This newsletter includes the following articles : World Bank Group Support, Ongoing Operations, International Finance Corporation and Afghanistan Reconstruction Trust Fund.
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Target farmers in Kandahar Province are putting into practice new horticulture methods and seeing the fruits of their labor. This is the result of technical training session on horticulture provided by the Nation Horticulture and Livestock Project (NHLP), which aims to increase horticultural output and productivity across the country.
... See More + Project activities are currently implemented in 300 districts in 31 target provinces, numbers that may grow as conditions warrant.
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The Afghanistan Development Update is a twice-annual publication providing analysis of recent developments and presenting the World Bank team’s most-recent macroeconomic projections.
... See More + The August 2018 edition focuses on the state of the economy in the context of upcoming elections, and the potential for a loss of recent momentum as confidence declines. Special topics address: i) the potential for trade to underpin development in Afghanistan; ii) recent trends in poverty and welfare; and iii) priorities for improving education quality and coverage. Afghanistan has experienced slow growth since 2014, with the draw-down of international security forces, accompanying reductions in international grants, and a worsening security situation (growth has averaged 2.3 percent between 2014-2017). Following a period of political instability after the 2014 elections, the economy has slowly regained momentum as reforms have been implemented and confidence restored. From a low of 1.5 percent in 2015, real GDP growth accelerated to 2.3 percent in 2016, and is estimated at 2.7 percent for 2017. Building momentum now appears to be at some risk, with increasing election-related violence, declining business confidence, worsening drought conditions, and some apparent slowing of economic activity. Growth is projected at 2.4 percent in 2018, with substantial downside risks arising from the prospects of political instability around upcoming parliamentary and presidential elections. Risks can be partly mitigated and recent momentum maintained through: i) continued reform progress, demonstrating to investors that the deterioration in governance seen in 2014 will not be repeated; and ii) continued donor commitment to sustained grant support.
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Afghanistan's biggest economic challenge is finding sustainable sources of growth. To date, the World Bank has committed more than 3.85 billion dollars for development projects.
... See More + The International Finance Corporation (IFC), the World Bank Group's private sector development arm, cumulative committed portfolio stands at 52 million dollars and its advisory services portfolio at 8.8 million dollars. The Multilateral Investment Guarantee Agency (MIGA) has 116.5 million dollars of gross exposure for three projects in Afghanistan. The Bank-administered Afghanistan Reconstruction Trust Fund has raised more than 10.3 billion dollars.
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Afghanistan's biggest economic challenge is finding sustainable sources of growth. To date, the World Bank has committed more than $3.73 billion for development projects.
... See More + The Bank-administered Afghanistan Reconstruction Trust Fund has raised more than 10 billion dollars.
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A severe slow-down in Afghanistan's economic growth characterized the period between 2012 and 2014, the so called Transition period leading to the 2014 election and handover of security responsibility to Afghan forces.
... See More + Afghanistan's economic malaise during this time can be attributed to the combined effects of the drawdown of international military forces and a sharp fall in associated international spending, reduction of aid, and increasing conflict and political instability. While aid fueled strong growth during the pre-transition period between 2007-2008 and 2011-2012, worrisome socio-economic dynamics already present intensified during the transition. Notably, the transition crisis magnified once again the many inequalities-between regions, cities and rural areas, rich and poor Afghans, and between men and women and girls and boys-that fracture Afghan society. The poorest and most vulnerable segments of the population benefited least from pre-transition growth, and the same groups suffered the most once the economy and the security condition deteriorated. This new edition of the Poverty Status Update series documents the evolution of poverty and socio-economic inclusion during the transition. It examines determinants of poverty and, with an eye beyond 2014, suggests policies to reduce vulnerability and inequalities.
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The Afghanistan Development Update, which is published twice a year, provides a comprehensive report of the state of the Afghan economy. It covers recent economic developments and outlines the medium-term outlook for Afghanistan.
