KABUL (SW) \u2013 The coronavirus pandemic has set back Afghanistan\u2019s economic growth by several years forcing the country to\u00a0reallocate resources from\u00a0long-term development priorities to fighting the health crisis, a latest report said on Wednesday.<\/p>\n
This was stated by the UNDP as it launched its latest COVID-19 Socioeconomic Impact Assessment Note on Afghanistan titled \u201cFiscal Options in Response to Coronavirus Crisis\u201d. The note is the fourth of a series of Country Notes that examine the likely effects of the coronavirus outbreak in Afghanistan with a focus on the fiscal implications of COVID-19.<\/p>\n
Recent simulations from a single-country computable general equilibrium\u00a0model\u00a0(CGE)\u00a0developed by UNDP estimates that\u00a0due to a combination of external and internal shocks, the Afghan economy will contract by around 6 percent in 2020.<\/p>\n
Assuming the\u00a0recovery\u00a0starts in 2021 and\u00a0growth performance to be positive\u00a0between 2021 and 2024, it will be moderate,\u00a0and well below the\u00a0pre-pandemic level. Without well\u00a0thought-out\u00a0recovery-oriented\u00a0policies, this amounts to a cumulative loss of\u00a0around\u00a012.5 percent in\u00a0real\u00a0GDP by 2024, said the report.<\/p>\n
Based on the findings of the Note, Afghanistan witnessed a sharp decline in revenues\u00a0in 2020\u00a0due to low economic activity, trade disruption and weaker compliance brought on by the pandemic. The government had to adjust the revenue estimates\u00a0downwards\u00a0from\u00a0Afs\u00a0209 billion\u00a0(USD 2.71 billion)\u00a0in 2019 to\u00a0Afs\u00a0144 billion\u00a0(USD 1.87 billion)\u00a0during the mid-year budget review.<\/p>\n
UNDP CGE model simulations estimated an average of 17 percent decline in corporate tax revenue and 18 percent decline in personal income tax\u00a0revenue. Tax on international trade will be\u00a0the worst\u00a0hit\u00a0and\u00a0revenues may\u00a0decline to as low as 19 percent due to\u00a0the\u00a0decrease in imports, while tax\u00a0revenue\u00a0on goods and services\u00a0might\u00a0decline by\u00a010\u00a0percent. The fiscal deficit is expected to increase to around\u00a04\u00a0percent of GDP\u00a0in 2020.<\/p>\n
The Afghan government needs to opt for policies and programs to generate more revenue to address the fiscal deficit, said the report.<\/p>\n
Given the economic slowdown, a second wave of the pandemic, continued conflict, and an uncertain peace process and political environment, the country will continue to need grant support from the international community to address the fiscal deficit and maintain its current level of expenditure on basic services, the UNDP predicted.<\/p>\n
It said additional grants need to be directed at driving and implementing reforms to improve\u00a0the\u00a0business regulatory environment, improve governance, encourage investment and strengthen the private sector.<\/p>\n
UNDP\u2019s socio-economic recovery offer to fight against COVID-19 aims to enable national and sub-national authorities to address the immediate fiscal impact of the pandemic in the short-run and help reverse its negative effects on the country\u2019s development agendas and attainment A-SDGs in the medium and long-run.<\/p>\n
The UNDP, along with other development partners,\u00a0is supporting the government of Afghanistan in the run up to, and after, the pledging\u00a0conference by presenting donors and friends of Afghanistan with evidence-based research and a clear picture of the situation\u00a0to ensure\u00a0the international community continues to support Afghanistan to address its fiscal needs and its recovery\u00a0path from the COVID-19, that is informed by data and research.<\/p>\n
ENDS<\/p>\n","protected":false},"excerpt":{"rendered":"
UNDP warns that with a second wave of the pandemic, continued conflict, and an uncertain peace process and political environment, the country will continue to need grant support from the international community.<\/p>\n","protected":false},"author":2,"featured_media":1787,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[179,16,6,7],"tags":[12,170,217,302],"class_list":["post-1786","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy-business","category-report","category-afghanistan","category-headline","tag-afghanistan","tag-undp","tag-coronavirus","tag-economy"],"views":627,"_links":{"self":[{"href":"https:\/\/swn.af\/en\/wp-json\/wp\/v2\/posts\/1786","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/swn.af\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swn.af\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swn.af\/en\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/swn.af\/en\/wp-json\/wp\/v2\/comments?post=1786"}],"version-history":[{"count":0,"href":"https:\/\/swn.af\/en\/wp-json\/wp\/v2\/posts\/1786\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swn.af\/en\/wp-json\/wp\/v2\/media\/1787"}],"wp:attachment":[{"href":"https:\/\/swn.af\/en\/wp-json\/wp\/v2\/media?parent=1786"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swn.af\/en\/wp-json\/wp\/v2\/categories?post=1786"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swn.af\/en\/wp-json\/wp\/v2\/tags?post=1786"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}