Introduction
At the end of the 2023 quarter, it was reported that Afghanistan currency , “Afghani” is the best performing currency all over the world. This country was terribly suffering from many problems and money was one of them. And, the western countries imposed sanctions on this country after the Taliban took control over Afghanistan. And more surprisingly, this country’s 54.5% of the population live below the poverty line.So, how did Afghanistan turn out to be this successful?
In this article, we will explain how a country like Afghanistan dealt with so many problems and made the currency the best performing in the world in the last quarter of 2023. So, before diving in, we first have to understand the situation people of Afghanistan were going through.
After the Taliban took control over Afghanistan from the US, more than 50 percent of the population were living under the poverty line. Its GDP ranked 124th among other countries. GDP was 14.27 billion dollars which is certainly below the mark. At that time, opium was the greatest exportable product. But, Taliban banned producing it, as a result the farmers were greatly damaged. But, it was a good decision because if something is harmful, you have to avoid this.
Afghanistan mainly executed three methods to solve this crisis.
Empowering Local Currency
Afghanistan firstly took on a project on empowering the local currency. They imposed restrictions on foreign currencies like Dollar, Pakistani Rupee etc. They banned foreign currency usage in local markets. They also imposed critical rules on traveling with foreign currency. By applying this method, no one can transfer US dollars. Other foreign currency from the country. And by applying the rule saying “No Foreign Currency Usage in Local Market”, the people have to convert foreign currency to local currency in order to live. That’s how they maximized the demand of their local currency. And all the data we have are from 2021, it’s still unclear what’s the present GDP. But, it’s expected to be much better now
Increasing food production
After banning production of Opium, they proved their decision right. The farmers took fresh food instead of Opium. They surprisingly produced 1.5 million tons of fresh food. They increased their cotton production 41%. They have grown 1,22,000 tons of cotton from 93,630 hectares of land. They have also produced Pamir Cola made of Pomegranate. Though the US imposed sanctions on this country, Afghanistan exported 45 ton Pamir Cola to the US. They are expecting to expand their exportation range to Central Asia, Europe, Iran etc.
Informal Economy
Above those, this field is larger and greater. Informal economy is the economy that doesn’t include tax. This economy may include many things and you will be shocked to know its contribution to the total GDP. It alone contributes 73.6% of the total GDP. It is approximately $89 billion USD. But, the government is trying to ignore this field.Because it may include many illegal things.
The Future Resource
We have talked about the present resources and their contribution. But, the trump cards aren’t those but mineral resources. And that is Lithium. This country has 1400 mine Lithium. And some reports say that this country’s Lithium deposit can alone challenge the Triangle Lithium countries (Bolivia, Chile and Argentina). But to export Lithium to Asia is very difficult and China is one of the leading Lithium user countries. And Afghanistan is way closer to China than the Lithium Triangle countries. And China is one of the countries which recognise Afghanistan. China has already started investing in Afghanistan mineral resources like the second largest copper mine project “Aynak Copper Mine Project”. As the world is slowly leaning over electric product than fossil fuel and Lithium is very important to make electric products, Afghanistan is expected to be a role model in the near future.
[Source : Web, Reference Video : https://youtu.be/E5udLqTcpIs?si=6YIZ_HFN-3QbiMgk]