... See More + Afghanistan. Each edition includes a section that provides in-depth analysis on one or more specific focus topics. The lack of high-frequency data in Afghanistan makes it difficult to track economic activities on a monthly or quarterly basis. Thus, proxy indicators are utilized when their quality is deemed satisfactory. Efforts are made to ensure that key analysis and forecasts are based primarily on reliable sets of data. The Afghanistan Development Update is intended for a wide audience, including policy makers, the donor community, the private sector, the community of analysts and professionals engaged in monitoring the economy and Afghanistan’s citizens at large. In this issue of the Update, the Focus Section discusses how economic stimulus can be provided in Afghanistan’s resource-constrained environment. In the context of the economic slowdown, Afghanistan faces the difficult dilemma of balancing measures to stimulate the economy while at the same time avoiding a further weakening of its fiscal position. The fiscal space is already extremely limited, with no room to increase public expenditure or to lower taxes. Thus, the Government must implement initiatives to maximize the growth impact of fiscal expenditure. First, policies to encourage government spending on non-tradable goods from local suppliers will ensure that demand taps domestic production, rather than imports. Second, policies to improve absorptive capacity will increase the quality, speed of execution and value for money of public investments. Third, policies to promote contestable markets in banking and construction will stimulate the entry of small and medium-sized firms in both sectors. Fourth, polices to increase fiscal space should include measures to improve revenue mobilization and to use existing resources more effectively, which will release additional resources.
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The contents of this newsletter focus on World Bank Group support, status of ongoing operations, International Finance Corporation, and Afghanistan Reconstruction Trust Fund.
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There have been substantial improvements in development outcomes in Afghanistan since 2001, particularly in terms of improved access to basic services such as water, sanitation, and electricity, and increased human development in education and health.
... See More + However, some gains are now being eroded due to growing insecurity, stagnating growth, and rising levels of poverty. Economic growth in Afghanistan has slowed after a period of rapid growth between 2003 and 2012. While the Government of Afghanistan is committed to an ambitious reform program, it is doing so in the midst of political and economic uncertainty. Afghanistan remains a deeply fragile and conflict-affected country. The long years of war have hollowed out state institutions and led to widespread disenchantment with the ruling elite and have fueled the Taliban insurgency. Internal displacement as a result of conflict has led to over 1 million internally displaced persons.At the same time, the country’s difficult topography, vulnerability to climate change, and growing population at 3 percent a year have imposed additional constraints on development. For economic growth to have any impact on poverty, it has to be particularly high and broad based to compensate for the high population growth rate and youth bulge. At nearly 50 percent, Afghanistan’s proportion of population aged 15 years or below is the second highest in the world. Poor nutrition, especially of children, threatens welfare and education gains.
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A severe slow-down in Afghanistan's economic growth characterized the period between 2012 and 2014, the so called Transition period leading to the 2014 election and handover of security responsibility to Afghan forces.
... See More + Afghanistan's economic malaise during this time can be attributed to the combined effects of the drawdown of international military forces and a sharp fall in associated international spending, reduction of aid, and increasing conflict and political instability. While aid fueled strong growth during the pre-transition period between 2007-2008 and 2011-2012, worrisome socio-economic dynamics already present intensified during the transition. Notably, the transition crisis magnified once again the many inequalities-between regions, cities and rural areas, rich and poor Afghans, and between men and women and girls and boys-that fracture Afghan society. The poorest and most vulnerable segments of the population benefited least from pre-transition growth, and the same groups suffered the most once the economy and the security condition deteriorated. This new edition of the Poverty Status Update series documents the evolution of poverty and socio-economic inclusion during the transition. It examines determinants of poverty and, with an eye beyond 2014, suggests policies to reduce vulnerability and inequalities.
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Doing Business in Afghanistan 2017 is the first report of the subnational Doing Business series in Afghanistan. It measures business regulations and their enforcement in five provinces.
