UN Creates Trust Fund for “People’s Economy” in War-Torn Country


The United Nations announced on October 21, 2021 that it had established a trust fund to provide urgently needed cash directly to the Afghan people thanks to a system of exploitation of donor funds frozen since the country was taken over by the Taliban in August 2021.

The global agency said that with the local economy imploding in the war-torn country, the fund’s goal is to inject cash into Afghan households to enable them to survive this winter and stay in their homeland.

United Nations Development Program (UNDP) Administrator Achim Steiner said Germany, the top contributor, had pledged € 50 million to the fund and was in contact with other donors as well. to mobilize their resources.

According to the UNDP, around 97% of Afghan households could live below the poverty line by mid-2022.

Afghan economy expected to contract by up to 30%

The International Monetary Fund has said Afghanistan’s economy is set to contract by up to 30% in 2021, which is likely to further fuel a refugee crisis that will affect neighboring countries Turkey and Europe.

The Taliban takeover in August 2021 saw billions of central assets frozen and international financial institutions suspended access to funds, however, humanitarian aid continued.

Banks are strapped for cash, government officials have not been paid, and food prices have skyrocketed.

According to Steiner, the challenge was to reallocate donor funds already allocated to Afghanistan, where the Taliban authorities are not internationally recognized.

The funds will allow the international community to be confident enough that these funds are not intended for government-to-government funding.

How does the UN plan to give money to the Afghans?

The director of the UNDP regional office for Asia-Pacific, Kanni Wignaraja, said the money will be provided to Afghan workers through public works programs, such as drought and flood control programs, and grants will be given to micro-enterprises.

The temporary basic income will also be paid to vulnerable elderly and disabled people. The United Nations Development Program had estimated the activities to be covered in the first 12 months at approximately $ 667 million.

Almost no local money in Afghanistan

The United Nations discussed the programs with the Taliban, noting that 80% of the micro-enterprises it helped were run by women.

Steiner added that the biggest challenge for the UN right now is that there is an economy in which there is hardly any national currency in circulation. The UN also wanted to avoid any domination of foreign currencies, which would further undermine the economy.

He said the intention is to quickly find ways in which international support can be converted into local currency so that it can stimulate local markets and local livelihoods.


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