Afghanistan is grappling with an economic crisis. Its currency, the Afghani, has sharply depreciated against the US Dollar. Here’s a detailed report on how the currency fluctuation is impacting daily life and the measures being taken to stabilize the economy.

Dollar surge deepens Afghanistan's economic woes

The Taliban announced a complete ban on the use of foreign currency in Afghanistan and warned of action for violators, reports said.

The move to shift to local currency, Afghani, is certain to cause further disruption to the Afghanistan economy that is already on the brink of collapse.

"The Islamic Emirate (Taliban) instructs all citizens, shopkeepers, traders, businessmen and the general public to&nbsp;conduct all transactions in Afghanis and strictly refrain from using foreign currency," a statement by Taliban spokesperson Zabiullah Mujahid said.

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"Anyone violating this order will face legal action," the statement further read.

Till now, the&nbsp;US dollar was widely used in Afghanistan's markets while&nbsp;bordering areas use the currency of neighbouring countries like Pakistan for trade purposes.

Afghanistan's access to more than $9.5 billion has been blocked by the US, the World Bank and the International Monetary Fund (IMF) after the Taliban takeover of&nbsp;Kabul on August 15.

Millions of Afghans have been internally displaced, and thousands have left the country, giving rise to a growing humanitarian crisis.

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The country is in a dire economic situation with no international support and connectivity, resulting in an extremely difficult situation for ordinary people.

The Taliban announced a complete ban on the use of foreign currency in Afghanistan and warned of action for violators, reports said. The move to shift to local currency, Afghani, is certain to cause further disruption to the Afghanistan economy that is already on the brink of collapse.

The Taliban announced a complete ban on the use of foreign currency in Afghanistan and warned of action for violators, reports said. The move to shift to local currency, Afghani, is certain to cause further disruption to the Afghanistan economy that is already on the brink of collapse. "The Islamic Emirate (Taliban) instructs all citizens, shopkeepers, traders, businessmen and the general public to conduct all transactions in Afghanis and strictly refrain from using foreign currency," a statement by Taliban spokesperson Zabiullah Mujahid said. Also Read | Kabul: Controversy erupts over 'container full of bodies' "Anyone violating this order will face legal action," the statement further read. Till now, the US dollar was widely used in Afghanistan's markets while bordering areas use the currency of neighbouring countries like Pakistan for trade purposes. Afghanistan's access to more than $9.5 billion has been blocked by the US, the World Bank and the International Monetary Fund (IMF) after the Taliban takeover of Kabul on August 15. Millions of Afghans have been internally displaced, and thousands have left the country, giving rise to a growing humanitarian crisis. Also Read | UN airlifts winter shelters for displaced Afghans The country is in a dire economic situation with no international support and connectivity, resulting in an extremely difficult situation for ordinary people.

Taliban ban use of foreign currency in Afghanistan

Its been well over 2 months since the Taliban took over control of Afghanistan since then country has been plagued with multiple economic crises. From the falling value of its currency to increasing fuel prices. WION correspondent Anas Mallick spoke to the Taliban finance ministry spokesperson, listen to this exclusive conversation.

Taliban's finance ministry spokesperson speaks to WION on rising fuel prices

UN Secretary-General Antonio Guterres has urged the international community to engage with the Taliban to prevent Afghanistan's economy from collapsing completely.

"It is hard to give humanitarian assistance within Afghanistan without engaging with the de facto authorities," Guterres told journalists on the sidelines of a donor conference, adding that working with the Taliban was "extremely necessary at the moment."&nbsp; 
 
<a href="https://www.wionews.com/south-asia/amid-cash-crunch-fleeing-afghans-sell-possessions-at-kabuls-busy-bazaars-412774">Also read | Amid cash crunch, fleeing Afghans sell possessions at Kabul's busy bazaars</a>

The United Nations has requested the international community to contribute $606 million to Afghanistan, where poverty and hunger have increased dramatically since the Taliban took power, and billions in foreign aid have dried up due to Western mistrust of the new leadership.&nbsp; 
 
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After decades of war, suffering and insecurity, Afghans are facing "perhaps their most perilous hour", UN Secretary-General Antonio Guterres said on Monday in his opening remarks to a conference in Geneva seeking aid for Afghanistan, adding that "the people of Afghanistan need a lifeline.

