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UN Fund for ‘People’s Economy’ in Afghanistan

  • IASbaba
  • October 23, 2021
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UN Fund for ‘People’s Economy’ in Afghanistan

Part of: Prelims and GS-II – International Relations 

Context The United Nations has set up a special trust fund to provide urgently-needed cash directly to Afghans through a system tapping into donor funds frozen since the Taliban takeover last August.

Key takeaways 

  • With the local economy “imploding”, the aim is to inject liquidity into Afghan households to permit them to survive this winter and remain in their homeland despite turmoil.
  • Cash will be provided to Afghan workers in public works programmes, such as drought and flood control programmes, and grants given to micro-enterprises.
  • Temporary basic income would be paid to the vulnerable elderly and disabled.
  • Germany, a first contributor, had pledged €50 million ($58 million) to the fund.

What is the Need of this Fund?

  • The International Monetary Fund said that Afghanistan’s economy is set to contract up to 30% this year and this is likely to further fuel a refugee crisis that will affect its neighbouring countries, Turkey and Europe.
  • The Islamists’ takeover saw billions in central bank assets frozen and international financial institutions suspended access to funds, although humanitarian aid has continued.
  • Banks are running out of money, civil servants have not been paid and food prices have soared.
  • The challenge is to repurpose donor funds already earmarked for Afghanistan.
  • The UNDP had cost activities to be covered over the first 12 months at approximately $667 million.

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