Afghan economy nears collapse as pressure builds to ease U.S. sanctions

adghan economy, afghanistan economy, us sanctions, afghanistan, afghanistan taliban

Racing down the cratered highways at dawn, Mohammad Rasool knew his 9-year-old daughter was running out of time.

She had been battling pneumonia for two weeks, and he had run out of cash to buy her medicine after the bank in his rural town closed. So he used his last few dollars on a taxi to Mazar-e-Sharif, a city in Afghanistan’s north, and joined an unruly mob of men clambering to get inside the last functioning bank for hundreds of miles.

Then at 3 p.m., a teller yelled at the crowd to go home: There was no cash left at the bank.

“I have the money in my account; it’s right there,” said Rasool, 56. “What will I do now?”

Three months into the Taliban’s rule, Afghanistan’s economy has all but collapsed, plunging the country into one of the world’s worst humanitarian crises. Millions of dollars of aid that once propped up the previous government has vanished, billions in state assets are frozen, and economic sanctions have isolated the new government from the global banking system.

Now Afghanistan faces a dire cash shortage that has crippled banks and businesses, sent food and fuel prices soaring, and triggered a devastating hunger crisis. This month, the World Health Organization warned that about 3.2 million children were likely to suffer from acute malnutrition in Afghanistan by the end of the year — 1 million of whom are at risk of dying as temperatures drop.

No corner of Afghanistan has been left untouched.

In the capital, desperate families have hawked furniture on the side of the road in exchange for food. Across other major cities, public hospitals do not have the money to buy badly needed medical supplies or to pay doctors and nurses, some of whom have left their posts. Rural clinics are overrun with feeble children, whose parents cannot afford food. Economic migrants have flocked to the Iranian and Pakistani borders.

As the country edges to the brink, the international community is scrambling to resolve a politically and legally fraught dilemma: How can it meet its humanitarian obligations without bolstering the new regime or putting money directly into the Taliban’s hands?

In recent weeks, the United States and the European Union have pledged to provide $1.29 billion more in aid to Afghanistan and to Afghan refugees in neighboring countries. But aid can do only so much to fend off a humanitarian catastrophe if the economy continues to crumble, economists and aid organizations warn.

“No humanitarian crisis can be managed by humanitarian support only,” said Abdallah Al Dardari, the United Nations Development Program’s resident representative in Afghanistan. “If we lose these systems in the next few months, it will not be easy to rebuild them to serve the essential needs of the country. We are witnessing a rapid deterioration to the point of no return.”

Under the previous government, foreign aid accounted for around 45% of the country’s gross domestic product and funded 75% of the government’s budget, including health and education services.

But after the Taliban seized power, the Biden administration froze the country’s $9.5 billion in foreign reserves and stopped sending the shipments of U.S. dollars upon which Afghanistan’s central bank relied.

The scale and speed of the collapse amounts to one of the largest economic shocks any country has experienced in recent history, economists say. Last month, the International Monetary Fund warned that the economy is set to contract up to 30% this year.

Thousands of government employees, including doctors and teachers, have gone months without pay. The wartime economy that employed millions and supported the private sector has come to a halt.

By the middle of next year, as much as 97% of the Afghan population could sink below the poverty line, according to an analysis by the U.N. Development Program. Many people who were already living hand to mouth have been pushed over the edge.

One October morning in Mazar-e-Sharif, dozens of men gathered downtown, carrying shovels cobbled together with rough wood and rusted metal.

For years, day laborers have gathered there to pick up work digging wells, irrigating fields of cotton and grain, or doing construction around the city. The pay was modest — a couple dollars a day — but enough to buy food for their families and pay other small bills. These days, though, the men stay at the square until sunset hoping for even one day of work a week. Most cannot even afford to buy bread during lunch.

“There was work one day — and then suddenly there wasn’t,” said Rahmad, 46, standing in the crowd. “It was so sudden, I didn’t have time to plan or save money or anything.”

Even before the Taliban takeover, Afghanistan’s fragile economy was wracked by slow growth, corruption, deep poverty and a severe drought.

Afghanistan has long been dependent on imports for basic foods, fuel and manufactured goods, a lifeline that was severed after neighboring countries closed their borders during the Taliban’s military campaign this summer. Trade disruptions have since caused shortages of crucial goods, such as medicine, while the collapse of financial services has strangled traders who rely on U.S. dollars and bank loans for imports.

