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PublishDate: Saturday, January 1, 2022 14:36

Looking Back: The Afghan Economic Situation in 2021

In 2021, aid from the international community to Afghanistan halted and assets held in foreign banks were frozen, leaving the country’s economy on the brink of collapse.

Afghan Voice Agency (AVA)_The country’s largest national program, , which was aimed at reducing and helping rural areas to develop, was suspended. In the middle of 2021, Afghanistan faced a drought.

Meanwhile, 2021 was not a good year for the aviation sector of Afghanistan. On August 15, all commercial flights were suspended and hundreds of passengers returned home from Kabul Airport even though they had visas and passports.

When the former government collapsed on August 15, people flocked to banks in Kabul and in the provincial centers and the private and public banks faced a shortage of cash.

“Afghanistan’s economy plunged, causing a major humanitarian crises after the Taliban took power, with the financial aid being suspended and the freezing of national assets in 2021,”said Seyar , an economist.

In 2021, the United States Department of the Treasury froze more than $9 billion of Afghanistan’s assets, and on the August 15--the day when Islamic Emirate took power-- all the country’s banking transactions with the world were cut off.

“Banks have their own problems, the activity of the Asian Development Bank--which was providing salaries for a number of employees--have been halted and most of the half-finished projects from the previous government have been suspended,” said Din Mohammad Hanif, acting Minister of the Economy. In 2021, Afghanistan’s currency faced sharp fluctuations.

Based on the statistics of the former acting governor of the central bank of Afghanistan, which he posted on his Facebook page, before the fall of the previous government, one was exchanged at the following rates:

36 days before the fall of the former government, one dollar was exchanged for 78 Afs. Thirty days before the collapse, one dollar was exchanged for 93 Afs, and a week after the political change, one dollar was exchanged for 102 Afs.

At one point the value of the afghani against the dollar plummeted, with one dollar being exchanged for 130 Afs.

“In 2021, we did not have good memories of the value of the afghani, Afghan currency was losing its value day by day the entire year,” said Abdurahman Zirak, spokesperson of the Money Exchangers Union at Sarai Shahzada.

In 2021, the suspended all its projects to Afghanistan, and its largest program, the $1 billion Citizen's Charter National Priority Program (CCNPP), was also halted.

In the later months of the year, the United Nations Development Program () reported that nearly 97 percent of the population of Afghanistan would go under the poverty line.

This year, hunger and rising of unemployment forced thousands of Afghans to flee to Iran and Pakistan to find jobs.

“After the political change, all aid agencies cut off their aid to Afghanistan, there were a lot of problems in the country,” said Ahmad Wali Haqmal, spokesperson for the Finance Ministry.

At the the start of the year, the third wave of Covid-19 caused severe problems for the economy of Afghanistan and work for many businesspeople stopped.

The economy in rural areas of the country, which relied on agriculture, was severely affected by drought, and the country’s wheat production decreased by one million tons this year.

Meanwhile, due to the inflation dozens of factories were closed because they faced a lack of raw materials and could only make limited withdrawals from banks to pay for materials or to pay employees.

“When production falls, it affects the whole economy of the country. It is clear that the employees lose their jobs, income lowers, and demand falls and it causes the recession of the economy,” said Hasibullah Mowahed, the deputy head of the Central Statistics Organization ().

Despite the problems and challenges, the Afghan Ministry of Finance reported that for the first time the country's budget has been prepared without relying on foreign aid, and that the regular budget will come from domestic revenue.

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