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UNDP warns Afghan economy to contract by 6% due to COVID-19

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United Nations Development Program (UNDP) Afghanistan launched its latest COVID-19 impact assessment report on Wednesday and said the pandemic has set back Afghanistan’s economic growth by several years.

The report, the 4th since the coronavirus outbreak, exposed structural and resource gaps in responding to unforeseen events such as pandemics. The country had to reallocate resources from long-term development priorities to fighting this health crisis.

In a statement issued by the UNDP, the organization said the report, titled “Fiscal Options in Response to Coronavirus Crisis”, focused on the fiscal implications of COVID-19.

The UNDP stated it estimates that due to a combination of external and internal shocks, the Afghan economy will contract by around six percent in 2020.

“Assuming the recovery starts in 2021 and growth performance to be positive between 2021 and 2024, it will be moderate, and well below the pre-pandemic level.

“Without well thought-out recovery-oriented policies, this amounts to a cumulative loss of around 12.5 percent in real GDP by 2024,” read the statement.

UNDP said Afghanistan witnessed a sharp decline in revenues in 2020 due to low economic activity, trade disruption and weaker compliance brought on by the pandemic.

“The government had to adjust the revenue estimates downwards from Afs 209 billion (US$2.71 billion) in 2019 to Afs 144 billion (US$1.87 billion) during the mid-year budget review.”

UNDP stated it estimated an average of 17 percent decline in corporate tax revenue and 18 percent decline in personal income tax revenue.

“Tax on international trade will be the worst hit and revenues may decline to as low as 19 percent due to the decrease in imports, while tax revenue on goods and services might decline by 10 percent,” the statement read.

Meanwhile, UNDP stated the fiscal deficit is expected to increase to around four percent of GDP in 2020.

“The Government of Afghanistan needs to opt for policies and programmes to generate more revenue to address the fiscal deficit.

“Given the economic slowdown, a second wave of the pandemic, continued conflict, and an uncertain peace process and political environment, the country will continue to need grant support from the international community to address the fiscal deficit and maintain its current level of expenditure on basic services,” read the UNDP’s statement.

The organization also stated that additional grants need to be directed at driving and implementing reforms to improve the business regulatory environment, improve governance, encourage investment and strengthen the private sector.

According to the statement, the UNDP and other stated along with other international development partners, it would continue to support Afghanistan in the run up to the donor pledging conference later this month.

However they urged the Afghan government to address the immediate fiscal impact of the pandemic and help reverse its negative effects.

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Ariana Afghan Airlines lowers cargo rates on Kabul–Delhi route to boost exports

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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.

 
 
 
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Afghanistan, Uzbekistan sign 13 trade MoUs worth over $100 million

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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.

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New Afghanistan-China transport corridor launched via Turkmenistan

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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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