"Let us be clear: This conference is not simply about what we will give to the people of Afghanistan. It is about what we owe," he said.

Between 1996 and 2001, the Taliban ruled Afghanistan, prohibiting women from working and preventing young girls from attending school. They were deposed in an operation led by the United States, which accused them of sheltering al-Qaeda militants responsible for the September 11 attacks.

Last month, the Taliban surged back to power in a rapid sweep when the last US-led NATO troops withdrew and the Western-backed government's forces melted away.&nbsp;

(With inputs from agencies)

UN Secretary-General Antonio Guterres has urged the international community to engage with the Taliban to prevent Afghanistan's economy from collapsing completely.

UN Secretary-General Antonio Guterres has urged the international community to engage with the Taliban to prevent Afghanistan's economy from collapsing completely. "It is hard to give humanitarian assistance within Afghanistan without engaging with the de facto authorities," Guterres told journalists on the sidelines of a donor conference, adding that working with the Taliban was "extremely necessary at the moment." Also read | Amid cash crunch, fleeing Afghans sell possessions at Kabul's busy bazaars The United Nations has requested the international community to contribute $606 million to Afghanistan, where poverty and hunger have increased dramatically since the Taliban took power, and billions in foreign aid have dried up due to Western mistrust of the new leadership. Also Read | Afghan women can study but in gender-segregated classrooms: Taliban Minister After decades of war, suffering and insecurity, Afghans are facing "perhaps their most perilous hour", UN Secretary-General Antonio Guterres said on Monday in his opening remarks to a conference in Geneva seeking aid for Afghanistan, adding that "the people of Afghanistan need a lifeline. "Let us be clear: This conference is not simply about what we will give to the people of Afghanistan. It is about what we owe," he said. Between 1996 and 2001, the Taliban ruled Afghanistan, prohibiting women from working and preventing young girls from attending school. They were deposed in an operation led by the United States, which accused them of sheltering al-Qaeda militants responsible for the September 11 attacks. Last month, the Taliban surged back to power in a rapid sweep when the last US-led NATO troops withdrew and the Western-backed government's forces melted away. (With inputs from agencies)

Engage with Taliban to avert total collapse of Afghan economy: UN chief Antonio Guterres

In spite of sitting on mineral resources reportedly worth a trillion dollars, Afghanistan, which was tremendously dependent on foreign aid, will face financial challenges as prospects under Taliban rule look uncertain.

