Afghanistan's relations with the international financial institutions (IFIs) have been multifaceted and complex, defined by both collaboration and conflict. Post Taliban's downfall in 2001, Afghanistan began interacting with IFI's such as the World Bank and International Monetary Fund (IMF) in order to rebuild its nation from a socio-economic perspective.[1]

The World Bank has financially contributed to development programs prioritizing education, healthcare facilities, and important donations [2]. These priorities led to the reconstruction of roads,  healthcare facilities, and delivering urgent need to rural areas.  The IMF initiated funding and policy assistance through its Extended Credit Facility,  focusing on fiscal advocacy adjustments, and macroeconomic solidarity [3].

The Afghanistan Emergency Food Security is a major contributor to Afghanistan's rebuilding process. The organizations main priority was to strengthen the production of food crop and distributing them to small scale Afghan agricultures. This is a positive reinforcement designed to prevent the prevalent issue of food scarcity in Afghanistan to persist [4]. One of the main principals of the program is to strengthen collaborations with a plethora of farmers and gardeners who interacted with local markets. The program aims to solidify access to irrigated water, which is a vital resource for farmers. The organization is also dedicated in improving soil fertility, and water quality, which is crucial for long term farming [5].

The Asian Development Bank (ADB) fund programs concentrated on developing agriculture sectors, energy and transportation [6]. Afghanistan's relations with the IFI's made a significant impact on rebuilding its economy. Alternatively, critics argue if these investments are really sustainable, and effective for long term growth [7]. In 2014, India's government and the ADB signed a document for a $400 million loan from the Accelerating Infrastructure Investment Facility in India (AIIFI). This targeted to enhance the government's efforts to increase growth of the infrastructure with private sector investment.[8]

Critics argue that the policies associated with the IMF's loans will be harmful for the nation's future [9]. The conditionalities associated with IMF loans such as austerity conditions has pressured the Afghanistan's already weak economy and low-income population [10]. These conditions require the Afghan government to decrease public spending, which in turn has impacted the nation's social services and programs. [11]

When the Afghan Government is required to decrease spending, it is common for there to be financial cuts in healthcare funding, education funding, negative effects towards public welfare, amplifying the struggles of Afghanistan's population [12]. Additionally, the deregulation and privatization of policies suggested by the IMF, occasionally leads to a significant increase in inequality and unemployment, as domestic businesses and industries fail to compete with foreign industries.[13]

Additionally, there have been reports of corruption and ineffectiveness in the development programs, The special Inspect Gerneral for Afghanistan Construction, (SIGAR) has reported several cases of mismanagement and fraud, examining the systemic challenges that stunt the development of Afghanistan [14].

Some see the IFI's engagement as a necessity for rebuilding the nation, while others believe that it affects the nations control and authority [15]. The public and media often covers the successes and failures of IFI funded programs. For instance, while the IFI's programs assisted in reconstruction, healthcare, education, critics argue that that the strong dependence on loans and foreign aid has created a cycle of dependency, stunting Afghanistan from developing a self-reliant economy [16].

The Taliban's takeover in 2021 further complicated these relations leading to IFI's being suspended from offering financial aid to Afghanistan [17]. The Taliban's opinion on the IFI remains unclear, and the prediction of Afghanistan's socio-economic development is harmful to the nation [18]. Additionally, the suspension of the IFI's foreign aid has caused the nation to suffer from a decline of liquid assets, hindering the government's ability to distribute income and maintain services open to the public. [19].

^[1]1) Kadirova, D. (2012). Implementation of aid initiatives in post-conflict reconstruction and development: Afghanistan 2002-2008

2). ^[2] Evans, M., & Barakat, S. (2012). Post-war reconstruction, policy transfer and the World Bank: the case of Afghanistan’s National Solidarity Programme. Policy Studies, 33(6), 541–565. https://doi.org/10.1080/01442872.2012.722293

3) ^[3] "IMF Executive Board Completes First Review of the Extended Credit Facility Arrangement for the Islamic Republic of Afghanistan". IMF. Retrieved 2024-07-28.

4)^[4] "Supporting the People of Afghanistan". World Bank. Retrieved 2024-07-28.

5) ^[5] "Emergency Food Security Project (EFSP) | Afghanistan Resilience Trust Fund". www.wb-artf.org. Retrieved 2024-07-28.

6) ^[6]"FOREIGN DEVELOPMENT ASSISTANCE IN AFGHANISTAN, - ProQuest". www.proquest.com. Retrieved 2024-07-28.

7) ^[7] Goodhand, Jonathan; Sedra, Mark (2007-01). "Bribes or Bargains? Peace Conditionalities and 'Post-Conflict' Reconstruction in Afghanistan". International Peacekeeping.

8) ^[8] Bank, Asian Development (2014-01-22). "$400 Million ADB Loan to Boost Private Investment in India Infrastructure". www.adb.org. Retrieved 2024-07-28.

9) ^[9] Woda, Joshua (2011). "A Thousand Thumbs in the Dike: Microlending and a New Role for International Finance in Afghanistan". heinonline.org. Archived

10) ^[10] "Two Years into Taliban Rule, New Shocks Weaken Afghan Economy". United States Institute of Peace. Retrieved 2024-07-28.

11) ^[11]Michail of, Serge (2000-12-23). "The Challenge of Reconstructing "Failed" States". Field Actions Science Reports. The journal of field actions. ISSN 1867-139X.

12) ^[12]Ali A. Jalali, "The Future of Afghanistan," Parameters 36, no. 1 (2006), doi:10.55540/0031-1723.2293.

13) ^[13] Alvarez-Cuadrado, Francisco; Japaridze, Irakli (2017-02-01). "Trickle-down consumption, financial deregulation, inequality, and indebtedness". Journal of Economic Behavior & Organization. 134: 1–26. doi:10.1016/j.jebo.2016.12.007. ISSN 0167-2681.

14) ^[14] Shafiei, N.; Puttanna, K. (2021). "An investigation into the factors causing international development project failure in developing countries: Focus on Afghanistan". Journal of Project Management. 6 (3): 157–170.

15) ^[15] LEPRI, CHARLOTTE (2012). "Afghanistan: The tale of a failure foretold" (PDF). Afghanistan: The tale of a failure foretold: 4.

16) ^[16] Daniel, Annie, Thomas, Caroline (June 13, 2024). "The Future of Assistance for Afghanistan: A Dilemma". The Future of Assistance for Afghanistan: A Dilemma: 6.

17) ^[17] O’Brien, Kelsey (2017). "Cooperative Agreements and Foreign Aid: Examining Usaid's Involvement in the Afghanistan Reconstruction Effort". Public Contract Law Journal. 46 (3): 623–642.

18) ^[18] "One Year Later, Taliban Unable to Reverse Afghanistan's Economic Decline". United States Institute of Peace. Retrieved 2024-07-28.

19) ^[19] Kottasová, Chris Liakos,Ehsan Popalzai,Sahar Akbarzai,Mohammed Tawfeeq,Ivana (2022-12-25). "Major foreign aid groups suspend work in Afghanistan after Taliban bars female employees". CNN. Retrieved 2024-07-28.

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