WASHINGTON: The International Monetary Fund has warned that the prolonged conflict, a heavy dependence on aid, and the impact of corruption and political uncertainty are preventing Afghanistan from building a strong economy.
In their second review of the Afghan economy, released in Washington this weekend, IMF directors noted that with financial and security support from the international community, Afghanistan has made important strides in rebuilding its economy since 2002.
But the directors warned that the country “remains conflict-affected, poor, and aid-dependent,” although macroeconomic policies have been broadly successful in maintaining fiscal and external sustainability.
The directors also urged Afghan authorities to prepare for lower external support to encourage growth by strengthening institutions and addressing corruption. They also stressed the need for building up physical and human capital, developing the financial sector, making access to financial services more inclusive, and improving the business climate.
The observations support Islamabad’s stance that instead of blaming Pakistan for Afghanistan’s failures, the United States should help Kabul in overcoming its domestic problems. Pakistan too identifies lack of governance, corruption and an ever-growing insurgency as Afghanistan’s main issues.
The United States, however, argues that the efforts to stabilise Afghanistan cannot succeed as long as there are safe havens in Pakistan that the insurgents use for carrying out attacks in Afghanistan.
The new US strategy suggests dealing with by defeating the Taliban in the battlefield to force them to seek reconciliation with the Kabul government.
The IMF report noted that Afghanistan’s real GDP grew by 2.4 per cent in 2016 due to higher agricultural output, up from 1.3pc in 2015. For 2017, growth is projected at 2.5pc and at 3pc for 2018.
But it warned that this was “below the rate of growth needed to reduce unemployment” and was “contingent on an improvement in confidence, implementation of reforms, and continued strong donor support.”
Published in Dawn, December 12th, 2017