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World Banks says Afghanistan’s economy adjusting to new realities

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(Last Updated On: October 19, 2022)

The World Bank said in it’s latest Afghanistan Development Update report that the country’s economy is adjusting to a “new normal” following the collapse of the former government and take over by the Islamic Emirate of Afghanistan (IEA).

According to the report, a sharp decline in public spending, lower household incomes, and reduced consumption caused aggregate demand to fall, while disruptions in the payment system and supply constraints further hampered private sector activities, initially forcing many businesses to close or scale down their operations.

The report noted that preliminary statistics on the gross domestic product (GDP) show that the economy contracted by about 20 percent in 2021.

However, the resumption of off-budget international support for humanitarian needs and basic services helped mitigate some of the negative impacts over the past year.

The report concludes that Afghanistan’s economy is now much smaller than before after contracting significantly. The economy has now reached a point where it is likely to plateau.

The World Bank stated that while inflation remains high, some indicators have improved: exports have increased, exchange-rate volatility has reduced, and domestic revenue collection is relatively healthy.

In addition, private businesses are adjusting to the new operating environment.

“While there are signs of economic stabilization and resilience of Afghan businesses, the country continues to face enormous social and economic challenges that are impacting heavily on the welfare of the Afghan people, especially women, girls, and minorities,” said Melinda Good, World Bank Country Director for Afghanistan.

“Living conditions showed slight improvements in the past few months, but deprivation remains very high across the country, and persistent inflation might further erode any welfare gains,” she added.

The report projects that the real GDP in 2022 will contract further, with an accumulated contraction of close to 30-35 percent between 2021 and 2022.

“A range of economic and political scenarios is possible for Afghanistan’s future. While all scenarios depend on continued off-budget aid from the international community, a more upside and sustainable trajectory requires actions by the interim Taliban (IEA) administration to unlock much-needed economic integration and domestic opportunities for the private sector to create jobs for the Afghan people,” added Good.

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Five countries eager to invest in lithium mines in Nuristan: officials

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(Last Updated On: March 24, 2023)

The Islamic Emirate officials say five countries are interested in investing in the “lithium” mining sector in Afghanistan’s Nuristan province.

Mohammad Yunus Rashid, the deputy of youth in the Ministry of Information and Culture, said that Japan, the US, China, Qatar and the United Arab Emirates are among the countries that are interested in investing in the mining sector of lithium mines in Nuristan province.

“There is a lot of interest in lithium mining at the global level, five countries have made contact with the Islamic Emirate and said that they are ready to invest in this sector,” said Rashid.

According to officials, there are high capacities for economic self-sufficiency in the country and positive changes will be made in the economic development of the country in the near future.

Economic experts meanwhile believe that if the extraction and processing of the country’s minerals are done in Afghanistan, the country can get out of the economic crisis very quickly.

“There are trillions of dollars of capacity in Afghanistan’s mines, which should be invested, the statistics should be accurate, the regions should be determined, in which areas we have what kind of mines,” said Kamaluddin Kakar, an economic expert.

In addition, members of the private sector say they are trying to invest jointly and individually with foreign investors in the mining sector. They call on the Islamic Emirate to hand over mining contracts to companies that have the ability to process in the country.

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Customs duties on essential food items drops by up to 70%

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(Last Updated On: March 20, 2023)

The Ministry of Finance said that based on the decision of the leadership of the Islamic Emirate of Afghanistan, customs duties on basic food items have dropped by between 50 and 70 percent in the last solar year.

As a result of this decision customs duties have been reduced to the value of 6.7 million afghanis this year, the ministry said.

The decision to decrease customs duties on the food items that include flour, wheat, cooking oil, rice, and sugar, was to keep the prices down on local markets.

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Kunduz commerce department’s revenues rise by 48%

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(Last Updated On: March 19, 2023)

Kunduz Directorate of Industry and Commerce officials say their revenues have increased by 48 percent this solar year.

According to officials, the institution has collected more than 12 million Afghanis from the extension and distribution of licenses to manufacturing companies.

Mohammad Rahim Sirat, head of Kunduz Directorate of Industry and Commerce, said they distributed licenses to 112 people and renewed the licenses for 303 people.

Meanwhile, Kunduz Municipality officials also announced that they have collected 120 million Afghanis in 11 months of the current solar year, which shows a 40 percent increase compared to the same period last year.

Tajuddin Sohak, the spokesman for Kunduz Municipality, said they collected 120 million Afghanis this year, which shows a 40 percent increase from 86 million afghanis last year.

But shopkeepers and owners of manufacturing companies in Kunduz complain about the lack of a market for their products. They say that in the past their goods used to be exported abroad, but now exports have declined.

“In the past, we used to export to Iran, Pakistan, and Iraq, but our exports have decreased compared to the past. We ask the government to cooperate with us to provide the basis for export,” Wasim Akram, an entrepreneur, said.

Local officials in Kunduz say they have always tried to facilitate trade. They express hope that in the new year their efforts for foreign marketing of manufacturing companies will produce good results.

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