Afghanistan will need aid for years: World Bank

Last Updated: Wednesday, November 23, 2011 - 20:21

Kabul: Afghanistan could face economic
collapse if international assistance is abruptly cut as
foreign combat forces are withdrawn, the World Bank warned,
stressing that the war-ravaged nation will need billions of
dollars in aid for a decade or more.

The forecast by the World Bank, released late Tuesday,
reflects broader concerns that Afghanistan will enter into a
deep recession as the international community gradually
reduces both the aid it provides the government and starts
drawing down the 130,000 troops currently in the country.

That troop withdrawal, which is slated to be completed by
the end of 2014, has already begun with the transition of
security responsibility from NATO to Afghan forces in seven
areas earlier this year.

"The full assumption of Afghan responsibility for
security by end-2014, the drawdown of most international
military forces and the likely reduction in overall assistance
will have a profound impact on Afghanistan`s economic and
political landscape, extending well beyond 2014," the World
Bank said in a report.

The organization said Afghanistan this year received USD
15.7 billion in aid, representing more than 90 percent of its
public spending.

"International experience and Afghanistan`s history after
the Soviet military withdrawal in 1989 demonstrate that
violent fluctuations in aid, especially abrupt aid cutoffs,
are extremely dangerous and destabilizing," the report said.

It said that the international community had to find ways
to mitigate the impact and find a more sustainable way to
deliver aid in the years to come.

The government of President Hamid Karzai has pinned much
of its hopes on massive copper deposits and other mineral
wealth, but exploiting those resources, which Afghan officials
predict will bring in about USD 3 trillion, will take years.

"The extremely high level of current annual aid is
roughly the same amount as Afghanistan`s Gross Domestic
Product and cannot be sustained," the study said.
The World Bank estimated that Afghanistan`s domestic
revenues are expected to increase from 10 percent of GDP in
2011 to 17.5 percent by 2021.

The rise, however, is dependent on the opening of some
mining facilities, efficient tax collection and a security
situation that does not deteriorate.

Weighing heavily on the country`s fiscal position is
spending on the Afghan National Security Forces, slated to
increase to 352,000 personnel by the end of 2014, and basic
and civil services.

Those expenses will have grown to twice the size of
revenues and will result in a shortfall of about USD 7.8
billion annually, or about 25 percent of the country`s GDP in
2021.

PTI



First Published: Wednesday, November 23, 2011 - 20:21

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