Afghanistan: Taliban prepare new budget without foreign aid as recession intensifies across country

It comes as the country is mired in economic crisis and faces a looming humanitarian catastrophe that the United Nations has called an 'avalanche of hunger'

Agence France-Presse December 21, 2021 08:04:05 IST
Afghanistan: Taliban prepare new budget without foreign aid as recession intensifies across country

Afghan children in Herat, November 2021. AP

Kabul, Afghanistan: Afghanistan's finance ministry under the Taliban government has prepared a draft national budget that, for the first time in two decades, is funded without foreign aid, a spokesman said.

It comes as the country is mired in economic crisis and faces a looming humanitarian catastrophe that the United Nations has called an "avalanche of hunger".

Finance ministry spokesman Ahmad Wali Haqmal did not disclose the size of the draft budget — which runs until December 2022 — but told AFP it would go to the Cabinet for approval before being published.

"We are trying to finance it from our domestic revenues — and we believe we can," he told state television in an interview shared on Twitter.

Global donors suspended financial aid when the Taliban seized power in August and Western powers also froze access to billions of dollars in assets held abroad.

The 2021 budget, put together by the previous administration under IMF guidance, projected a deficit despite 219 billion Afghanis ($2.7 billion at the time) in aid and grants and 217 billion from domestic revenue.

At that time, the exchange rate was around 80 Afghanis to the dollar, but the local currency has been hammered since the Taliban's return, particularly in the past week, slumping to 130 on Monday before recovering Friday to around 100.

Haqmal accepted that public servants are still owed several months of wages, saying "we are trying our best" to make good on overdue pay by year-end. He warned, however, a new pay scale had also been prepared.

The new government's revenue department said last month that it had collected 26 billion Afghanis in the previous two and a half months, including 13 billion in customs duties.

It also announced a new Islamic tax to fund aid projects for poor people and orphans.

An Afghan economist who asked not to be named said Friday the new budget would likely end up being only a quarter of that for 2021.

"The Taliban are saying they have more transparency at the border crossings," meaning fewer goods dodge duties than previously, this economist told AFP.

But, he said, even if true, maximum revenues would only be about 100 billion Afghanis because the intensifying recession will shrink the tax take to a far greater extent.

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