In its first annual budget since coming to power last August, the Taliban announced a deficit of $501 million. The militant group made no comments on how it intends on bridging the gap between the expected expenditures and income, drawing criticism for lining the coffers of its top leadership without addressing the country’s dire humanitarian crisis.
A statement by the Ministry of Finance projected spending of up to $2.6 billion, of which $2.3 billion has been set aside for ordinary expenditure. The remaining $300 million has been allocated for development activities. In this regard, Deputy Prime Minister (PM) Abdul Salam Hanafi said the Taliban would prioritise bringing bringing “technical education and higher education” to “each and every corner of the country,”
National budget brief pic.twitter.com/I7xIlUpRGL
— Ministry of Finance - Afghanistan (@afghanistanmof) May 14, 2022
According to Azeraksh Hafizi, an economist quoted by Tolo News, the 2022 budget for development is the smallest in the past 20 years. He remarked, “With the implementation of this budget, it is difficult to develop the economy.”
Furthermore, the announcement remained silent on other aspects of the Taliban’s predicted expenditure, including defence, which remains a pressing concern for the group, particularly in light of the rising ISIS attacks in the country. In fact, just a day after announcing the budget, the Taliban announced that it had recruited over 130,000 soldiers, inching closer to the target of 150,000 troops, which it says will give Afghanistan an “independent, well-formed and committed military.”
According to Deputy PM Hanafi, domestic revenue is expected to be $2.7 billion. Finance Ministry spokesperson Ahmad Wali Haqmal, clarified that this will be generated from the customs, ministries, and mines departments.
Furthermore, on Sunday, Foreign Minister Amir Khan Muttaqi said that the Taliban is seeking to “turn Afghanistan into a transit hub and economic hub.” However, the group has not offered any detail on how it plans to do so beyond touting “effective financial planning.”
د بهرنیو چارو وزیر: افغانستان اوس د تاریخي او مثالي امن څښتن هیواد دی.
— Hafiz Zia Ahmad (@HafizZiaAhmad1) May 15, 2022
وروسته له ۴۰ کلونو په افغانستان کې مرکزي حکومت حاکم دی.
زموږ هڅه داده چې افغانستان د ټرانزیټ لار او اقتصاد په مرکز بدل شي.
د افغانستان د اوسنې نظام کمزوري کول د مخربو کړیو سره د مرستې په معنا ده. pic.twitter.com/JwkihpHD6j
The budget, which was published over two months after the 2022-23 fiscal year began in March, also aims to set aside revenue to pay the salaries of the 800,000 government employees who have not been paid for months.
The Taliban has insisted that these initiatives will be funded entirely through national revenue and “without any foreign consideration.” While presenting the budget, Hanafi said, “The entire budget, including spending on education, health, development, defence or other sectors, will be funded by our national revenue sources without any foreign contributions.” He added that the focus remains on increasing the domestic revenue and “eliminating corruption.”
IEA approved the national budget for FY 1401 (Mar 2022 to Mar 2023), a snapshot:
— Mohsin Amin (@MohsinAminn) May 14, 2022
Total budget: $2.57 billion
Operating: $2.26 billion (87.1%)
Development: $0.33 billion (12.9%)
Budget deficit: $0.49 billion
MoF says the budget is 100% funded by national revenues. pic.twitter.com/54wWrXRkAH
In the past, Afghanistan has largely relied on financial assistance from other countries and aid institutions. In fact, international aid accounted for 40% of the country’s GDP and 80% of its budget under the previous Ghani government. In December, the United States Office of Foreign Assets Control issued licenses permitting American and international agencies to conduct “official business” with the Taliban, paving the way for humanitarian aid. Nevertheless, between its the Taliban’s takeover in August and February this year, Afghanistan has received merely $1.6 billion in aid.
Furthermore, the Taliban has banned the cultivation of the opium poppy to crack down on drug production. Opium poppy is the country’s most valuable cash crop, worth around $863 million, and occupies around 263,000 hectares of land. The crop also employs more than 500,000 people, more than any other industry in Afghanistan, and the opiate economy alone is worth over 10% of Afghanistan’s GDP. According to the United Nations Office on Drugs and Crime, Afghanistan accounted for 85% of the global opium production in 2020.
In addition, since the departure of the United States’ troops and the subsequent takeover by the Taliban last August, donor countries and international institutions have withdrawn their funding over their concerns about the Taliban’s attacks on political and ethnic minorities and women’s rights. The Taliban has also been restricted from accessing up to $10 billion in central bank funds.
While the Taliban has reassured Western nations of their commitment to protecting human rights and gender rights, their policies and actions indicate otherwise. For instance, last week, the group issued a decree instructing all Afghan women to cover their faces from head to toe in public spaces. It has also denied women from working in government offices, banned women from boarding flights without a male guardian, prevented them from visiting parks on the same days as men, and prevented them from obtaining driving licenses.
These decisions have attracted heavy criticism from the international community. On Thursday, the foreign ministers of the G7 said that the Taliban “are further isolating themselves from the international community.” On the same day, the United Nations Security Council (UNSC) held an emergency session to discuss several recent measures taken by the Taliban that severely repress women’s freedom in Afghanistan. They have since been joined by a number of other Western governments and allies.
Given this backlash, it is highly unlikely that the Taliban will be able to secure funding from donor nations and financial institutions, which could further compound its already spiralling humanitarian crisis. According to the UN, over 50 million Afghans are in dire need of aid, particularly food. In fact, the UN has described the food security crisis in Afghanistan as an “avalanche of hunger.”
According to a report by the Integrated Food Security Phase Classification, in the June-November period, merely 8% of the Afghan population is expected to receive even two-thirds of their food rations due to a lack of funding. In this regard, Deputy Minister of Economy Abdul Latif Nazari claimed that the Taliban is using “economic diplomacy” to bring aid back to the country.