Purchasing power declined in Afghanistan amid extensive restrictions

The World Bank reported in April of this year that Afghanistan’s inflation rate has decreased due to what is perceived as a decrease in people’s purchasing power.

The Central Bank, under the control of the Taliban, indirectly confirmed this report, stating that the decrease in people’s purchasing power in Afghanistan is due to international sanctions.

Hajji Badri, the head of Afghanistan’s Central Bank operating under the Taliban administration, met and discussed with Ramiz Alakbarov, the Deputy Secretary-General of the United Nations in Kabul on Monday, May 20.

In this meeting, Mr. Badri confirmed that “people’s purchasing power in Afghanistan” has decreased but attributed it to international sanctions without providing further details.

According to him, “sanctions imposed on Afghanistan’s banking sector have had a negative impact on the country’s financial stability and inflicted further losses on the people.”

During the meeting with Ramiz Alakbarov, the head of the Central Bank, he also mentioned international transactions through unofficial channels, which he claimed was also a result of sanctions.

Meanwhile, the World Bank reported in April of this year that people’s purchasing power in Afghanistan had decreased, leading to a reduction in the inflation rate, which the Taliban authorities consider an achievement.

This comes amid a dire humanitarian crisis in the country since the Taliban took power in Afghanistan due to their failure to fulfil their international obligations and their restrictions on women’s basic rights, including education, employment, and free movement.

According to the World Bank report, Afghanistan’s economy experienced a severe 26% contraction in the first two years of the Taliban rule, alongside a 9.7% decrease in inflation (negative 14.4% in food and negative 4.4% in non-food) until February 2024.

The report outlined a “bleak” economic outlook for Afghanistan’s future until at least 2025.

It’s worth mentioning that per capita income is what leads to an increase or decrease in demand. The World Bank reported in early 2022 that the per capita income of Afghan citizens had decreased by over 30% in the first four months of 2021, restricting people’s purchasing power and ultimately leading to a decrease in the country’s inflation rate.

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