global economy

Afghanistan’s economic collapse could prompt refugee crisis – IMF

Reuters

This is AI generated summarization, which may have errors. For context, always refer to the full article.

Afghanistan’s economic collapse could prompt refugee crisis – IMF

HUMANITARIAN CONCERNS. Refugees board a bus taking them to a processing center upon their arrival at Dulles International Airport in Dulles, Virginia, September 1, 2021.

Kevin Lamarque/Reuters

The International Monetary Fund says the turmoil in Afghanistan is expected to generate economic and security spillovers to the region and beyond

Afghanistan’s economy is set to contract up to 30% this year and this is likely to further fuel a refugee crisis that will impact neighboring countries, Turkey, and Europe, the International Monetary Fund (IMF) said on Tuesday, October 19.

With non-humanitarian aid halted and foreign assets largely frozen after the Taliban seized power in August, Afghanistan’s aid-reliant economy “faces severe fiscal and balance-of-payments crises,” it said in its regional economic outlook update.

“The resulting drop in living standards threatens to push millions into poverty and could lead to a humanitarian crisis.”

The IMF said the turmoil in Afghanistan was expected to generate important economic and security spillovers to the region and beyond and was “fueling a surge in Afghan refugees,” although it gave no estimates of potential numbers.

“A large influx of refugees could put a burden on public resources in refugee-hosting countries, fuel labor market pressures, and lead to social tensions, underscoring the need for assistance from the international community,” it said.

Assuming a million more Afghans flee their homeland and settle in other countries in a way that is proportional to the existing spread of Afghan refugees, the annual cost of hosting them would amount to $100 million in Tajikistan (1.3% of gross domestic product), about $300 million in Iran (0.03% of GDP), and more than $500 million in Pakistan (0.2% of GDP), the IMF said.

Tajikistan said last month it could not afford to take in large numbers of refugees unless it received international financial assistance. Other Central Asian nations have also said they have no plans to host refugees.

Another channel through which Afghanistan’s economic troubles could affect its neighbors is trade.

“Exports to Afghanistan are macroeconomically and socially relevant for Iran, Pakistan, Turkmenistan, and Uzbekistan,” the Fund said.

Afghanistan previously served as a source of cash dollars, through both legitimate and possibly illicit cross-border flows, due to its status as a beneficiary of large donor funds, but now even larger amounts of dollar banknotes could start flowing into the country due to its shortages, the IMF said.

The goods they are exchanged for are likely to raise new concerns over money laundering and the financing of terrorism, it added. – Rappler.com

Add a comment

Sort by

There are no comments yet. Add your comment to start the conversation.

Summarize this article with AI

How does this make you feel?

Loading
Download the Rappler App!