Afghanistan Requires $7bn in Aid Each Year
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Torn apart by a decade of war and destruction, Afghanistan is appealing for $7 billion in foreign aid each year over the next decade to grow its economy.
In an interview with Reuters, Afghanistan’s central bank governor Noorullah Delawari said the withdrawal of Western troops and foreign aid will cripple Kabul’s already fragile economy and pose a serious threat to its national security.
Torn apart by a decade of war and destruction, Afghanistan is appealing for $7 billion in foreign aid each year over the next decade to grow its economy.
In an interview with Reuters, Afghanistan’s central bank governor Noorullah Delawari said the withdrawal of Western troops and foreign aid will cripple Kabul’s already fragile economy and pose a serious threat to its national security.
Appealing for direct international assistance, Delawari said Afghanistan needs about $6 – 7 billion annually in economic aid.
Related: Afghanistan Economic Statistics and Indicators
However, that could complicate discussions with donor countries who are concerned about misuse of funds. Last year, Transparency International ranked Afghanistan the third most corrupt country in the world, a ranking it shares with Myanmar.
Afghanistan’s international donors will gather in Tokyo next month for a conference at which they are expected to pledge economic aid.
Afghanistan is one of the least developed countries in the world, with a per capita gross domestic product of $528 and more than a third of its population living below the poverty line.
[quote] Its economy is also extremely dependent on foreign aid money. Aid is estimated to be $15.7 billion last year – about the same size of its gross domestic product in 2011. [/quote]
However, the economic crisis and tepid recovery in the United States threatens jeopardise that branch of economic assistance.
Despite the large volume of aid, the World Bank says most international spending “on” Afghanistan is not spent “in” Afghanistan, as it leaves the economy through expatriated profits of contractors and outward remittances.
Delawari said Afghanistan has seen double-digit economic growth since 2011 and is expected to expand 7.5 percent this year because of a good agriculture crop, but it was hard to envision its economic prospects without aid.
Landlocked Afghanistan is hoping that its underground reserves of copper, iron ore and oil will help make up some of the shortfall, but Delawari said the revenues from the extractive industries were “five to 10 years away if not more”.
Last week, it was reported that Afghanistan is planning to sell Islamic bonds for the first time next year, in a bid to calm its volatile capital market and to develop its domestic financial market.
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