KABUL – Afghanistan is going through its most painful period since takeover by the Taliban and which caused an abrupt cessation of foreign aid and the collapse of the banking system, seriously damaging the already fragile economy.
International sanctions, limited access to financial systems, and reduced foreign aid have further complicated the economic landscape. The return of civilian aid has stabilized the economy to some extent, but this aid is mainly humanitarian and not a long-term solution to the country’s economic woes.
One of the remarkable aspects of the post-transition economy is the strengthening of the Afghan currency, the afghani, against the US dollar. Government measures, such as banning the use of foreign currency for domestic transactions, have contributed to this currency stability. Importantly, Afghanistan has experienced growth in imports despite its contracting economy. Some of these imports, however, are not intended for domestic consumption but are instead illegally exported to Pakistan, which has led to an unexplained gap in the country’s finances.
Despite these challenges, the Islamic Emirate has focused on revenue collection, achieving some success, and even generated revenue beyond its targets in various sectors. Additionally, there have been efforts to curb corruption and enforce the payment of unpaid bills, even from influential figures.
The report also highlights the impact of the ban on opium cultivation, which has disrupted the significant income stream from narcotics. This ban has led to economic distress for households previously reliant on poppy farming.
The Afghan economy has faced significant challenges since the fall of the previous regime. While there have been positive aspects, such as a stabilized currency and improved revenue collection, there are still major hurdles to overcome. The country’s future economic development remains uncertain, and the Emirate seeks to portray a narrative of economic progress despite these challenges. The path forward will require sustained efforts to stabilize and strengthen the Afghan economy.