanistan, in line with its economy-focused policies, and assured that the Islamic Emirate is committed to providing all necessary support and facilitation in this regard.

The ceremony was also attended by senior officials of Uzbekistan, Azerbaijan, Kazakhstan and Kyrgyzstan.

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