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World Bank: Peace Deal With Taliban to Help Improve Struggling Afghan Economy

By Ayaz Gul July 21, 2019

The World Bank estimated Sunday that Afghanistan's economy grew by less than two percent (1.8 %) in 2018 primarily due to ongoing war, drought and political uncertainty, likely leading to further increases in poverty.

In its latest assessment of the Afghan economy, the Bank noted that sustained and substantial improvement in the security situation are key to better economic conditions required to reduce poverty from high current levels.

"Any political settlement with the Taliban could bring major economic benefits through improving confidence and encouraging the return of Afghan capital and skilled workers from overseas," the assessment noted.

The report comes as the United States has been holding negotiations with Taliban insurgents to try to bring an end to the 18-year-old Afghan war. The two adversaries are said to have come closer to signing a peace deal that could also jumpstart intra-Afghan negotiations for permanent cessation of four decades of hostilities in the country.

"Whatever happens, rapid growth will only be possible with improved security under a government that remains committed to private sector development, respects the rights of investors, and maintains the gains Afghanistan has achieved over the past two decades towards establishing strong and impartial government institutions" said Henry Kerali, the World Bank Afghanistan country director.

Sunday's report, however, hailed progress in government policies and a strong economic management, saying it has improved prospects for 2019, with growth expected to accelerate to 2.5 percent with the easing of drought conditions.

"Government revenues reached a new high of nearly 190 billion afghanis in 2018, up seven percent from 2017 while budget execution rates also reached record levels," it noted.

It urged the government to do more to improve the business environment, ensure a smooth election process and prevent corruption and management of scarce fiscal resources over the difficult months to come.

Afghan election officials are preparing to hold the repeatedly-delayed presidential vote on September 28. Presidential hopefuls alleged incumbent President Ashraf Ghani, who is also seeking re-election, is using state machinery and resources to undermine his rivals.

Presidential spokespeople, however, reject the charges.

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