Afghanistan Economic Update, April 2014
Economic growth slowed considerably to 3.6 percent (estimated) in 2013 despite robust agricultural production, as heightened uncertainty surrounding the political and security transition led to a slump in investor and consumer confidence. Growth is...
| Main Authors: | , |
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| Format: | Economic Updates and Modeling |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2014/04/19425195/afghanistan-economic-update http://hdl.handle.net/10986/18633 |
| Summary: | Economic growth slowed considerably to
3.6 percent (estimated) in 2013 despite robust agricultural
production, as heightened uncertainty surrounding the
political and security transition led to a slump in investor
and consumer confidence. Growth is projected to remain weak
in 2014, while a smooth political and security transition
would help restore confidence in the economy and enable a
pickup in growth in 2015. Revenue collection continued to
weaken in 2013, while Afghanistan's large security
expenditure obligations and high aid dependence pose the
risk of crowding out important civilian operating and
development spending. Domestic revenues declined to 9.5
percent of GDP in 2013 from 10.3 percent in 2012 and the
peak of 11.6 percent in 2011. The decline in revenue
collections is a result of the economic slowdown as well as
weaknesses in enforcement in both tax and customs
administration. In light of tight resources, austerity
measures in 2013 disproportionately affected civilian
expenditures as security expenditures have continued to
grow. A concerted effort will be required going forward to
improve revenue mobilization, while at the same time
safeguarding important civilian spending. In addition to
managing the transition related uncertainty and
underperformance, Afghanistan will need to stay focused on
its medium term structural reform goals, which include: (i)
ensuring fiscal sustainability by mobilizing revenue,
securing grant assistance, and safeguarding non-security
expenditures; (ii) supporting inclusive and job-creating
private-sector led growth by unlocking the potential of the
agriculture, services, and natural resource sectors and by
tapping the potential of regional integration; (iii)
continuing to improve upon the still low levels of human
capital and skills; and (iv) continuing to strengthen
institutions and governance. |
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