In spite of sitting on mineral resources reportedly worth a trillion dollars, Afghanistan, which was tremendously dependent on foreign aid, will face financial challenges as prospects under Taliban rule look uncertain. After Taliban's swift and shocking takeover of the Afghanistan government, how they are seen by the rest of the world will largely impact the country's future financial assistance receipts. Amid the political chaos, some major donors have already halted their support for the country. European Union said not a single euro from the allotted billion-euro development aid will go to a country that violates rights of women and girls. Canada has "no plans" to recognise the Taliban and Germany suspended its development aid. ALSO READ | Black Hawk choppers to armoured Humvees: Billions in US weaponry seized by Taliban However, some important countries like Russia, China and Turkey have welcomed the Taliban's public statements as the insurgents have promised to improve Afghanistan's economy. The conundrum leads to some unavoidable questions : What tools do they have and do they have the needed skill set to run a country? How will an insurgent group, with men wielding guns roaming the streets, promise a stable society? Will they be trusted by foreign investors? Here's an in-depth examination of what we know about the Afghan economy and future economic prospects, a country that has a population of just under 40 million and is categorised as one of the poorest nations in the world. ALSO READ | Armed, but holy! Afghanistan observes first Friday prayers under Taliban rule Afghanistan's GDP After Taliban were driven from power in 2001, Afghanistan's economy was gradually progressing. A Bloomberg report stated that country's gross domestic product, estimated at $22 billion, has grown nearly threefold since 2001. After Taliban's exit, the economy was managed by experts, technocrats, some of them Western-educated or trained. But the question is, will they stay on in the country now? And how will a skill-deprived Taliban rulers run the economy? In 2020, aid flows represented 42.9 per cent of Afghanistan's $19.8 billion GDP, according to World Bank data. Trillion-dollar worth of minerals A report published in 2010 revealed that Afghanistan is sitting on mineral deposits worth nearly $1 trillion. The data by US military officials and geologists determined that vast supplies of iron, copper, gold and rare earth minerals are scattered over the country. The value of the mineral deposits will be more now as compared to what it was estimated in 2010. The reports also stated that Afghanistan could be home to one of the world's biggest deposits of lithium. It is an essential but scarce component required in rechargeable batteries and other technologies vital to tackling the climate crisis, like solar panels and wind farms. Copper, which is needed to make power cables, became a hot commodity this year as prices soared to more than $10,000 per tonne. World demand for lithium is expected to grow by over 40 times by 2040, according to the International Energy Agency. In 2010, the US Geological Survey's Jack Medlin said during a Pentagon briefing that "It's not a quick win" , as converting the potential of mineral wealth into actual revenue take years and huge investments. In an attempt to extract the minerals, the Taliban will face security challenges and a lack of infrastructure but such valuable minerals might lure foreign players despite the chaos. Afghanistan's possible wealth has the potential to enable a better future but other countries might try to exploit it, even as internal corruption poses a bigger threat. Opium and taxes According to a May 2020 report from a UN Security Council sanctions committee, the Taliban gets much of its revenue from criminal activities such as the cultivation of poppies used to make heroin and opium, as well as from drug trafficking. Extortion of businesses, as well as ransom from kidnapping, also provide income, according to the report which estimated the group's revenues at $300 million to $1.5 billion a year. It is imperative to note that the international community spent billions of dollars over the years to help Afghanistan eradicate poppy cultivation, but the country still produces more than 80 per cent of the world's opium. The industry employs hundreds of thousands of people in a country with high unemployment after 40 years of conflict. However, the Taliban have promised that they will end the narcotics industry in Afghanistan. But is it really possible? Watch: Who created the Taliban? × International relations Since the Taliban took over the Afghanistan capital, it appears that they want to be recognised by the international community as being a legitimate government. In a recent interview with ABC News, US President Joe Biden said that the Taliban are going through sort of an "existential crisis". Despite their promises of running the country smoothly, the "positively different" insurgents-turned-rulers have received a mixed response. Some countries have reacted on the basis of how the Taliban's reputation precedes them but some foreign donors trust the group. As mentioned before, Russia, China and Turkey have all welcomed the insurgents' first public statements. However, United States is wary. Canadian Prime Minister Justin Trudeau said his country has "no plans" to recognise the Taliban. Germany announced the suspension of its development aid as it was going to provide $503.1 million in aid this year, including $292.5 million for development. China, however, can play a massive role here as some of the political experts have indicated China's substantial interest in the Afgan economy at the moment. However, it is not clear if it will fill the void should relations with western nations remain cold, especially with the United States. According to the World Bank's most recent estimates from May, remittance flows to Afghanistan from overseas were estimated at $789 million in 2020. Cash on hand How much cash on hand does the country have? Amid uncertainties, international organisations are not willing to trust the Taliban as the International Monetary Fund (IMF) announced it would freeze aid to the country. Apart from IMF, The Biden administration has frozen the Afghan central bank’s assets and halted shipments of cash to the country. Central bank governor Ajmal Ahmady said on Twitter the Da Afghanistan Bank (DAB) had around $9 billion in reserves, but most of that is held overseas, out of reach of the Taliban. "As per international standards, most assets are held in safe, liquid assets such as treasuries and gold," said Ahmady. The US Federal Reserve holds $7 billion of the country's reserves, including $1.2 billion in gold, while the rest is held in foreign accounts including at the Basel-based Bank for International Settlements, Ahmady added. Also note that the Western Union also said that it was temporarily cutting off wire transfers to the country — another vital source of cash for the people. The World Bank has more than two dozen development projects ongoing in the country and has provided $5.3 billion since 2002, mostly in grants. The status of those programmes is unclear as the development lender works to pull staff out of the country. Impact of COVID-19 pandemic The Coronavirus has also impacted the reeling Afghan economy, and the Taliban has acknowledged that it cannot improve the situation without foreign help. (inputs and quotes from agencies)

