Trade Transactions Worsen Afghan Economy

Doha Meeting Highlights Need for Cash Injection

Doha, Qatar - The ongoing trade transactions in Afghanistan have further weakened the country’s private sector, leading to increased unemployment and poverty rates. A recent meeting in Doha, Qatar brought together international envoys and representatives from over 25 countries and organizations.

Key Findings:

• Injecting cash liquidity into the Afghan economy is crucial to ensure essential aid reaches the people.
• Scaling up shipments of US dollars for humanitarian purposes is necessary, along with depositing Afghani banknotes held by businesses into aid agencies’ local accounts and printing modest amounts of Afghan currency.
• Foreign banks are hindered from delivering assistance due to risk avoidance and sanctions. The US government must take steps to reassure banks that they will not face penalties for transactions related to humanitarian aid.

Broader Economic Measures Needed

The Afghan economy is on the brink of collapse, with the cost of providing humanitarian support year after year unsustainable. To address this, broader economic measures should include:

• Expanding sanctions relief to encompass private business and commercial transactions
• Finding ways to pay salaries of health workers and teachers using aid funding
• Releasing foreign exchange reserves to cushion the economic shock

Government Responsibilities

The Afghan government must also play its part by:

• Restoring capacity in the Ministry of Finance and DAB
• Appointing competent officials
• Presenting a credible national budget for this year

Confidence among Afghans and businesses depends on the government’s ability to stem the deterioration in confidence and restore stability.

Positive Developments

Despite the grim situation, there are some positives:

• The fighting has died down, and security is generally better than in recent years.
• However, the lack of resources and purchasing power for the starving population means that food supply shortages are not the main issue - it is a matter of ensuring money is in the hands of those in need.

Challenges Ahead

The Taliban’s prohibition on opium poppy cultivation has resulted in reduced poppy cultivation, but this has deepened poverty among rural Afghans who depended on the crop for their livelihoods. Any aid mobilized to offset harm from the ban will be insufficient and ultimately wasted unless it fosters broad- based rural and agricultural development.

Counterterrorism Investment

Investment in counterterrorism can work preventively to shield the strategic competition agenda, said USIP’s Asfandyar Mir.

Way Forward

The international community must work together to address these challenges and find a way to stabilize the Afghan economy.