IEA’s finances in much better shape: The Economist

The Islamic Emirate of Afghanistan’s (IEA) finances appear to be in much better shape than expected, The Economist magazine said in an article published Wednesday.

The British media outlet said that when the IEA seized power, it seemed obvious that they would struggle to administer a country of 40 million, especially for lack of money.

“Yet the new government’s finances appear to be in much better shape than anybody expected,” the report read.

Last month IEA announced its first full-year budget, forecasting revenues of $2.1bn.

The World Bank’s estimate is more modest but still impressive: it reckons the government will collect about $1.7bn this year (about 12% of GDP) in domestic revenue, from things like taxes, customs and fees for services.

That is nearly three-quarters of the $2.3bn the previous government raised domestically in 2020, before business and trade dried up and many taxpaying Afghans left the country.

The previous government’s total funding including foreign finance came to $5.7 billion, but IEA do not have access to the grants and loans that made up the rest.

The Economist said that the IEA managing to keep revenue flowing despite the obstacle is “remarkable.” One reason for their success is that they have plenty of experience collecting taxes, it noted.

Moreover, a handful of holdovers from the former government are maintaining sophisticated financial-management software to run their revenue-collection systems.

IEA has also cracked down on graft, a serious problem under the previous government, The Economist noted.

IEA’s Ministry of Finance welcomed the report, saying the government was seeking to make Afghanistan self-reliant.

“IEA members together with former professionals are working in a brotherhood atmosphere and with it transparency has come and revenues have increased. We have stopped corruption that unimaginably existed in the ministry of finance,” said Ahmad Wali Haqmal, a spokesman of the Finance Ministry.