Afghanistan’s Recent Strategies for Economic Growth are On Hold
  • Afghanistan is a heavily import-dependent country with a huge trade deficit
  • Striving private sector contributes 60% of annual government revenue
  • Agriculture accounts for 30% of GDP and employs 70% of the workforce
  • International aid could help minimise the pandemic’s economic ramifications

 

The economy of Afghanistan was not affected by most of the financial crises neither had much to do with fluctuating oil prices over the past years. The reason for this has not been the strength or resilience of the country’s economic system. Rather the relatively low effect of these changes on Afghanistan is because its economy has not been quite integrated with the regional and international economy. Before 2015, the country’s economic system has, for quite some time, been dependent on international aid which continued to be delivered regardless of the status of the world’s economy. But when this aid started to shrink, the country became more vulnerable.

Since the beginning of 2020, the COVID-19 pandemic has been impacting almost every country on planet earth and Afghanistan is no exception. The novel coronavirus reached the Asian country while it was preparing for a boost in foreign investment following the Agreement for Bringing Peace to Afghanistan signed in Qatar on 29 February. The agreement brought high hopes of a better future for the 40% of the population living below the poverty line. Unfortunately, all the plans by the government to leverage this agreement had to be put on hold. Last year, Afghanistan’s economic growth was 2.9 per cent, 2.1% less than the projected five per cent.

Following the closure of its borders with Pakistan, the Afghan government had replaced the imports of wheat from Central Asia. While this helps to ensure the essential goods are available, the prices of these goods increased significantly due to the higher costs incurred to import them. Besides, the government allocated about USD 25 million of the USD 104 million grant by the World Bank through the International Development Association to cover the immediate expenditures related to COVID-19 pandemic.  As of March 25, 2020, the International Organisation for Migration reported that approximately 136,400 Afghans returned from Iran with a high risk of having COVID-19. In response, Afghan authorities have locked down three cities on the Afghanistan–Iran border.

Afghanistan confirmed the first case of COVID-19 on 24 February 2020. Until 21 March, the country had 22 cases, which was a relatively low number compared to many countries in the region and other parts of the world. Since then, the number of cases surged at an average rate of 15% to reach 1,026 as of 20 April. Among the OIC countries, Afghanistan has the 21st largest number of confirmed COVID-19 cases. The recovery rate in Afghanistan stands at 13.16% which is half the global figure rate and about one-third of the OIC recovery rate. In contrast, Afghanistan’s mortality rate is 3.51%, comparably close to the OIC rate of 3.82%.