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The headline CPI inflation continues its downward trend while food and non-food items remain widely available. According to the official statistics, headline year-on-year (YoY) inflation in November 2022 decelerated to 9.1 percent from its peak of 18.3 percent in July 2022. Both food and non-food segments contributed to this positive outcome. The 3.9 percentage point Y-o-Y decline between November 2022 and December 2022 can be explained by a drop in inflation of fuel (8 percentage points), wheat (5.1 percentage points), sugar (2.7 percentage points), cooking oil (2.2 percentage points), bread (1.5 percentage points), etc. According to the latest data collected by the Third-Party Monitoring Agent (TPMA), most basic food and non-food commodities remain in the market.
The exchange rate remains substantially stable against major currencies. The AFN has slightly depreciated against the USD (by 1.5 percent), Euro (by 1.2 percent), and Chinese yuan (by 0.2 percent) between end-June and to end of December 2022 but appreciated against the Pakistan rupee (24.8 percent) and Indian rupee (2.6 percent). The central bank (DAB) is undertaking occasional auctions in the forex market. However, no data is available on the central bank website to confirm the frequency and auctioned amount. In the absence of regular market interventions, the ITA continues to exert controls in the foreign exchange market to manage parity and liquidity, such as regulating the MSP sector and prohibiting foreign currency-denominated domestic transactions. In parallel, the money service providers (MSPs) report some foreign exchange shortages in the open market.
Cash withdrawals of pre-August 2021 deposits from banks continue to be regulated. While most individual depositors can access their deposits within the allowed limits, selected financial institutions face difficulties honoring withdrawals. Firms, on the other hand, not only report accessibility lower than allowed limits, but access to deposits declined further recently. Accordingly, no statutory withdrawal limit is imposed on deposits made after August 28, 2021.
Civil servants’ salaries are reported to be paid on time for both men and women. Data collected by TPMA also shows that most civil servants have reported receiving salaries regularly (as reported by 97 percent of the respondents). Moreover, females are reported to be paid more regularly than males over the last two months. However, they reported the liquidity shortage as one of the significant challenges in withdrawing salaries and crowding in the branches. Poor staff behavior is another key issue – particularly for female public servants when they draw their salaries.
Demand for both skilled and unskilled labor has been declining since the beginning of the winter. Heavy snow and cold weather result in a decline in agriculture, construction, and allied activities in most parts of the country. In parallel, data show a marginal increase in nominal wages, which, coped with the decrease in inflation, results in a stronger increase in real wages.
Revenue collection in the first nine months of the fiscal year 2022 remains strong. Overall revenue collection reached AFN135.9 billion (US$ 1.54 billion) between March 22, 2022, and December 21, 2022, in line with 2020 results. Afghanistan continued to rely relatively heavily on revenue collected at the border — as opposed to inland revenue collection. For example, for the period under discussion, the taxes at borders reached 58 percent of the total revenue. Revenue from inland sources reached AFN61 billion (US$ 0.7 billion) from March 21 till the end of December 2022, of which non-tax sources contributed the most. Non-tax revenue, comprising mainly revenues from ministries in administration fees and royalties, contributes 54 percent of total inland revenues, compared to 45 percent in 2021. A rise in coal mining royalties and fees likely drives the increase in ministries’ revenue.
Export performance remains strong: during Jan – Nov 2022, Afghanistan exported US$1.7 billion worth of goods, compared to US$ 0.9 billion and US$ 0.8 billion for the full years 2021 and 2020. Data from customs authorities show that Pakistan (65 percent) and India (20 percent) are the two main export destinations. Major exports include vegetable products (56 percent), mineral products (28 percent), and textiles (10 percent) – collectively contributing 94 percent of total exports. Unfortunately, up-to-date import data is unavailable.
However, the Jan-June 2022 data shows that Afghanistan imported USD 2.9 billion of goods. Of the total imports, Iran (23 percent), Pakistan (16 percent), and China (14 percent) were the main import origins. Major imports include mineral products (24 percent), vegetable products (20 percent), and textiles (9 percent) – collectively contributing 54 percent of total imports.
New addition – Health Service Delivery indicators
The Bank financed Health Emergency Response project provides critical mother & child related health services. The data collected by the TPMA shows that the twenty-three hundred supported facilities received around 3.3 million antenatal visits and provided 691,234 assisted births in 2022. Also, according to third-party monitoring data, 98% of health facilities had a female health worker present during verification visits between July and October 2022.