Afghan economic crisis looms as foreign aid dollars depart

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Afghan economic crisis looms as foreign aid dollars depart
By RAHIM FAIEZ and LYNNE O'DONNELL
Associated Press
Jan 26, 2:27 AM EST

KABUL, Afghanistan (AP) -- 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.