Afghanistan Development Update, July 2020

Abstract

The global COVID-19 crisis has compounded the daunting challenges currently facing Afghanistan. Afghanistan has officially recorded 31,238 cases and 733 deaths as of end-June, with actual cases and fatalities expected to be far higher. The number of cases is increasing rapidly, with no sign that the pandemic is under control. With major disruptions to domestic economic activity, regional trade, and remittance flows, the economy is now contracting rapidly. With declining incomes and increasing food prices, hardship is increasing, with the poverty rate expected to increase to up to 72 percent over 2020. Due to reduced trade, administrative disruptions, and declining economic output, government revenues fell by more than a third below target levels in May, placing major pressure on government finances. COVID-19 has hit Afghanistan in the midst of a difficult political transition, an intensifying conflict, and significant uncertainty regarding future grant support.