At the Hairatan port along the Afghanistan-Uzbekistan border, a team of workers unloaded flour bags from a shipping container into trucks, sending clouds of white specks into the air. Since August, their company has slashed its imports in half; people can no longer afford basic goods.

At the same time, the cost of doing business soared. Customs and traffic officers, who have gone unpaid for months, are asking for more in bribes, according to a manager for the company, the Bashir Navid Group.

“Everything is disorganized,” said the manager, Mohammad Wazir Shirjan, 50. “Everyone is completely frustrated.”

To avoid a complete currency collapse, the Taliban limited bank withdrawals to first $200 and then $400 a week and have appealed to China, Pakistan, Qatar and Turkey to fill its budget hole, which is billions of dollars large. So far, none have offered the financial backstop that Western donors provided to the former government.

The Taliban have also pressed the United States to release its chokehold on the country’s finances or risk a famine as well as Afghan migrants flooding into Europe in search of work.

“The humanitarian crisis we have now is the result of those frozen assets. Our people are suffering,” Ahmad Wali Haqmal, a spokesperson for the Ministry of Finance, said in an interview.

In late September, the Biden administration issued two sanctions exemptions for humanitarian organizations to ease the flow of aid, and it is considering additional adjustments, according to humanitarian officials involved in those negotiations. But those exemptions do not apply to paying employees such as teachers in government-run schools and doctors in state hospitals, and the decision not to include them risks the collapse of public services and a further exodus of educated professionals from the country, humanitarians say.

And the scope of the exemptions is limited in other ways. Many foreign banks that aid organizations rely on to transfer funds into Afghanistan have cut ties to Afghan banks for fear of running afoul of sanctions. And the liquidity crisis severely restrains the amount that organizations can withdraw to pay vendors or aid workers.

“The current economic restrictions and sanctions policy, if maintained and not adjusted, are on track to hurt the Afghan people — through deprivation and famine — more than the Taliban’s brutalities and poor governance,” said John Sifton, the Asia advocacy director at Human Rights Watch.

Already, hospitals across the country show signs of a hunger crisis that could overwhelm the fragile health care system.

In a malnutrition ward of a hospital in southern Afghanistan, Shukria, 40, sat with her 1-year-old grandson, Mahtab, his mouth craned open but body too weak to let out a cry.

For weeks, the boy’s father had come home empty-handed from his mechanic shop as business dried up, and the family resorted to bread and tea for every meal. Soon, his mother stopped producing milk to breastfeed, so she and Shukria supplemented Mahtab’s diet with milk from their family’s goat. But when they ran out of cash to buy food, they sold the animal.

“I’ve been asking this hospital to give me work,” Shukria said. “Otherwise, after a week, a month, he will just end up sick and back here.”

News Related

OTHER NEWS

Republic Day parade to have 25 tableaux, 16 marching contingents, 17 military bands

This year’s Republic Day parade will have 16 marching contingents, 17 military bands and 25 tableaux of various states, departments and armed forces, the Indian Army said in a statement ... Read more »

‘Takeover hunt for department store giant Kohl's: $9 billion bid on the table'

Insiders report this to Bloomberg news agency. The second-largest department store chain in the United States is under pressure from activist shareholders because it would underperform and the company would ... Read more »

Delimitation has started, elections will be held soon in J&K: Amit Shah

Union Home Minister Amit Shah on Saturday said that the delimitation process in Jammu and Kashmir has started and soon elections will be held soon. Speaking virtually at the launch ... Read more »

Maharashtra govt assures of probe into Mumbai residential building fire; announces Rs 5 lakh compensation to kin of deceased

The Maharashtra government has assured of investigation into the fire that broke out inside a residential building in Mumbai’s Tardeo area on Sturday morning that claimed the lives of six ... Read more »

Majority of parents in Maharashtra unwilling to send children to school from Jan 24: Survey

About 62 per cent of surveyed parents in Maharashtra are unwilling to send their children to school from January 24, amid the state government’s decision to allow reopening of schools ... Read more »

Mumbai residential building fire: PM Modi announces ex-gratia of Rs 2 lakh for next of kin of deceased, Rs 50,000 for injured

