World Economy

New Afghan President Vows to Transform Economy

New Afghan  President  Vows to  Transform EconomyNew Afghan  President  Vows to  Transform Economy

Afghanistan President Ashraf Ghani Ahmadzai vowed to tackle endemic corruption and use Afghanistan’s mineral wealth to wean the government off foreign aid after he became the country’s second elected leader since the US invasion in 2001, Bloomberg reported.

“The rich mineral resources in Afghanistan can transform the country into an industrial nation,” Ghani, a 65-year-old former World Bank economist said after being sworn in as president on Monday. “We broadly depend on imports and foreign assistance, and we aim to create a sound economic system for the country to stimulate exports and develop economy.”

Ghani faces the challenge of overhauling Afghanistan’s political system, rooting out graft and boosting growth in Asia’s poorest country.

The government put the country’s mineral wealth at $3 trillion in 2011, triple an estimate from the Pentagon the previous year. The US and other donors fund about 60 percent of Afghanistan’s national budget, according to the Special Inspector General for Afghanistan Reconstruction, known as Sigar. Last year, the Afghan government raised about $2 billion in revenues, or less than a third of its stated budget needs.

 Tough Task

But Ghani faces a tough task overhauling the economy. GDP growth slowed from 14.4 percent in 2012 to just 4.2 percent last year, foiling the government’s attempts to boost domestic revenue sources and keeping it reliant on foreign aid. Despite impressive overall economic growth since 2002 and the benefits of international support, the Afghan economy remains tiny at just $20 billion and one of the world’s poorest. Its more dynamic sectors, such as construction, are those most susceptible to the end of the International Security Assistance Force mission.

Since the US-led war began, Afghanistan’s economy has been boosted by foreign spending. According to the World Bank, about 97 percent of Afghanistan’s gross domestic product is derived from spending linked to foreign forces and the donor community.

It reported in April that economic growth had dropped to an estimated 3.6 percent in 2013, compared to 14.4 percent in 2012 as investors and consumers worried about the coming security and political transitions. Violence targeting foreigners in Kabul in recent months, including a Taliban assault in January on a popular restaurant that was the deadliest single attack against foreign civilians in the war, has led many international organizations to cut back.