UN: Afghanistan sees 'unprecedented' economic shock as aid flows halt

The withdrawal of international aid after the Taliban's return to power has resulted in an economic crisis "never seen before", a UN agency says.

Afghanistan has plunged into an economic turmoil after Western countries blocked its fund and stopped giving aid money following Taliban takeover in late August.
AFP

Afghanistan has plunged into an economic turmoil after Western countries blocked its fund and stopped giving aid money following Taliban takeover in late August.

Afghanistan's GDP could contract 20 percent within a year, a decline that could reach 30 percent in following years.

"The sudden dramatic withdrawal of international aid is an unprecedented fiscal shock," United Nations Development Programme (UNDP) Asia Director Kanni Wignaraja said on Wednesday.

For decades now Afghanistan's economy has been undermined by war and drought, but it was propped up by billions in international aid, much of which was frozen when US-led international forces withdrew and the Taliban returned to power in August.

"It took more than five years of war for the Syrian economy to experience a comparable contraction. This has happened in five months in Afghanistan," Wignaraja said.

Another UN source said that, "in terms of population needs and weakness of institutions, it is a situation never seen before. Even…Yemen, Syria, Venezuela don't come close."

Previously, international aid represented 40 percent of Afghanistan's GDP and financed 80 percent of its budget.

READ MORE: UN distributes cash help to struggling Afghan families

Afghan women role critical

Reinstating aid now, while crucial, would be a "palliative" move, Wignaraja said, adding that what Afghans need are "jobs, being able to learn, be able to earn and to be able to live with dignity and safety."

The Taliban have allowed only a portion of female civil servants, those working in education and health, to return to work and have been vague on what the rules will be in the future.

The UN’s Afghanistan Socio-Economic Outlook 2021-2022 report warned that depriving women of paid work in Afghanistan could fuel a GDP drop of up to five percent, representing a loss of wealth of $600 million to $1 billion.

In addition, there is a loss in consumption. Women who no longer work no longer have a salary and can no longer buy as much as before to feed or equip their homes, which could reach $500 million per year, according to the UNDP.

"Women constitute 20 percent of formal employment, and their jobs are vital to mitigate the economic catastrophe in Afghanistan," Wignaraja said.

Wignaraja also stressed the importance of education for women that "will help them…to contribute as they can and wish as doctors, nurses, teachers, engineers, civil servants or to run their businesses and build back the country."

READ MORE: Can the Taliban keep the lights on through the winter?

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