Taliban takeover leads to economic collapse in Afghanistan


The prices of daily necessities such as flour, cooking oil and fuel have soared. Wages have ceased to be paid. Residents line up to pick up cash outside the bank and in front of the ATM.

Since the Taliban came to power earlier this month, Afghans have been struggling with an economic collapse, which analysts and aid organizations say could turn into a financial collapse and widespread hunger.

This import-dependent landlocked country is cut off from the world: its borders are mostly closed, and its new Islamic ruler cannot obtain approximately US$9 billion in frozen foreign exchange reserves.

Donor countries, including the United States, and organizations such as the International Monetary Fund and the World Bank have Stop funding In Afghanistan, foreign aid accounts for more than 40% of GDP. The country’s currency, the Afghani, has fallen by about 10% because the physical transportation of the dollar, which supports its value, has ceased.

In Kabul, there are signs that frustration is on the rise: protesters, including some government employees, took to the streets on Saturday, demanding that the bank reopen and, in some cases, pay several months overdue wages.

Afghanistan Graeme Smith, a senior adviser to the International Crisis Group (ICG), said he was suffering from the “abrupt end of the multi-billion-dollar war economy.” “There is a huge yawn gap,” Smith said. “This caused some panic.”

Anvita Basu, head of Asian country risk at Fitch Solutions, warned that Afghanistan’s GDP could shrink by 10% to 20% in the next two years.

She said this was “roughly equivalent to the scale of contraction experienced by economies facing similar political collapses such as Syria, Lebanon, and Myanmar”, adding that if the currency continues to weaken, hyperinflation “cannot be ruled out”.

Afghans have already witnessed an astonishing price increase, and there may be shortages in the coming months. The pressure has increased the severe drought, which is expected to curb the supply of important crops such as wheat.

According to the United Nations World Food Program, there are 14 million Afghans, or one-third of the total population. Face hunger, And “it’s hard to see the future of this population now… There are no malnourished children”.

In Herat, Afghanistan’s third-largest city, residents said that the types of goods in stores and markets have decreased, the quantity has decreased, and prices have risen. Many people worry that the crisis will worsen when the country’s cold winter arrives.

One resident said, for example, the price of lentils has more than doubled, from 50 afghanis to 120 (US$1.50) per kilogram, and the prices of chickpeas and beans are also higher. “The big merchant left Herat, Which makes us wonder how the trade will continue,” she said.

Another person in Bamyan, a smaller city in central Afghanistan, said the cost of vegetable oil rose by about 25% in a week to 2,000 afghanis per gallon.

Since the Taliban took over two weeks ago, most of the banks have been closed, and a few reopened banks are facing people who are eager to run out of savings and get urgently needed cash.

Fearing cash shortages, the Taliban limited bank withdrawals to $200 a week on weekends.

The economic situation of Afghanistan in the coming months will depend on the direction of relations between the Taliban and other countries. Contacts with neighboring countries such as Pakistan and Iran, and even the United States and Europe, may help pave the way for the resumption of cross-border land trade and international aid.

On August 25th, Afghans wait outside the bank in Kabul
Afghans wait outside the Kabul bank on August 25 © AP

Islamists who have not yet formed a government have held talks with non-Taliban leaders such as former President Hamid Karzai, which increases the possibility of a more diverse government with some economic expertise.

But many analysts said that these wishes are fantasy. The recent decision to appoint Mohammad Idris as acting central bank governor shows that the new Islamic forces will prioritize theorists over experience.

The Taliban tried to present a more modest image than when they first ruled in the 1990s, when it administers an authoritarian regime that prohibits women from working, but it also contradicts evidence of retaliatory killings and atrocities.

Some people in the West are weighing sanctions against the country, and Smith of the ICG believes that this “will harm the Afghan people” rather than the Islamic leaders they aim to punish.

Thousands of Afghans now find their livelihoods at risk, including civil servants and members of the armed forces who worked in the former government.

The Taliban said they will continue to pay government salaries, but many people are skeptical. It is unclear whether women will be allowed to continue working. The United Nations has warned that in some provinces, they have been ordered to stay at home.

“You don’t know whether you should go to work, if you go to work, whether you will get paid, and how much will you get paid,” said a doctor in a public hospital in Herat. “Those who continue to work do so based on their commitment to God and man.”

A resident of Kabul said he was worried that the country was heading for a “humanitarian disaster”.

“Due to a power vacuum, Kabul has no money,” he said.


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