Prime Minister Narendra Modi on Saturday announced an ex-gratia of Rs 2 lakh each from Prime Minister’s National Relief Fund (PMNRF) to the next of kin of those who lost ... Read more »

Wall Street Week Ahead: Investors shelter in US regional banks as Fed hikes loom

NEW YORK: Expectations of rising interest rates are bolstering the shares of regional banks, as a tumble in technology stocks pushes investors to search for assets that could thrive amid ... Read more »

Nasdaq 100's unrelenting declines ring a dot-com bust alarm bell

Bulls should be glad there were only four days this week instead of five. To wit, the Nasdaq 100 just did something it hasn’t done since the aftermath of the ... Read more »

Death of 4 Indians at US-Canada border: Indian missions ascertaining details

With a family of four Indians, including an infant, found dead near the US-Canada border, government sources here said Indian missions are in touch with Canadian authorities for ascertaining the ... Read more »

Sources: US talks with Qatar about gas supplies to Europe

Photo: ANP The US government is in talks with Qatar about supplies of liquefied natural gas (LNG) to Europe if Russia were to invade Ukraine, causing European gas shortages. According ... Read more »

Hong Kong's home buyers snap up Henderson Land's The Harmonie flats, defying city's worst one-day explosion of new Covid-19 cases

Hong Kong’s property buyers turned out in droves, defying the city’s worst one-day explosion of new Covid-19 cases to snap up apartments at the first new housing project to be ... Read more »

Maha: Naxals torch 11 tractors, machinery engaged in road construction work

A group Naxals allegedly set on fire 11 tractors and two JCB machines engaged in road construction work in Gadchiroli district of Maharashtra, police said on Saturday. The incident took ... Read more »

Covid: UP govt extends closure of educational institutions till Jan 30

The Uttar Pradesh government on Saturday extended the closure of educational institutions, including schools, till January 30 in view of rising coronavirus cases in the state. The closure of all ... Read more »

Bonus rain at top US bankers: boss Morgan Stanley goes home with $35 million

The big boss at Morgan Stanley was paid a base salary of $1.5 million in 2021. On top of that came a cash bonus of $8 million and $5 million ... Read more »

Yes Bank posts 77% rise in December quarter profit on lower provisions, higher recoveries

yes-bank-300_36683164 Yes Bank on Saturday reported a 77% year on year growth in December quarter profit at Rs 266 crore as lower provisions and higher loan recoveries drove earnings at ... Read more »

CBI seems to be protecting accused in judge murder case, says Jharkhand HC

Jharkhand High Court has slammed the Central Bureau of Investigation (CBI) for its “laxity” in probing the murder of Dhanbad judge Uttam Anand, and observed that it seems that the ... Read more »

From today, staying at isolation facility not mandatory for foreign arrivals testing Covid positive

Travellers from any country arriving in India, who test Covid positive, will not mandatorily be managed at an isolation facility from Saturday, but have to quarantine themselves at home according ... Read more »

BSP chief Mayawati releases list of 51 candidates for second phase of UP Polls

File image of BSP supremo Mayawati The Bahujan Samaj Party (BSP) on January 22 released a list of 51 candidates for the second phase of the upcoming Uttar Pradesh Assembly ... Read more »

Bloomberg: multi-billion dollar offer for major department store chain Kohl's

Photo: ANP The major American department store chain Kohl’s has received a takeover offer worth about $ 9 billion, converted almost 8 billion euros, from a group of investors. Insiders ... Read more »

Bitcoin rumbles further down: 25% fall in new year

On crypto platform Coindesk, bitcoin sees another 10% of its value evaporate to a position of $35,580 around 8 a.m. (Dutch time). This means that the digital currency has returned ... Read more »

SpeakIn set to launch Asia Dialogues, to focus discussion on business and policy ecosystem

SpeakIn, a consortium of thought leaders, is set to launch ‘Asia Dialogues‘. The forum intends to build conversations on topics of urgent and immediate focus for the Asian region by ... Read more »

Current economic landscape may not allow government to go for fiscal consolidation immediately: YES Bank chief economist

Read more »

Aspirational districts now eliminating barriers to progress: PM

Aspirational districts are now eliminating the barriers to the progress of the country and they have become accelerators for growth instead of impediments, Prime Minister Narendra Modi said on Saturday ... Read more »

