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The rise of the Taliban to power in Afghanistan not good news for the economy of the country of middle East. Slowly but steadily, the country’s finances had been improving in the last two decades -since the intervention of United States in 2001 – in the heat of international aid and the adoption of a free market economy.

In this way, the arrival of a new government Without the support of any foreign power and with the aim of re-centralizing the entire productive apparatus, the Taliban will become a breeding ground for an increase in the deficit, unemployment, inflation and a significant drop in GDP. as warned by economists and international organizations.

An economic instability that will only increase the already precarious situation of the Afghan economy. 39% of its citizens live in poverty, a figure that will increase by destroying the poor quality of life that Afghans had gained in the last two decades.

Input, the new Afghan government will not be able to count on $ 12 billion in aid committed by the international community in November, since these resources were conditional on the peace process between the Afghan government and the Taliban.

A prelude to closing the tap on international aid. As reported by world BankDespite slow growth in 2018, the government was able to raise 12% more revenue (189.7 billion Afghanis, about 2 billion euros). Income that will fall by half without international aid.

GDP evolution

In any case, the few expectations of economic growth that the country had were directly related to the maintenance of the Government of National Unity. “While sustained peace would raise prospects for development, the failure of the talks could exacerbate violence, leading to loss of life, destruction and potentially a refugee crisis, hampering the ability of authorities to undertake actions. reforms that support the forecasts, and feed the outflow of capital, “the IMF said recently.

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Since the arrival of United States, its GDP has increased fivefold from 4,000 million to 20,000 million (in stable dollars), with an average annual growth of 6.2% between 2003 and 2020. However, GDP growth in 2018 was only 2.2% and in 2020 has fallen.

The START per capita has increased 166% to $ 509 and its population has almost doubled, from 22 million to 39, according to data from the World Bank. However, analysts agree that despite massive foreign aid flows over two decades, the Afghan economy remains unstable and inequality is extreme.

The inflation rate is high, 4.9% in 2017, according to the CPI, a stark contrast to -0.6% in 2015. Foreign direct investment remains minimal due to political violence and a substantial lack of skilled workers. Consequently, the World Bank ranked Afghanistan 167th out of 190 countries in its 2018 Doing Business report.

On the other hand, and although there is no official and exhaustive evaluation of unemployment, 46.3% of Afghans reported being involved in some type of economic activity, according to a survey by the Asia Foundation 2018.

Withdrawal of the troops

Public debt was recorded at 7.10% of GDP in 2018. Internal public revenue collected by the government in 2018 shows an improvement. With 189.7 billion Afghans raised, revenue collection for 2018 reached a record high. A situation that diminished towards 2020 due to the coronavirus crisis.

In fact, the loss of steam is directly related to the outflow of foreign aid from the United States and other countries. According to Pajhwok News Agency, Since the inauguration of the Government of National Unity in 2014, the Afghan has plummeted more than 23%.

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Two factors have contributed to this trend: the withdrawal of most international forces in 2014 and the country’s growing trade deficit. The income generated for the local economy by the presence of international forces has decreased and they have not been compensated by the local productive structure.

Agriculture, the most important source of employment in Afghanistan, which occupies between 85% and 90% of the population in rural areas, is also unstable. Consequently, in the first six months of 2020, the value of domestic production fell rapidly due to lower food prices and drought, and farmers had to sell their products at lower prices to quickly raise capital to mitigate the decline. drought, according to the IMF.

On the other hand, the financial services sector continues to be affected by several factors. Due to its dependence on foreign aid and the large fiscal gap, the country’s financial services sector suffers from instability and a poor fiscal structure.

Financial instability

Only 17.6% of the adult population aged 25 years and over has completed some level of formal education. Afghanistan’s adult literacy rate (about 31%) is one of the lowest in the world.

The Afghan state is still heavily dependent on foreign aid. Despite its five-year financial management plan and fiscal performance improvement plan, the Afghan economy is hard hit by the trade deficit and growing instability. An instability that will get worse with the Taliban in power.

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