Kabul, October 03, 2020 – UNDP Afghanistan launched a new COVID-19 Socioeconomic Impact Assessment Note on Afghanistan. The note is the third of a series of Country Notes that examine the likely effects of the coronavirus outbreak in Afghanistan in general and implications on Afghanistan’s Sustainable Development Goals (A-SDGs) in particular. The note is prepared using Computable General Equilibrium (CGE) Model developed by UNDP for Afghanistan. These notes are intended to provide the policymakers with the tools to better understand the trade-offs, and provide policy recommendations to mitigate the social and economic impacts of the pandemic.

The first Country Note was developed in Mid-April 2020, in which we present updates and propose Social Protection measures in alleviating the immediate adverse impact of COVID-19.

The second Country Note was produced in July 2020, which was comprised of an evidence-based analysis where we combined an economy-wide analysis with infection transmission scenarios developed by the Ministry of Public Health.

This third note which builds on the first and second notes, assesses the socio-economic impact of COVID-19 on the Afghan economy and its impact on the SDGs. Using evidence from recently developed regional Computable General Equilibrium (A-GTAP CGE) model, this note aims to provide the Government of Afghanistan and its development partners with informed policy options to address immediate impact of the pandemic on SDGs and potential funding options.

COVID-19 pandemic has disrupted the progress recorded in the achievement of the SDGs as the globally recognizable agenda for fostering inclusive development. Globally, the Human Development Index (HDI) is expected to decline this year for the first time since 1990, when it was first introduced. In Afghanistan, the pandemic has also negatively impacted all A-SDGs. Particularly, SDG1 (End Poverty) deteriorated significantly since poverty rate rose from its pre-COVID-19 level of just under 55% to 72%.

Based on the findings of the Notes, the Afghan government would need to allocate resources equivalent of 15% of the current GDP for immediate interventions in the health sector, along with social protection measures, including SDGs attainment in 2020.

This would include:

(i) $300 million for overall SDG attainment
(ii) around $250 million for emergency interventions to fight COVID-19
(iii) comprehensive social protection measures (cash transfer schemes to eligible citizens) amounting to the tune of $2.5 billion.

While the donor funding is declining, the Government of Afghanistan needs to opt for policies and programmes to generate more revenue to address these immediate needs. It could mobilise resources through more efficient tax collections by focusing on strengthening institutions (SDG-16). The government could also generate more revenue by legalizing and regulating mining sector and taping on the country’s rich natural resources. Expansion of regional trade would also significantly increase GDP growth. For example, if the cost of trade between Afghanistan and the South Asian Association for Regional Cooperation (SAARC) countries decreases by 10%, it would boost Afghanistan’s GDP by around 4% in 2020. This additional revenue could finance SDG attainment and will provide resources to address the adverse impact of COVID-19.

UNDP’s socio-economic recovery offer to fight against COVID-19 aims to enable national and sub-national authorities to address the crisis in the short-run and help reverse its negative effects on the realization of the A-SDGs in the medium and long-run. UNDP is re-orientating its programme portfolio towards supporting the Government’s strategic agenda and National Priority Programmes.

Leveraging its strong collaboration with other development organizations, as well as its advisory and continuous dialogue with the Afghan Government, UNDP aims to play a catalytic role in Afghanistan’s transition to sustainable and inclusive development by 2030. The platform approach proposed by UNDP is being based on a holistic approach which links traditional budget planning with innovative finance towards implementing sustainable development policies and programmes in Afghanistan.

Contact Information: Farhad Zalmai, Communications Unit, UNDP Afghanistan: +93 790 509 133, Farhad.Zalmai@undp.org