Instagram's new subscription model: How it will aid Indian creators

While the features are being tested in the US, creators in India bet big on Instagram’s new subscription model. Instagram is testing three new subscription features under which followers can ... Read more »

Robert Vinall's tips to evaluate good businesses to seek stellar returns

Robert Vinall may not be a popular name in the investment community, but his investing performance certainly deserves attention. He has been one of the top-performing investors of the last ... Read more »

Pre-Budget jitters to keep bears in control of D-Street

After a quick climb to 18,300, Indian bourses appeared to be recouping their breath this week. Global peers have been facing corrections for quite some time now and spooked by ... Read more »

E-mobility startup VAAN Electric Moto launches e-bikes in India

Indian lifestyle e-mobility startup VAAN Electric Moto Pvt Ltd has launched its electric bicycle-Urbansport in the country. Union Minister of State for Skill Development, Entrepreneurship, Electronics and IT, Rajeev Chandrasekhar, ... Read more »

J&K core group says benchmarks set after abrogation of Article 370 achieved

The Core Group of top officials from armed forces, administration, police and intelligence agencies in Jammu and Kashmir have said that the benchmarks set after the abrogation of Article 370 ... Read more »

Gulmarg, other places in Jammu and Kashmir, receive fresh snowfall

Gulmarg and other upper reaches of Kashmir received fresh light snowfall during the night, even as the minimum temperature in most parts of the valley settled above the freezing point, ... Read more »

Indians' death in brutal cold: Canadian PM Justin Trudeau says working 'very closely' with US to stop smuggling

Canadian Prime Minister Justin Trudeau has said that his government was doing all it can and working “very closely” with the US to stop human smuggling, a day after a ... Read more »

Impact of oil firms' exit from Myanmar limited 'A lot more pressure needed to defeat this junta for good,' says human rights activist

The TotalEnergies logo is seen on a charging station in La Defense on the outskirts of Paris. The French company announced in Friday that it would pull out of Myanmar. ... Read more »

Payments Council urges rollback of no-fee transaction policy for UPI and Rupay debit cards

The industry estimates a loss of Rs 5,500 crore due to the Zero-MDR norm. (Representative image) The Payments Council of India (PCI), the industry body for digital payments, yesterday said ... Read more »

Clubhouse app chat case: Delhi cops arrest man from Lucknow

The Delhi Police has arrested an 18-year-old man from Lucknow in connection with a chat on the Clubhouse app in which objectionable and abusive comments were passed against women, officials ... Read more »

More trouble for PTC India as independent director quits after three board exits in arm over corporate governance issues

After PTC India Financial Services (PFS) came under the scanner with three of its independent directors resigning citing lapses in compliance and corporate governance, an independent director at the parent ... Read more »

Market falls over 3% but BSE smallcap index hits new high, 33 stocks gain 10-44%

After a positive start for the week on January 17 the Indian benchmark indices remained under selling pressure for the next four session’s in the week ended January 21 in-line ... Read more »

Ombudsman: Return to Australia for a DigiD

In the end, thanks to the help of an official Australian government agency, he manages to have his AOW paid out through the SVB. But he would also like to ... Read more »

Hawkish comments from the Fed may further strengthen the dollar which may not bode well for commodities: Kotak Securities' Ravindra Rao

Commodities witnessed strong gains this week despite the dollar strengthening and equities weakening as rising inflationary pressure drew investors, said Ravindra Rao, vice-president, head of commodity research, Kotak Securities. Inflation ... Read more »

Major fire at Mumbai high-rise: 7 dead, 15 injured

The fire erupted around 7 am in Kamla building located opposite Gandhi Hospital at Gowalia Tank. (Image: ANI) At least seven persons were killed and 15 others injured in a ... Read more »

How to build a unified innovation ecosystem

New York, Stockholm, Tel Aviv, London, Tokyo and Singapore. These are just a handful of diverse geographies that stand united in their quest to emerge as powerful innovation hubs. These ... Read more »

Family of four Indians, believed to be Gujaratis, frozen to death along US-Canada border; man charged with human smuggling

In a heartbreaking tragedy, a family of four Indians, including a baby, believed to be Gujaratis, has died from exposure to extreme cold weather on the Canadian side of the ... Read more »
On free-english-test.com you will find lots of free English exam practice materials to help you improve your English skills: grammar, listening, reading, writing, ielts, toeic