Afghan growth rate projected at 3.1pc in 2013
WASHINGTON (PAN): The World Bank has projected a steep decline in Afghanistan’s growth rate from a high 14.4 percent in 2012 to a low 3.1 percent in 2013, attributing the decline to increasing uncertainty stemming from political and security transition.
In its South Asia Economic Focus report issued on Wednesday, the World Bank, however, said agriculture in Afghanistan this year is expected to contribute flat or slightly negative growth, while investment has slowed as well.
Overall growth is slated to pick up again in 2015, assuming a smooth political and security transition, said the report released on the sidelines of the annual plenary meeting of the International Monetary Fund and the World Bank.
The report said presidential elections scheduled for April 2014 seemed likely to complicate uncertainty over whether the new government would be sufficiently cohesive to make coherent policy decisions.
Fiscal performance of the current government, meanwhile, has weakened, leading to declining revenues that could potentially derail Afghanistan’s smooth passage toward self-reliance, it added.
The World Bank said to preserve fiscal sustainability, a concerted effort will be required on the part of the authorities to improve revenue mobilization by strengthening tax and customs administration and expediting the introduction and implementation of the planned value-added tax.
Afghanistan faces considerable expenditure needs in the areas of security, infrastructure development, service delivery, and operations and maintenance. Meeting these needs will also require significant donor assistance for the foreseeable future, it reported.
“In the midst of these transition-related uncertainties and underperformance, Afghanistan’s leaders will need to stay focused on the country’s medium-term structural reform goals,” the report said.
These include: safeguarding sustainability by mobilizing revenue and securing grant assistance; supporting inclusive and job-creating post-transition growth by unlocking the potential of the agriculture and natural resource sectors and by tapping the potential of regional integration.
It also includes raising the low levels of human capital and skills; and continuing to strengthen institutions and governance.
Noting that political stability, security, and certainty, or their absence, are the primary factors that will determine the economic performance of Afghanistan in the medium term, the World Bank said in the medium term, post-transition growth is projected at about 5 percent per year during 2015-16. This is less than the average annual growth of 9.4 percent during 2003-12 that was fueled by the surge in international aid and security spending.
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