Afghanistan: Potential Impact of COVID-19 and SDGs Attainment

COVID-19 pandemic has disrupted the progress recorded in the achievement of the SDGs (Sustainable Development Goals) till 2030, 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 (Afghanistan SDGs). Particularly, SDG1 (End Poverty) deteriorated significantly since poverty rate rose from its pre-COVID-19 level of just under 55 percent to 72 percent. However, there are more affordable policy options regarding social protection that the Government could opt for, such as: (i) income support of around 1,000 Afghanis/month to the elderly (“social pension”) for six months which would require only 0.25% GDP; (ii) income support for the internally displaced people (IDPs) and returnees would cost around 0.5% GDP; and (iii) civil works for unemployed for 100 days at a wage of 1,000 Afghanis/month which would cost only around 1 % of GDP. Based on the findings from our model simulations, 30% of the potential revenue to be generated by VAT collections at the borders, 30% of revenue to be collected from excise and export tax from legalization of illegal mining activities could fund A-SDGs achievement in 2020; the remaining 70% additional revenue would support both the fight against COVID-19 and the longer-term development agenda. In addition, if regional trade expands, it will significantly increase GDP growth. More specifically, 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 as well as being deployed in addressing the adverse impact of COVID-19.