... See More + The provinces are compared against each other, and with 189 other economies worldwide. The objective of the study is to gain a broader understanding of the business regulatory environment across Afghanistan as well as to provide good-practice examples and reform recommendations to help guide policy at the national and subnational levels. The study focuses on indicator sets that measure the complexity and cost of regulatory processes affecting four stages in the life of a small to medium-size domestic firm—starting a business, dealing with construction permits, getting electricity and registering property. These four indicator sets were selected because they relate to areas of business regulation in which implementation of the common legal and regulatory framework differs across locations—because of differences in local interpretations of the law and in the resources and efficiency of local agencies responsible for administering regulation. While highly centralized line ministries hold the direct formal authority for the delivery of most services in the provinces, cutting across this system are the provincial governors, who have little formal responsibility for service delivery but wield local power and authority. The report also includes a gender dimension, with the indicator sets for starting a business and registering property expanded to account for gender-differentiated practices.
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The contents of this newsletter focus on World Bank Group support, status of ongoing operations, and Afghanistan Reconstruction Trust Fund. It has the following headings: news; World Bank group support; ongoing operations; raising livestock gives rural poor a chance at brighter future;canal reconstruction improves rural living in Bamyan province; capacity building pays off with first kidney transplant in Afghanistan; International Finance Corporation; Afghanistan Reconstruction Trust Fund; and horticulture provides alternative livelihood to farmers
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The withdrawal of international security forces since 2014 and continuing political uncertainties have resulted in a significant deceleration to economic growth, with fiscal pressures increasing as security threats mount.
... See More + However, to a significant extent, Afghanistan has successfully managed the immediate challenges resulting from the transition. It has maintained macroeconomic stability and established the conditions for a slow recovery of the economy. Risks to the economy remain significant, and it is vital that the Government identify new sources of growth to replace the declining donor inflows over the longer-term. The medium-term outlook points towards a slow recovery over the next three years. The rate of growth is projected to reach 1.9 percent in 2016, assuming adjustments in firms and households’ behavior in the context of the deteriorating security environment. Growth is projected to gradually increase from 1.9 percent in 2016 to 3.6 percent in 2018, if the political situation stabilizes and planned reforms are successfully implemented. On the other hand, any deterioration in the security environment could weaken growth prospects, with this risk being the most significant faced by the country.
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The contents of this newsletter focus on World Bank Group support, status of ongoing operations, and Afghanistan Reconstruction Trust Fund. It has the following headings: news; World Bank group support; ongoing operations; improved access to health care; bridge connects rural community to the world; empowered women see a bright future in Balkh province; International Finance Corporation; Afghanistan Reconstruction Trust Fund; and new school facilities enhance quality of education in Kandahar Province.
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More frequent incidences of violence in Afghanistan, as well as delays in the elections process and cabinet formation, continued to fuel uncertainty and affected investor confidence in 2014 and the first half of 2015.
... See More + Economic growth slowed to 1.3 percent in 2014, down from 3.7 percent a year earlier. Unlike in previous years, agriculture did not contribute much to growth in 2014. Production levels were high for a third year in a row but did not supersede the strong output in 2013. Growth was mainly driven by services and a slight expansion of industries where an increase in construction activities outweighed lower production in manufacturing. Private investment activities showed strong signs of slowdown in 2014, evidenced by a drop of nearly 50 percent in new firm registrations since 2012. The National Unity Government has embarked on an ambitious reform agenda to revitalize the economy, tackle corruption, and improve investment climate. However, it will take time for these reforms to have an impact, and it is yet unclear how much they will mitigate the high risks stemming from the fragile security environment. Growing trends in security and pension and wage spending over the medium term require immediate attention. Afghanistan faces significant financing shortages for both civilian and security spending. Therefore, securing continued high levels of donor financing over the coming years is of critical importance for fiscal stability in the country. The fragile security environment and financing constraints, compounded by weak governance capacity, pose serious challenges to service delivery in Afghanistan. Any setback in reform implementation would further slowdown the pace of human capital accumulation in Afghanistan and reduce future prospects of growth and poverty reduction.
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