Afghanistan would require billions of dollars in foreign aid to sustain its most basic services even after a peace settlement with the Taliban, the World Bank has warned.
Despite 18 years of American and NATO military presence marked by funnelling of billions of dollars, Afghanistan’s economy remains highly dependent on foreign aid. The country’s public expenditure is $11 billion annually while revenues stand at $2.5 billion, according to officials cited by the New York Times. The difference of about 75 percent of expenses is footed by foreign governments particularly the United States.
A new World Bank report, titled “Financing Peace,” addresses the idea that US and other international donors to Afghanistan see a potential deal with the Taliban as what one official described as an “of jail card” to significantly reduce their costs in Afghanistan, particularly on the civilian side.
The report warned that even after a peace agreement with the Taliban, the country would still require financial assistance at almost current levels of $7 billion annually for several years to come, to be able to sustain its most basic services.
“A sudden and substantial reduction in civilian grants would risk a reversal of the gains that have been achieved, driving increased hardship and poverty,” said Henry Kerali, the World Bank country director for Afghanistan. “While Afghanistan is not expected to be reliant on grants forever, the pace of decline in grant support needs to reflect current realities.”
The current cycle of financial commitments of international donors to Afghanistan, with just under $5 billion in security assistance each year and $3.5 billion in civilian aid, expires next year.
Citing Afghan and Western officials, NYT said that there is little concern about European donors reducing aid, the US government has signalled to expect a signification reduction at least in civilian assistance in the next cycle.
A State Department spokesman said a reduction in civilian aid has been a gradual process over the years, aligned with the American objective of assisting the Afghan government in expanding its “capacity and desire for greater self-reliance.” US civilian assistance has dropped to $480 million in 2019, from $4 billion in 2010.
“Earlier this year, the U.S. embassy in Kabul led a review of all U.S. civilian assistance,” the spokesman said. “The review endorsed the present strategy and concluded that future requests for civilian assistance will continue to responsibly decrease as U.S. policy objectives are met in Afghanistan.”
