Afghanistan

By: Belle Hamilton

Afghanistan Overview
Political History

Afghanistan has an Islamic Republic government.

Ashraf Ghani is the current leader of Afghanistan.

After much political wrangling, President Ghani and former Foreign Minister Abdullah formed a unity
government with Abdullah as the newly created chief executive officer. Afghanistan is heavily dependant on
international military and economic assistance, which consisted an estimated 4 percent of GDP in 2016, and
its living standards are among the lowest in the world. [2]

The formation of the independent Central Asian Republics (CAR) has introduced new dimensions into
regional relationships and is leading to demands for diversified trade and transit links, particularly through
the creation of ocean transport links. [5]
Monetary History

Central Bank: Da Afghanistan Bank. (Kabul)

Currency: Afghan Afghani

There was a financial scandal in 2011 where over $1

billion were just disappeared from there central bank
in mysterious insider loans. The scandal caused the
country to be on the edge of collapsing. [3]
Economy Details

The main industries of Afghanistan are cotton, tobacco, madder, castor beans, and sugar beets. [4]

Afghanistan is a land that is rich in natural resources. There are numerous mineral and precious stone
deposits, as well as natural gas and yet untapped petroleum stores. Some of these resources have been
exploited, while others have retained relatively unexploited. [4]

The top 3 goods of exportation and importation of Afghanistan:

➔ Exports: ➔ Imports:
◆ Grapes: $143 million. ◆ Petroleum: 33% of total imports.
◆ Insect Resins: $102 million. ◆ Machinery and Equipment: 15%.
◆ Tropical Fruits: $101 million. ◆ Food Items: 14%.
Economic Data
Economic Data

➔ GDP growth rate: 3.4%

➔ GDP per capita: $800
➔ Debt to GDP ratio: 7.1
➔ Unemployment rate: 40%
➔ Inflation rate: 26.8%
➔ Interest rates: 14.84

Source: [1] [4]

Economic Data cont.

Afghanistan is the poorest

country ever. It has been really
poor because of the past wars
that cause a lot of people there
to lose everything. It is mostly
based on agriculture. It is mostly
known for its crops mainly just
to feed to people but also for
some to be exported.
Fiscal Policy
Expanisionary
Fiscal Policy

The top income and corporate tax rates are 20 percent. The overall tax burden equals 5.0 percent of total
domestic income. Over the past three years, government spending has amounted to 35.6 percent of the
country’s output (GDP), and budget deficits have averaged 0.6 percent of GDP. Public debt is equivalent to
7.4 percent of GDP. [2]

I will make tax cuts. This will increase demand because more people will have more money that they would
want or need to spend on things. If demand increases then the GDP increases, leading them to grow. I would
target infrastructures, helping schools and and better education, and extensions of the unemployment
benefits. [6]
Fiscal Policy Plan
These are important changes because right now Afghanistan is the poorest country in the world. There needs
to be something done to help them out, and that starts with the government. If the government makes tax
cuts, then the demand will increase. I want to increase government spending and help out infractures,
education and unemployment because we would need more building for the jobs that are going to rise up,
and also for the families that are going to grow. I want to help out the education system because they need a
better education so they can learn about what they want to be when they grow up and just grow as a
person. Unemployment is really low in Afghanistan so if you give the unemployed more benefits then they
will be more happy. [6]

The people running the government might oppose to this fiscal policy because they don't want to spend
more money than they need to. But they need to give more to there people so they can all grow as a nation.
The residents definitely wont aopose because there taxes will be lowered so they don't have to do any extra
work to be paid the same amount of money.
Monetary Policy
Expansionary
Monetary Policy

By buying bonds it will increase the money supply in the economy by swapping out bonds in exchange for
cash to the general public. By decreasing the reserve ratio, it lowers the amount of cash that banks are
required to hold in reserves, allowing them to make more loans to consumers and businesses. This increases
the nation’s money supply and expands the economy. A decrease in the discount rate makes it cheaper for
commercial banks to borrow money, which results in an increase in available credit and lending activity
throughout the economy.

Lowering interest rates will be more willing for people to borrow money to make big purchases, such as
houses or cars. Business and farmers also benefit from lower interest rates, as it encourages them to make
large equipment purchases due to the low cost of borrowing. [7]
Monetary Policy Plan

More borrowing because of low interest rates will be very beneficial because more people are poor and
don’t have the necessities to life like a house or transportation. If they are able to take out loans with little to
no interest rates to get them buy with the necessities to living and creating more money for them, they are
more likely to pay it off. [7]

I wouldn’t say anyone will oppose it, but there just not doing their job and ignoring the problem. Economic
sector departments, including the central bank that is responsible for the monetary policy are the country
and regulating banks have become bases for political activism, ignoring their main responsibilities of
managing and promoting the economy. [8]
Sources
 https://tradingeconomics.com/afghanistan/indicators [1]

https://www.heritage.org/index/country/afghanistan [2]

https://www.theguardian.com/world/2011/jun/16/kabul-bank-afghanistan-financial-scandal [3]

https://www.afghan-web.com/economy/ [4]

http://siteresources.worldbank.org/INTSARREGTOPINTECOTRA/1385530-1139318607199/20810980/TradeAndRegionalCooperation
.pdf [5]

https://www.investopedia.com/ask/answers/040115/what-are-some-examples-expansionary-fiscal-policy.asp [6]

https://www.investopedia.com/articles/stocks/09/how-interest-rates-affect-markets.asp [7]

https://thediplomat.com/2019/09/for-peace-in-afghanistan-the-economy-is-key/ [8]

Everything that doesn’t have a number I found on google [0]