Economic Instability in Afghanistan since Return of Taliban

A long history of wars and foreign interventions have been the causal factors behind Afghanistan’s political instability and severe economic woes which continue even today. There is widespread poverty, unemployment, hunger, migration and many more similar social challenges. The withdrawal of US after nearly two decades of military presence and the subsequent return of Taliban at the political scene on 15 August 2021 has further increased economic instability in the country because a huge portion of international aid (from the United Nations and United States of America (USA) and other international non-governmental organizations) has stopped.

After the fall of Kabul, the US froze Afghan government reserves of almost US$ 7 billion of Afghanistan Central Bank at the New York Federal Reserve, of which almost US$ 3.5 billion remain frozen even today. Similarly, the World Bank revoked the credentials of the Afghan Central Bank to interact with international banking systems and international financial institutions like International Monetary Fund (IMF), African Development Bank (ADB) etc. and with many other countries’ domestic banking systems. According to a report by Human Rights Watch , before August 2021 almost 75% of Afghanistan’s economy was dependent on foreign aid and assistance.

Consequently, the Afghan currency lost its value, leading to high inflation and the concomitant rise in prices of essential items. Furthermore, the weak banking system resulted in private players selling currencies on the streets of Afghanistan. According to its annual report for 2022 published by the United Nations the absence of an internationally recognised government, blockade of international aid and funds has resulted in a severe humanitarian crisis in Afghanistan.

At the social-societal levels, arbitrary moves by the Taliban government like barring Afghanistan women from education and work also resulted in huge backlash from the international community. Women have been totally excluded from higher education and government jobs which also led to a sort of economic instability given that a significant portion of the population has been barred from contributing to the economy and politics.

According to the UN more than 24.4 million people in Afghanistan are in need of immediate humanitarian assistance as 9 in 10 people in Afghanistan live in poverty. Nearly half of the population of Afghanistan is facing hunger crisis, even in some provinces of Afghanistan where people do not even have access to foreign aid and are forced to sell their body organs or even their daughters for money.

Similarly, half of the population of Afghanistan (nearly 20 million people) lack access to proper nutrition, sanitation and medical facilities. According to a report of the World Food Program (WFP), nearly 20 million people of Afghanistan are facing ‘level 3’ crisis or ‘level 4’ emergency levels of food security. In provinces like Ghor, thousands of people have slipped into “catastrophic” ‘level-5’ acute malnutrition, a precursor to famine.

Although the whole country is facing the crisis, the girls and women in Afghanistan face greater obstacles to obtain food, proper healthcare and lack financial resources are disproportionately affected. Taliban policies have barred women from stepping out of homes and earning a living and also getting requisite medical assistance. WFP surveys show that almost 100% of female lead households of Afghanistan do not have enough to eat and survive and are forced to take drastic steps like sending their children to work and selling off their daughters to obtain food and living.

The crucial question arises is how a war torn country can be pulled out of the ongoing political and severe economic crisis. Dialogues and talks are continuously taking place at the international level to support and uplift the war torn country. On its part, the Taliban regime is trying its best to uplift the economy by extracting the country’s natural resources and also boost trade with neighboring countries.

However, the ongoing efforts by the international community are not sufficient to address the poor state of Afghanistan’s economy as the progress and relations of the country with the international community are at their lowest since August 2021. The international community must necessarily make sincere efforts and provide humanitarian assistance to the people of Afghanistan to ensure their survival.

India and Afghanistan share deep rooted cultural, traditional, linguistic and historical relations which can be traced back to the Indus valley civilization. Since the Taliban regime came to power in 2021, India has been helping the nation with humanitarian assistance to cope with the hunger crisis, the most recent being the announcement of India's partnership with UNWEP for the delivery of 20,000 MTs of wheat to Afghanistan through the Chabahar port. Prior to this move, India had announced development assistance of Rs 200 crore in aid in its union budget of 2023-24. Other contributions by India in rebuilding Afghanistan includes construction of the new parliament building, Afghan- India friendship dam (AIFD) previously known as Salma Dam, reconstruction of several educational institutions and hospitals including Indira Gandhi Children's hospital in Kabul. India remains committed to helping Afghanistan in every possible way.



Ms. Arshpreet Kaur is a Pushto language newsreader with the All India Radio (AIR) at New Delhi.

© 2018 Kalinga International Foundation Designed by Nescant Info Systems