Afghans wait in front of a bank as they try to withdraw money in Kabul on Sept. 12.
Bernat Armangue/The Associated Press
When the Taliban swept into power, they found Afghanistan’s economy fast approaching the brink and were faced with harrowing predictions of growing poverty and hunger. So they ordered the financial managers of the collapsed former government back to work, with an urgent directive: Do your jobs, because we can’t.
In the 20 years since the Taliban last ruled, Afghanistan evolved from an economy dealing mostly in illicit enterprise to a sophisticated, multi-billion-dollar system fuelled by donor aid and international trade. The Taliban, a movement borne out of the rural clergy, struggled to grasp the extent of the transformation.
Four employees from financial institutions told The Associated Press how the Taliban commanded bureaucrats from the previous government’s Finance Ministry, central bank and other state-owned banks to return to work. Their accounts were confirmed by three Taliban officials.
“They told us, `We are not experts, you know what is better for the country, how we can survive under these challenges’,” recalled one state bank official, who like others spoke on condition of anonymity because he was not authorized to speak on record.
They told him, “Do what you must,” but warned, “God is watching you, and you will be accountable for what you do on Judgment Day’.”
Quietly, these technocrats are advising the Taliban leadership in the running of the crippled financial sector. They tell them what to do and how to do it. But, as seasoned experts, they see no way out of Afghanistan’s economic quagmire: With billions in international funds frozen, the best they can muster in domestic revenues is $500 million to $700 million, not enough to pay public salaries or provide basic goods and services.
The Taliban are buttressing relations with local businessmen to keep them operating, while the leadership makes its case for international recognition in meetings with foreign officials.
The Taliban’s seizure of power in mid-August resulted in an abrupt halt to most donor funds. These disbursements accounted for 45% of GDP and financed 75% of state expenditures, including public sector salaries. In 2019, total government expenditures were nearly $11 billion.
With drought ongoing as well, the United Nations predicts 95% of the population will go hungry and as much as 97% of the country risks sinking below the poverty line.
The United States froze billions in dollar reserves in line with international sanctions against the Taliban, eroding the liquidity of both the central bank and commercial banks and constraining their ability to make international transactions.
This has undermined international trade, a mainstay of the Afghan economy. Intermediary banks abroad are reluctant to engage in transactions given sanctions risks. Informal trade, however, continues. The International Monetary Fund predicts the economy will contract sharply.
In the Finance Ministry and central bank, near daily meetings revolve around procuring basic staples like flour to ward off hunger, centralizing customs collections and finding revenue sources amid critical shortages in household goods. In Afghanistan, all fuel oil, 80% of electricity and up to 40% of wheat is imported.
The technocrats’ frustrations are many.
Never mind dollars, there isn’t enough of the local currency, the afghani, in circulation, they said. They blame this on the previous government for not printing enough prior to Kabul’s fall in August.
Hallways once bustling with employees are quiet. Some ministry workers only show up once or twice a week; no one has been paid a salary. A department responsible for donor relations once had 250 members and dealt with up to 40 countries; now it has 50 employees at best, and one interlocutor: the United Nations.
There are no women.
Many are growing exasperated with the Taliban leadership.
“They don’t understand the magnitude,” said one ministry official. “We had an economy of $9 billion in circulation, now we have less than $1 billion.”
But he was quick to excuse them. “Why would I expect them to understand international monetary policy? They are guerrilla fighters at heart.”
The returning government workers said the Taliban appear genuine in wanting to root out corruption and offer transparency.
They aren’t told everything. A closely guarded secret of the Taliban is how much cash remains in state coffers. Ministry and bank officials estimate this could be just $160 million to $350 million.
“They are very sincere about the country, they want to boost morale and create friendly relations with neighbouring countries,” said another banking official. “But they don’t have expertise in banking or financial issues. That is why they requested we return, and that we do our work honestly.”
Mawlawi Abdul Jabbar, a Taliban government adviser, said the returning experts are “with the government. And they are working on the financial issues to solve these problems.”
The Taliban are strengthening relations with businessmen who trade in basic goods with neighbouring countries.
An active proponent of forging business relations is Taliban adviser Abdul-Hameed Hamasi. He was recently greeted with a warm embrace at the wedding of the son of prominent businessman Baz Mohammed Ghairat.
Ghairat’s factories process everything from cooking oil to wheat. Hamasi said the Taliban were providing him with security, including permission to drive in bulletproof vehicles, so his dealings could continue.
But central bank limits on withdrawals are Ghairat’s chief concern. Without access to deposits, he cannot pay traders, he said.
The economic woes preceded the Taliban’s rise. Corruption and mismanagement were rampant in the former government.
In the first months of 2021, economic growth slowed and inflation accelerated. Drought undermined agricultural production as fuel and food costs spiked.
The Taliban’s capture of border posts and transit hubs ahead of Kabul’s fall exacerbated matters.
Government officials, schoolteachers and civil servants hadn’t received salaries for two to three months before the government collapsed. Many sold household goods or accumulated debts with neighbours and relatives to make ends meet.
Sayed Miraza, an Agriculture Ministry employee, arrived at the bank at 4 a.m. one Saturday morning. People had already lined up to access their weekly withdrawal limit of 20,000 afghanis, or $200.
Miraza’s account is empty. He came to pick up a Western Union transfer from a nephew in the U.S. “We ran out of food, so we had to ask for help,” he said. By 9 a.m. he was still waiting.
In a Kabul flea market, Hematullah Midanwal sells the items of people who have run out of funds.
“They come sometimes with their entire living rooms, everything down to spoons,” he said.
Many hope to leave Afghanistan. Given the chance, the technocrats running the country’s finances would also leave, every single one interviewed by the AP said.
One central bank official said he was waiting on his asylum papers to go to a Western country. “If it comes, I will definitely leave. I would never work with the Taliban again.”
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OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
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