Afghanistan Crisis: United Nations sets up trust fund for ‘people’s economy’ in war-torn country
United Nations announced that it had set up a special trust fund to provide urgently needed cash directly to the people of Afghanistan through a system tapping into donor funds frozen since the country was taken over by Taliban in August 2021.
The United Nations announced on October 21, 2021, that it had set up a special trust fund to provide urgently needed cash directly to the people of Afghanistan through a system tapping into donor funds frozen since the country was taken over by Taliban in August 2021.
The global agency said that with the local economy of the war-torn country imploding, the aim of the fund is to inject the liquidity into Afghan households in order to permit them to survive this winter and remain in their homeland.
The Administrator of the United Nations Development Programme (UNDP), Achim Steiner said that Germany, a first contributor, had pledged 50 million euros to the fund and that it was also in touch with other donors to mobilise their resources.
As per UNDP, some 97% of Afghan households can be living below the poverty line by mid-2022.
Afghanistan’s economy set to contract up to 30%
The International Monetary Fund said that Afghanistan’s economy was set to contract up to 30% in 2021 and this was likely to further fuel a refugee crisis that will affect the neighbouring countries, Turkey and Europe.
The Taliban takeover in August 2021 saw billions in central assets frozen and the international financial institutions suspend access to the funds, however, humanitarian aid has continued.
Banks have been running out of money, civil servants have not been paid and the food prices have soared.
As per Steiner, the challenge was to repurpose donor funds already earmarked for Afghanistan, where the Taliban authorities are not recognized internationally.
The funds will allow the international community to be confident enough that these funds are not meant as government-to-government funding.
Afghanistan: The current economic crisis is expected to result in almost all households falling below the poverty line in the coming months.— United Nations (@UN) October 21, 2021
With $660M needed, @UNDP has launched a new trust fund, to provide desperately needed access to cash.https://t.co/GyhDlJpXdw
How UN plans on giving cash to Afghans?
The Director of UNDP’s regional bureau for the Asia Pacific, Kanni Wignaraja said that the cash will be provided to the Afghan workers in public works programmes, such as drought and flood control programmes, and grants given to the micro-enterprises.
The temporary basic income will also be paid to the vulnerable elderly and disabled. The UN Development Programme had costed the activities to be covered over the first 12 months at approximately $667 million.
Virtually no local cash in Afghanistan
The United Nations has discussed the programmes with Taliban, noting that 80% of the micro-businesses being helped were led by women.
Steiner added that the greatest challenge for the UN right now is that there is an economy in which there is virtually no domestic currency in circulation. The UN also wanted to avoid any foreign currencies dominating, which will further undermine the economy.
He said that the intent is to find ways quickly in which international support can be converted into the local currency in order to be able to stimulate local markets and local livelihoods.