Over the past two years, the Taliban have consistently claimed to improve Afghanistan’s economic situation and foster investment opportunities. They have sought to minimize the economic crisis among the populace and the global community by disseminating engineered information. However, the World Bank has reported an economic recession in Afghanistan, attributed to reduced economic activities and ongoing inflation. In its report titled “Afghanistan Economic Monitoring,” the bank disclosed that annual inflation in Afghanistan hit -10.2 percent in January 2024. Coal exports, once touted by the Taliban as a symbol of export growth, have plummeted by 87 percent. Nonetheless, economic experts argue that under Taliban rule, Afghanistan has not achieved competitive export levels. They maintain that coal exports to Pakistan, itself engulfed in an economic crisis, cannot alleviate the country’s backwardness, unemployment, and poverty. According to them, resolving the economic recession requires a conducive investment environment, contingent upon a legitimate and authoritative political framework with both domestic and international recognition.
The World Bank stated in its recent report titled “Afghanistan Economic Monitoring” that annual inflation in Afghanistan reached -10.2 percent in January 2024. The report explicitly states that this inflation is due to a sudden decrease in the prices of food (-15.1 percent) and non-food items (-4.8 percent).
The World Bank report notes that a prolonged decrease in inflation can lead to a damaging cycle wherein consumer purchasing power is delayed, businesses reduce investment, economic growth halts, and ultimately poverty increases while job opportunities decrease.
According to this report, Afghanistan’s exports have decreased by 5 percent compared to the same period last year, reaching $140.5 million, whereas last year this figure was $148.1 million.
Based on this report, coal exports have suffered a significant blow, decreasing by 87 percent to $3.9 million. The reason cited for the decline in coal exports to Pakistan is that Pakistan is utilizing its own domestic and cheaper coal.
According to the report, Afghanistan’s imports were $600 million in January of last year, but in January 2024, they reached $830 million, increasing the trade deficit. Experts state that a trade deficit occurs when a country’s imports exceed its exports.
The World Bank has estimated Afghanistan’s annual imports at $5.5 billion, indicating a trade deficit of $3.5 billion. The World Bank report also indicates that Afghanistan’s revenues are lower than what the Taliban had stated.
According to this report, during the 11 months of the past fiscal year, from March 2023 to February 2024, a total of 189 billion Afghanis were collected, which is 2 percent less than the set target. Economic experts say that economic decline occurs when goods are available in the market but people lack purchasing power. This condition is referred to as negative inflation or deflation, which poses a threat to a country’s economy and can result in an economic collapse.
Azarakhsh Hafizi, an economic expert, told the Hasht-e Subh Daily that unfortunately, Afghanistan has not achieved economic stability with strong infrastructure, preferred production, and competitive exports. He adds concern over the decline in coal exports to Pakistan, stating that exporting minerals to a country already in crisis cannot solve Afghanistan’s backwardness, unemployment, and poverty. Mr. Hafizi emphasizes, “The reason for this setback is the lack of an effective economic system and economic advantages in Afghanistan. When Pakistanis don’t need coal, they won’t buy it from Afghanistan, and if they find alternative energy sources [to coal], they will cut off imports from Afghanistan.” According to him, to overcome this crisis, purchasing power must first be increased, which is possible when there is employment, people have incomes, and shopkeepers can sell their goods.
The economic expert states: “One of the economic problems is that [the Taliban], instead of recognizing the problem officially and finding a solution, try to mitigate the disaster in people’s minds through advertising. In the current situation, political relations with Pakistan are not desirable, and they usually have political issues. They take revenge on the economic sectors of Afghanistan. On the other hand, trade with neighboring countries has decreased.”
Mr. Hafizi adds that a significant portion of Afghanistan’s revenues from transit trade between South Asia and Central Asia has decreased due to existing problems and Pakistan’s disinterest in imports from Central Asia through Afghanistan. He emphasizes that sustainable and adequate economic growth requires political stability and legitimacy so that international institutions such as the International Monetary Fund (IMF), World Bank, Asian Development Bank (ADB), and other economic organizations can invest in Afghanistan without legal obstacles.
According to economic experts, as long as Afghanistan remains deprived of direct aid from the world, investment opportunities will not be readily available with an economy reliant on internal resources. They argue that until Afghanistan becomes integrated into the world’s financial policies, investment issues cannot progress through informal channels and equations.
Previously, the Coal Exporters Union in Afghanistan also reported a significant decrease in exports to Pakistan. This union attributed the decline in coal exports to economic and political developments in Pakistan and an increase in customs tariffs by the Taliban.
Afghan traders have repeatedly stated that Afghan coal is sold to Pakistani middlemen in Pakistani currency (rupees), which has significantly lower value compared to other foreign currencies and the currency of Afghanistan.