Minerals worth trillion dollars: So really how big is Afghanistan's economy under Taliban control?

Afghanistan&#39;s government is boosting its revenues by imposing a new tax regime. The aim is to stop the country&#39;s dependence on international aid, but several private business did not welcome the move complaining that it hits them hard, making it difficult to hope in a possible economic recovery.&nbsp; 
&nbsp; 
After decades of conflict, Afghanistan&#39;s economy is struggling to get back on track. The country is ranked 183 out of 190 countries in the World Bank&#39;s Doing Business index and the tax drive does not make it easier.&nbsp; 
&nbsp; 
Local firms complained that they are constantly targeted by tax officials who do not give them any possibility to delay payments nor any other flexible approach and this chocks their businesses preventing them to plan new investments or hire new resources.&nbsp; 
&nbsp; 
&quot;I personally planned to start two or three small manufacturing businesses but I decided not to,&quot; says Sadiq, a local businessman. &quot;I haven&#39;t been as disappointed at any time in the past 30 years.&quot;&nbsp; 
&nbsp; 
Afghanistan&#39;s finance ministry says it expects to raise almost 2.5 billion USD in revenues in the first three months of 2017. It is 500 million USD above target and it could be a vital achievement since cash for aid and foreign armed forces begins to slow.&nbsp; 
&nbsp; 
International donors pledged to invest 15.2 billion USD to 2020, but after that, the future is unclear and the country is willing to move on and find its own way to develop.&nbsp; 
&nbsp; 
&quot;Taxes are nobody&#39;s favourite, especially those who have to pay and that&#39;s why you see resentment,&quot; said Khalid Payenda, director-general for macro fiscal policy at the finance ministry.&nbsp; 
&nbsp; 
&quot;Their (the government) only concern is raising a certain amount of revenue. How it&#39;s done is of no concern to them,&quot; said Mustafa Sadiq, whose firm Omaid Bahar Fruit Processing usually employs around 200 staff and double that number at peak times. &quot;They&#39;re not increasing the volume of business, they&#39;re just increasing taxes on whatever there is left.&quot;&nbsp; 
&nbsp; 
The government needs to increase its revenues since much of the country&#39;s 20 billion USD, mainly carpets and fruit, has always operated informally, paying no taxes at all. &nbsp; 
&nbsp; 
This new reform comes in a difficult moment for the Afghan private sector: 2016 saw a loss in new companies registration which dropped by 30 per cent and many local firms are suffering due to cheap imports from Pakistan and Iran.&nbsp; 
&nbsp; 
The Afghan Taxation system had already been reshaped at the end of 2015, when the government decided that the main tax rate was doubled from two to four percent. Afghan companies must now pay four times a year.&nbsp; 
&nbsp; 
&quot;If the government is under pressure, then so is the private sector,&quot; said Fawad Saafi, whose Millifactories group makes products ranging from PVC tubes to foam mattresses. His workforce has dropped from 700 to under 200 as economic growth stalls and business dries up.&nbsp; 
&nbsp; 
Several companies reported about bribery and arbitrary tax collection saying that too often the system is inefficient and open to abuse.&nbsp; 
&nbsp; 
&quot;The feeling amongst many business people is that if some bureaucrats drive past a successful business they&#39;ll find a way to extract money from it,&quot; said Franz-Michael Mellbin, EU Special Representative to Afghanistan. &quot;That makes for a really hostile business environment and it doesn&#39;t need to be.&quot;&nbsp; 
&nbsp; 
The real challenge in a country where corruption and tax evasion are rampant lies in the implementation of a functional collection rather than on imposing new tolls. &nbsp; 
&nbsp; 
In Afghanistan economy is also strictly connected to security. Large parts of the country are under control of Islamist insurgents and creating jobs could be a very effective way to prevent young citizens to join their ranks, the only way the country has to secure peace and therefore prosperity.&nbsp;

