Afghanistan faces economic crisis as international aid money leaves and growth stalls

FILE - In this Monday, Jan. 12, 2015 file photo, An Afghan money changer, right, counts a pile of currency at the Money and Exchange Market in Kabul. Afghanistans fragile economy has lost around a third of its value in the past year as the international military and aid organizations that poured in cash for more than a decade have drastically scaled back after U.S. President Barack Obama declared an end to the 13-year war against the Taliban _ leaving the government struggling for funds and key sectors lacking investment, economists, analysts and officials said. (AP Photo/Massoud Hossaini, FIle)(The Associated Press)

FILE - In this Monday, Jan. 12, 2015 file photo, An Afghan money changer, left, counts a pile of currency at the Money and Exchange Market in Kabul. Afghanistan's currency, the Afghani, stands at 57.60 against the U.S. dollar. Afghanistans fragile economy has lost around a third of its value in the past year as the international military and aid organizations that poured in cash for more than a decade have drastically scaled back after U.S. President Barack Obama declared an end to the 13-year war against the Taliban _ leaving the government struggling for funds and key sectors lacking investment, economists, analysts and officials said. (AP Photo/Massoud Hossaini, File)(The Associated Press)

FILE - In this Monday, Jan. 12, 2015 file photo, Afghan money changers wait for customers at the Money and Exchange Market in Kabul. Afghanistans fragile economy has lost around a third of its value in the past year as the international military and aid organizations that poured in cash for more than a decade have drastically scaled back after U.S. President Barack Obama declared an end to the 13-year war against the Taliban _ leaving the government struggling for funds and key sectors lacking investment, economists, analysts and officials said. (AP Photo/Massoud Hossaini, File)(The Associated Press)

KABUL, Afghanistan Afghanistan's fragile economy has lost around a third of its value in the past year as international aid organizations that poured in cash for more than a decade have drastically scaled back after Western forces effectively ended their 13-year war against the Taliban.

Assuming power in September amid a continuing Taliban insurgency, President Ashraf Ghani inherited a moribund economy and an electorate weary of endemic corruption and soaring unemployment. But economists, analysts and officials agree that the economic challenge has been compounded by the Western handover of security to Afghan forces, completed at the end of last month, whose knock-on effect has left key sectors lacking investment and struggling for funds.

Economic growth that was above 14 percent in 2012 will fall to just 1.4 percent this year, the World Bank predicts. In recent months, fears about the state of the economy have outstripped security concerns in opinion polls taken across the country.

The Central Bank spends tens of millions of dollars weekly to stem the fall of the afghani as money continues to leave the country, traders said, reflecting a general lack of confidence in the government's ability to introduce reforms, stimulate growth, guarantee security and cut corruption.

At Kabul's Saraye Shahzada money market, traders dealing in dollars, rubles, euros, rials, rupees and dirhams, are concerned about capital flight.

"At least twice a week, the Central Bank sells $40 million to $50 million to support the afghani," said Mohammad Khan Baz, the market's manager. "If the government doesn't pay attention to security and provide opportunities for investors, I am afraid that the economic situation for ordinary people will go from bad to worse."

Imports vastly outstrip exports, Ghani recently told parliament, exacerbating the country's dependence on financial support from international partners who are already spending billions annually on the military and police.

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Afghanistan faces economic crisis as international aid money leaves and growth stalls

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