Conflicts & War

Afghanistan’s economy on verge of collapse amid Taliban boycott

Kabul, Sep 3 (EFE).- Afghanistan’s economy is on the verge of collapse following the Taliban takeover after 20 years of heavy dependence on foreign aid during the United States occupation.

Four days have passed since all foreign troops withdrew from the war-torn nation and the Taliban have yet to name a future government.

This uncertainty is starting to concern a population confronting acute economic problems caused by decades of war, drought and, more recently, Covid-19.

Heaping further stress on these myriad issues was the decision by a raft of international institutions from the International Monetary Fund to the European Union to freeze funding to the country. Foreign aid comprises 43% of Afghanistan’s GDP, according to the World Bank.

“Afghanistan’s economy has been heavily dependent on foreign donations as most of the annual national budget has been donated by foreign countries in the past 20 years,” Nasir Agmad Alokozai, an economics analyst, told Efe.

As an example, he pointed out that the national budget for 2021 was 473 billion afghanis (nearly $6 billion), of which just 45% was from domestic investment, the rest coming from abroad.

The total annual income for the Afghan government in 2020 was $2.2 billion, below the target of $2.6 billion, he added.

Since international aid operations began in 2002, Afghanistan has invested roughly $5.3 billion into development projects, according to the World Bank.

The money from the World Bank’s coffers, designed to breathe life into a failing economy, worked at first. Between 2003-12, the average annual economic growth in Afghanistan was 9.4%, although this slumped to 2.5% between 2015-20.

This is not the only foreign aid received by the Afghan government.

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