One may have a different opinion about the political reality of the Islamic Emirate of Afghanistan. However, it is advisable to take the economic reality of this state and deal with the nation in this stride. It has become a reality, one may or may not appreciate. It is better to accept the fait-accompli. It would be interesting to understand how the new administration is trying to overcome the acute economic crises, including inter alia the liquidity crisis, of this war-torn geographical region in view of the fact that the overseas assets of the Afghan Central Bank – over $9.5 billion in the US alone – have been frozen. The financial supports from the World Bank and the International Monetary Fund (IMF) are also under severe constraint.
Afghanistan had been almost completely reliant on foreign cash to pay civil servants’ salaries and meet expenses of several institutions, including banks, passport offices, schools and universities. Its annual budgets had been met by foreign fundings without any worthwhile internal generation of funds. Now that such foreign financial support is not available, it has to plan its economic development based almost entirely on internal resources, including custom duties from exports. This is what the political administration has announced while reporting that it has framed its interim budget up to the end of the current financial year and is preparing the regular annual budget for the next year.
The 2021 budget, presented by the previous administration under IMF guidance, had projected a deficit despite 219 billion afghanis ($2.7 billion at the time) in aid and grants and 217 billion from domestic revenue. Afghanistan’s finance ministry under the new government of the Islamic Emirate has prepared a draft national budget that, for the first time in two decades, is funded without foreign aid, as reported by Ahmad Wali Haqmal, Finance Ministry spokesman. Around 4.7 billion afghanis will be spent on development projects, including transport infrastructure. “We are trying to finance it from our domestic revenues – and we believe we can,” he said. He further added, “It’s a small amount but that’s what we can do now.”
CALENDAR OF AFGHANISTAN
The financial year of Afghanistan is different from what other nations generally follow. Its calendar is neither Gregorian nor Hijri, the Islamic calendar. It is a mix of these two and is called Shamsi Hijri Calendar, abbreviated as SH, or HS. It is solar based like Gregorian but follows the year of Hijrah (migration) of Prophet Muhammad ﷺ as the beginning year. So, both the Hijri and the Afghan calendar begin with 622 AD. The first day of the year (Nowruz) begins with vernal equinox, the day when the sun is exactly over the Equator and the length of day and night is equal. It falls in the last week of March, depending on whether the year is leap or not. The leap year of this Shamsi-Hijri calendar is also unique. The first six months have 31 days, the next five have 30 days, and the last month has 29 days in usual years but 30 days in leap years.
So, the next Afghan year (1416 SH) will start on 22nd March and the interim budget announced covers up to the end of current year.
Afghanistan administration is trying to overcome the economic crisis and smoothen economy through export with the realisation that the reliance on foreign aid cannot solve the problem of economy for good. Self-reliance is the panacea. “Humanitarian aid cannot solve Afghanistan’s economic problems. The only way to achieve economic self-sufficiency is to boost domestic products and export them abroad,” the Deputy Foreign Minister of the Islamic Emirate of Afghanistan, Sher Mohammad Abbas Stanekzai, told a gathering in Kabul.
Export accounted for only $800 million in 2020. The volume of exports this year, as reported by the Ministry of Commerce and Industry has already reached 1.5 billion dollars. It is worthwhile in view of the fact that the exchange rate of afghani, the local currency, has been going down drastically (one dollar that fetched 77 afghanis one year ago can now be bought for 105 afghanis). Hence, the quantum increase of export is worthwhile. “The exports reached around one billion and fifty million dollars’ worth. It is a high rate. The exports were affected during the recent changes, but it is now at a normal level,” said Nooruddin Azizi, Minister of Commerce and Industry. Afghanistan exports mainly include fresh and dry fruits, carpets, and precious stones.
“During the past three months of the former administration, Afghanistan had 11.58 billion afghanis of exports; but during the first three months of the new government, Afghanistan’s exports were 26.83 billion afghanis, which showed a 132 per cent surge,” deputy spokesman of the government Inamullah Samangani informed. The statement came as Afghan traders have exported 698 metric tonnes of dried fruit, including 585 tonnes of raisins, to the European Union, Australia, the US and several countries in Asia during the past two weeks, according to information provided by the Ministry of Industries and Commerce.
Imports, on the other hand, have declined. According to the chamber of commerce and industry, the rate of importing products from foreign countries has dropped this year compared to the previous year. “As you know the situation in Afghanistan, our imports have dropped in the past two quarters of the year. The demands are low in the market,” said Khanjan Alokozai, a member of the chamber.
Another positive side of the changed scenario is that the administration has ensured almost total peace in the region, which is a boon to development of any economy. They have also, reportedly, ensured that the corruption which was prevalent in the earlier administration is dealt with strongly. Its direct impact is on better revenue collections. That is why there is credence to believe the new government’s revenue department’s report that it had collected 26 billion afghanis in the previous two months and a half, including 13 billion in customs duties.
There is a prevalent impression that the sole reliance of Afghan economy is opium. But that is far from truth. A report for the year 2018AD says that it produced following items in the year:
3.6 million tons of wheat; 984 thousand tons of grape (18th largest world producer); 615 thousand tons of potato; 591 thousand tons of vegetables; 381 thousand tons of watermelon; 352 thousand tons of rice; 329 thousand tons of melon; 217 thousand tons of apple; 150 thousand tons of onion; 106 thousand tons of maize; 56 thousand tons of barley; 47 thousand tons of peach.
Afghanistan currently produces roughly 1.5 million tons of fresh fruits annually. The northern and western Afghan provinces are known for pistachio (pista) cultivation. In recent years, farmers in the southern provinces have also begun cultivating pistachios. Provinces in the east of the country are famous for pine nuts. The northern and central provinces are also famous for almonds and walnuts. The Bamyan Province in Central Afghanistan is known for growing superior quality potatoes, which produced 370,000 tons in 2020. Nangarhar is famous for lemons, oranges, olives, peanuts and dates.
Wheat and cereal productions are Afghanistan’s traditional agricultural mainstay. Afghanistan is nearing self-sufficiency in grain production.
Time will say whether Afghanistan is politically a success or failed state. However, economically it has great potentials, provided its valiant and hard-working populace are provided with much needed peace and cooperative administration. It is in no way a “white man’s burden”.