Wednesday, December 11, 2013

Impasse Over Security Deal Adds to Afghan Economy’s Troubles --- KABUL, Afghanistan — The stubborn impasse over a long-term security deal with the United States has not only raised concerns about the future of the Afghan security forces, but put an instant and alarming drag on the Afghan business climate, already suffering as Western forces have pulled out. -- Nearly every anecdotal indicator of economic confidence has turned negative in the days since President Hamid Karzai insisted on delaying his signing of the agreement, which would pave the way for a continued American troop presence and billions of dollars in annual international aid after 2014, according to interviews with business leaders and Afghan officials. -- Food and fuel prices have started to rise. Banks have slowed lending, and domestic travel has taken a hit. Private investment, already modest, has all but frozen. -- Even the price of firewood, an essential commodity during the brutal Afghan winter, has risen steeply because of a sharp move in the currency exchange rate and the general cloud of uncertainty over the country’s future. -- There is a broader fear gripping business leaders, as well as politicians. The economy relies almost entirely on foreign aid: In 2010, such aid was equal to about 97 percent of the country’s gross domestic product. Spending on government activity in 2012 totaled about $10 billion, according to rough estimates. Only $2 billion of that was from the country’s own revenues. - More, NYTimes

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