Islamic Republic of Afghanistan - Enhanced Integrated Framework ...

Table 4.1. Macroeconomic projections13852006/0713862007/0813872008/0913882009/1013892010/1113902011/1213912012/13Real sector(annual percent change)Real GDP (excluding opium) 6.1 13.5 9.0 9.0 8.0 7.7 7.0Nominal GDP (excluding opium) 9.5 24.1 19.8 16.4 14.2 13.2 12.1Consumer Price Index 5.1 9.8 10.2 7.2 6.0 5.4 5.0Fiscal sector(percent of GDP)Total expenditures (A) 21.55 22.6 23.0 24.2 23.5 22.6 22.0Revenues/Financing (B)(operating and development)20.1 21.2 21.5 22.5 22.6 21.7 21.4Budget balance (B minus A) -1.4 -1.4 -1.5 -1.8 -0.9 -0.9 -0.6Fiscal sustainability indicator(domestic revenues as % of 66.3 67.0 69.9 72.0 82.9 91.4 100.1operating expenditures)Monetary sector(percent of GDP)Net foreign assets 30.1 26.7 24.0 19.3 16.5 13.9 12.4Net domestic sales -14.1 -12.0 -9.2 -5.5 -3.4 -1.5 -0.6External sector(percent of GDP)Merchandise trade balance -70.1 -67.6 -64.5 -52.7 -46.3 -39.0 -33.4Current account balance,including official transfers-6.3 -1.4 -0.1 -0.7 -2.6 -3.6 -4.5Foreign direct investment 3.4 3.3 3.3 3.4 3.9 4.0 4.1Memorandum items(percent of GDP)External budget (= grants) 55.4 54.5 51.6 38.0 30.8 23.6 18.0LINKING GROWTH WITHPOVERTY REDUCTION ANDEMPLOYMENT CREATIONA growth strategy is the backbone of theANDS. Poverty in Afghanistan is high by anystandard. Estimated poverty incidence rangesfrom 34 percent around harvest season to asmuch as 42 percent in the leaner season. Theunemployment rate hovers at around40 percent. High annual average growth ratesat 12 percent in the past few years likely havehad positive impacts on reducing poverty andgenerating employment at the margins, whichare undoubtedly hard to measure (see PovertyProfile chapter). Afghanistan’s poverty andunemployment have the following key characteristics:• High vulnerability: A significant numberof Afghans are concentrated around theHigh growth rates: GDP per capita nearlydoubled from $147 in 1381 to $289 in 1385 (excludingopium). Nevertheless, GDP per capitais still one of the lowest in the world. Continuedhigh rates of growth will be essential toachieve further increases in average per-capitapoverty line, especially among the ruralpopulation. The concentration around thepoverty line implies that even small shockscould further increase national poverty figures.• Seasonality: National poverty has strongseasonality and uneven dispersion acrossthe country.• Working poor: Low salaries subject manyunemployed to the risk of falling below thepoverty line. The poor are concentratedprimarily in the informal sector, whichpays very low salaries and leaves themwithout job protection.The high poverty and unemployment rates aswell as their characteristics suggest that there isa need to sustain high growth rates in the medium-term(sustainability) and results of highgrowth should reduce poverty and generateemployment (quality).incomes. Preliminary estimates of the elasticityof growth on poverty reduction suggest thatthere will be significant reductions in the povertyrate if growth remains strong in the nextfew years. These estimates suggest that thepoverty rate could fall as much as 20 percent-40Afghanistan National Development Strategy (ANDS)