Now what for the Afghan economy under Taliban rule?

Now what for the Afghan economy under Taliban rule?

The economic crisis that the country has been in gives the Western world a leverage to ensure an inclusive and modern government

Drivers sit near to their container trucks as they wait to enter Afghanistan at the Pakistan's border town of Chaman. Credit: AFP Photo

Afghanistan now enters a new phase after nearly 20 years of American presence in the country. Amid droughts and international isolation, Afghanistan's economy is likely to face a crisis.

In March, the World Bank said that Afghan economy was "shaped by fragility and aid dependence".  Afghanistan’s economic indicators are poor and have been the same even before the Taliban seized control of the capital. According to US research, nearly 90 per cent of Afghans were living below the government-estimated poverty line.

Afghanistan is heavily dependent on international aid, which covered around 75 per cent of the Western-backed government's budget.  With its economy shattered by 40 years of war, Afghanistan is now facing the end of billions of dollars in foreign aid poured in by Western donors.

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The economic crisis that the country has been in gives the Western world a leverage to ensure an inclusive and modern government. However, the Taliban, though they say they do not want to take economic aid at the expense of their interests, they have also appealed for countries to play a part in Afghanistan's rehabilitation.

Earlier this month, the UN World Food Programme estimated that some 14 million people — roughly one out of every three Afghans — urgently need food assistance. A UN agency meanwhile warned that a worsening drought threatens the livelihood of more than 7 million people. The Rome-based Food and Agriculture Organization said Afghans are also suffering from the coronavirus pandemic and displacement from the recent fighting.

Before the then impending takeover, several Afghans rushed to banks to withdraw their life savings and flee the country. However, banks closed during the takeover and large withdrawals were banned.  ATM machines are still operating, but withdrawals are limited to around $200 every 24 hours, contributing to the formation of long lines.

Although one of the poorest countries in the world, Afghanistan happens to have vast mineral deposits like iron, copper and gold, and what could be world’s biggest lithium deposits, according to findings by US military and geologists.

Lack of infrastructure and security issues persisting in the country has prevented it from utilising these resources to its benefit and it is not likely to change under the new Taliban rule. Neighbouring countries including Pakistan, India and China have shown interest in the minerals and have tried to engage but it has not yet taken a positive direction.

(With inputs from agencies)

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