Two years since the Taliban took over… How is Afghanistan’s economy look like?
Two years have passed since the departure of foreign forces from Afghanistan, the Taliban’s control of the reins of government, and the accompanying international economic and political retaliation against Afghanistan.
The Taliban, along with the Afghan people, faced difficult challenges, especially after the United States confiscated the foreign exchange reserves of the Afghan Central Bank, estimated at about $7 billion.
The World Bank database shows that the performance of Afghanistan’s merchandise imports amounted to $5.63 billion in 2022, down from $5.55 billion in 2021.
Despite this slight improvement, the rate of merchandise imports didn’t reach what it was before the advent of the Taliban, noting that in 2020, it amounted about $6.54 billion.
As for merchandise exports, 2021 is the best year, as Afghan exports amounted to $1.04 billion, while in 2020 they were around $777 million, and in 2022 exports amounted to $883 million.
On the level of inflation, a World Bank report issued last April states that the inflation rate in December in Afghanistan was 5.3%, and there is a state of stability in the local currency exchange rate, but this stability in the exchange rate may be due to limited transactions.
On foreign exchange, and the state’s control over all foreign transactions, and therefore this is not a natural performance of supply and demand for foreign exchange.
Two years now, and the Taliban government still doesn’t enjoy international recognition by any country in the world, and undoubtedly this deprives it of many advantages related to receiving aid, participating in infrastructure projects and other investment opportunities.
In an attempt by the Taliban to circumvent its lack of financial resources and cover the salaries of its employees, it resorted to paying salaries or part of it through in-kind goods, which brings the country back to the era of barter, a mechanism that doesn’t fit the nature of the obligations of individuals in the modern era.
In terms of foreign aid, which is the foreign exchange lifeblood of the Afghan economy, a study by the United Nations Development Program indicated that foreign aid to Afghanistan amounted to $3.7 billion in 2022 and 26.1 million Afghans benefited from it, and confirmed that this aid prevented the country’s complete collapse, and contributed to improving the country’s indicators, exchange rate stability and low inflation.
However, it’s noted that some foreign aid programs have already stopped.
The Red Cross recently announced the suspension of aid to 25 hospitals in Afghanistan by the end of 2023, due to lack of funding.
As for poverty, its rates have increased dramatically, as the number of poor people reached 34 million in 2022, representing 83.9% of the country’s population of more than 41 million, and an increase of 79% compared to 2020, when the country recorded about 19 million people in poverty.
Meanwhile Afghanistan need to recover the funds of the Central Bank of Afghanistan, through which the country’s monetary system can be largely secured, with the possibility of investing part of that money in infrastructure projects that the country needs.
As for the greatest need, it’s for things to move on the international political level in order to obtain international recognition for its government, activate its presence in international financial and economic institutions, and facilitate international trade operations.
The majority of Afghanistan’s foreign trade under the Taliban government takes place through direct transactions across the borders with Pakistan and Iran.
