Over the past year, the Afghan economy has faced a series of shocks, plunging the country into a dramatic economic situation. The cessation of Western aid and the fall in the currency have pushed up the prices of basic necessities. They have increased by more than 30% since August 2021, according to the World Bank. The price of bread has tripled in one year. The average per capita income has been halved and 70% of Afghan households can no longer meet their basic needs.
The sale of young girls, promised in marriage by poor families to pay off their debts, has doubled since last year. The eviction of women from professional spheres will cause a “cost of a billion dollars a year”, according to Franco-Swiss financier Michel Santi.
For now, the Taliban’s attempts to stem the disaster are limited. They launched a “Food for Work” program that offers wheat to more than 40,000 unemployed men in exchange for construction work.
7 billion dollars blocked in the United States
The return of the Taliban to power has cut Afghanistan off from the international financial system. “About $9 billion (8.81 billion euros, editor’s note) of reserves are held outside Afghanistan, including 7 billion in the United States”, explains Bernard Aw, Coface economist for the Asia-Pacific region. These funds have been frozen. The Taliban are negotiating to get them back, but last February President Biden signed an executive order announcing the payment of half of these funds to the victims of the September 11 attacks.
Added to this is the cessation of international financial aid and the State budget, which has practically been divided by three for 2022 compared to the two previous years. Half of the budget is fed by customs duties, but also by an Islamic tax system and income from coal mines, “exported almost exclusively to Pakistan and growing by 30% in one year”underlines Michel Santi.
Drug revenues become necessary
In this context, Afghanistan cannot do without drug revenues, despite a fatwa that condemns opium: “Poppy cultivation is still one of the main incomes of the Taliban regime, which taxes exports at 20% customs duty”, explains Michel Santi. The Taliban movement is also financed by donations and subsidies from allied countries or rich donors, arriving in complete opacity.
As for the main NGOs and international organisations, they have timidly reopened the aid floodgates. At the beginning of June, the management committee of the Special Fund for the Reconstruction of Afghanistan (ARTF) approved the transfer of 793 million dollars (777 million euros). The funds will be used “outside the control of the interim Taliban administration, through UN agencies and NGOs”, says the World Bank. After the earthquake struck at the end of June 2022, various countries such as Australia and China also announced material aid under the same conditions.