Afghanistan’s Economy on Brink: UNDP Warns of Devastating Impact of Financial Crime

A Decade of Progress Reversed in Just 12 Months

A devastating report by the United Nations Development Programme (UNDP) has revealed that Afghanistan’s economy, which had been growing for a decade, has suffered a catastrophic reversal in just 12 months. The country has lost nearly $5 billion since August 2021, wiping out ten years of economic progress.

Financial Crime Takes Its Toll

The UNDP report, “One Year in Review: Afghanistan Since August 2021,” highlights the crippling impact of financial crime on the economy. Soaring prices and widespread job losses threaten the livelihoods of millions. A basket of essential goods needed to avoid food poverty has risen by 35 percent, forcing poorer households to resort to debt or selling off assets just to survive.

Job Losses and Economic Crisis

The report notes that nearly 700,000 jobs have vanished, exacerbating a population already reeling from the effects of conflict, drought, and the COVID-19 pandemic. The UNDP warns that without swift action, Afghanistan risks sliding into deeper economic crisis.

UNDP’s Strong Response and Continued Support Needed

UNDP Head Achim Steiner praised the organization’s “strong, coordinated response” to the crisis, which prevented catastrophe last winter. However, he emphasized the need for continued support to prevent a deeper crisis and help Afghans cope with the coming winter.

Fiscal Situation Paints a Bleak Picture

The report paints a bleak picture of Afghanistan’s fiscal situation, dating back more than a decade before the Taliban ascendency. With GDP in steady decline since 2008, the country had become reliant on international aid to sustain its economy. However, foreign donors largely suspended aid after the transition, leaving Afghanistan with limited domestic revenue from agriculture and coal exports.

Addressing Revenue Shortfalls

The authorities have sought to address revenue shortfalls by cracking down on corruption and reaching out to the private sector and foreign investors. The UNDP report highlights the need for expanding connectivity among regions and industrialization to drive economic growth.

Restricting Women’s Participation Has Devastating Impact

Restricting women’s participation in the economy is also having a devastating impact, with UNDP analysis forecasting an economic loss of up to $1 billion – or five percent of the country’s GDP. The organization has provided support to 34,000 women-owned small businesses and aims to reach 50,000 by the end of this year.

Call for Increased International Support

UNDP Resident Representative Abdallah Al Dardari called for increased international support, stating that Afghans are “running out of time and resources” and need help to bring back to life local markets and small businesses, which are the backbone of Afghanistan’s economy.