The IMF warns that Afghanistan’s economic crisis will impact its neighbors

Afghanistan’s economic woes could fuel a refugee crisis affecting neighboring countries, Turkey and Europe, the International Monetary Fund said.

The economy will contract by up to 30% this year, which could push millions of people into poverty and cause a humanitarian crisis, the fund warned.

The IMF said Afghanistan’s neighbors would be further affected because they rely on its trade funds.

The border with Tajikistan said it could not afford to take in many more refugees.

With foreign assets frozen and most non-humanitarian aid blocked, the inflows of money into Afghanistan have nearly dried up.

In its regional economic perspective, the fund said: “A large influx of refugees could burden public resources in refugee host countries, fuel labor market pressures and lead to social tensions, underlining the need for assistance from the international community. ”

While it is unclear how many Afghan refugees would be, the IMF estimates that if there were one million more, hosting them would cost Tajikistan $ 100 million (£ 72 million), Iran $ 300 million and Pakistan $ 500 million.

Last month, Tajikistan said it cannot afford to take in large numbers of refugees unless it receives international financial assistance, while other Central Asian nations said they have no plans to host refugees.

Neighboring countries will also be hurt by the loss of Afghanistan as an important trading partner.

The country received huge amounts of foreign aid. The The UK government estimates that OECD countries donated $ 65 billion to Afghanistan from 2001 to 2019 – much of this filtered through trade in neighboring Iran, Pakistan, Turkmenistan and Uzbekistan.

The IMF also warned that there are concerns that funds entering the country could be used to finance terrorism and launder money.

Last week, G20 group members from major economies pledged to invest billions of dollars in the Afghan economy to avoid an economic catastrophe.