(WION with inputs from Reuters)&nbsp; 
&nbsp;

The government aims at curbing the country's dependence on foreign aid, but corruption and collection issues risk to chocke the economy

Afghanistan's government is boosting its revenues by imposing a new tax regime. The aim is to stop the country's dependence on international aid, but several private business did not welcome the move complaining that it hits them hard, making it difficult to hope in a possible economic recovery. After decades of conflict, Afghanistan's economy is struggling to get back on track. The country is ranked 183 out of 190 countries in the World Bank's Doing Business index and the tax drive does not make it easier. Local firms complained that they are constantly targeted by tax officials who do not give them any possibility to delay payments nor any other flexible approach and this chocks their businesses preventing them to plan new investments or hire new resources. "I personally planned to start two or three small manufacturing businesses but I decided not to," says Sadiq, a local businessman. "I haven't been as disappointed at any time in the past 30 years." Afghanistan's finance ministry says it expects to raise almost 2.5 billion USD in revenues in the first three months of 2017. It is 500 million USD above target and it could be a vital achievement since cash for aid and foreign armed forces begins to slow. International donors pledged to invest 15.2 billion USD to 2020, but after that, the future is unclear and the country is willing to move on and find its own way to develop. "Taxes are nobody's favourite, especially those who have to pay and that's why you see resentment," said Khalid Payenda, director-general for macro fiscal policy at the finance ministry. "Their (the government) only concern is raising a certain amount of revenue. How it's done is of no concern to them," said Mustafa Sadiq, whose firm Omaid Bahar Fruit Processing usually employs around 200 staff and double that number at peak times. "They're not increasing the volume of business, they're just increasing taxes on whatever there is left." The government needs to increase its revenues since much of the country's 20 billion USD, mainly carpets and fruit, has always operated informally, paying no taxes at all. This new reform comes in a difficult moment for the Afghan private sector: 2016 saw a loss in new companies registration which dropped by 30 per cent and many local firms are suffering due to cheap imports from Pakistan and Iran. The Afghan Taxation system had already been reshaped at the end of 2015, when the government decided that the main tax rate was doubled from two to four percent. Afghan companies must now pay four times a year. "If the government is under pressure, then so is the private sector," said Fawad Saafi, whose Millifactories group makes products ranging from PVC tubes to foam mattresses. His workforce has dropped from 700 to under 200 as economic growth stalls and business dries up. Several companies reported about bribery and arbitrary tax collection saying that too often the system is inefficient and open to abuse. "The feeling amongst many business people is that if some bureaucrats drive past a successful business they'll find a way to extract money from it," said Franz-Michael Mellbin, EU Special Representative to Afghanistan. "That makes for a really hostile business environment and it doesn't need to be." The real challenge in a country where corruption and tax evasion are rampant lies in the implementation of a functional collection rather than on imposing new tolls. In Afghanistan economy is also strictly connected to security. Large parts of the country are under control of Islamist insurgents and creating jobs could be a very effective way to prevent young citizens to join their ranks, the only way the country has to secure peace and therefore prosperity. (WION with inputs from Reuters)

New tax hits hard on Afghanistan local firms