Afghanistan Exports to Pakistan Mark Historic Rise

Pakistan says its exports to Afghanistan have dropped and imports sharply increased in the current financial year, leading to a bilateral trade balance for the first time in favor of the war-torn neighbor.

Pakistan has stepped up bilateral cooperation and announced trade-related concessions for the landlocked country to help it overcome deteriorating humanitarian and economic crises after the Taliban returned to power last August.

In the 11 months of the current financial year, Pakistani exports to Afghanistan have dropped to around $700 million from more than $900 million last year, a spokesperson for the commerce ministry in Islamabad told VOA.

The change is attributed mainly to increased purchases of Afghan coal and an “extremely good quality” cotton by Pakistan in recent months.

The spokesperson noted that imports from Afghanistan, meanwhile, have increased to more than $700 million from $550 million last year.

The decline in Pakistani exports is attributed to U.S. sanctions on the interim Taliban government, the absence of banking channels and non-availability of dollars in Afghanistan, as well as a drop in demand for certain Pakistani goods.

The commerce ministry spokesperson, however, told VOA that Pakistani exports to Central Asian countries through Afghanistan have risen by 70 percent to $202 million in the last 11 months from $118 million in the same period last year.

There are five fully operational border crossings between Pakistan and Afghanistan.
Pakistan has in recent years fenced off its nearly 2,600 kilometer traditionally porous Afghan border and tightened immigration controls to deter terrorist infiltration in either direction.

Afghans say the massive fencing project has undermined livelihood opportunities for divided tribes, straddling the largely mountainous frontier.

A senior Pakistani foreign ministry official said despite tightened measures “about 30,000 people, including Afghan refugees, move across the border every day.”

“We have allowed Afghan importers to buy our products in Pakistani currency and have given them freedom to export any items to Pakistan to facilitate bilateral trade,” said the official, who deals directly with bilateral Afghan matters.

He noted that the Pakistani government has identified 44 places on the border where it plans to establish new crossings to further facilitate commercial activities as well as visitor movement.

“We intend to open several of the proposed gates every two or three months. We have discussed it with Afghan (Taliban) leaders and told them to arrange for manning these posts, so they know who is moving in and out,” the Pakistani official said.

The Taliban has acknowledged they are also stepping up coal exports to Pakistan and have raised duties on sales with a goal to generate more revenue from the Afghan mining sector in the absence of direct foreign funding.

Financial funding for Afghanistan has dried up because no country has yet recognized the Islamist group as the legitimate rulers of the country.

The Taliban are now relying on the country’s natural resources, including largely untapped mineral and fossil fuel deposits, to meet economic challenges facing their new government.

On Saturday, Taliban spokesman Zabihullah Mujahid said in a statement that the ministry of mines and petroleum earned nearly $5 million, including about $1.9 million from crude oil sales, within the past week (May 26-June1).

Last week, the Afghan ministry said it had collected $44 million in customs revenue through coal exports in the last six months.

Cash-strapped Pakistan has increased coal imports from Afghanistan in the wake of rising global prices in a bid to reduce Islamabad’s dependence on expensive supplies from South Africa.

The coal price hike is linked to an unexpected ban by top exporter Indonesia earlier this year, followed by Russia’s military invasion of Ukraine.

South Africa currently provides almost three-quarters of Pakistan's coal needs for the country's cement and textile industries, as well as some power plants.

Afghan and Pakistani business representatives are scheduled to gather in Islamabad next week to deliberate on developing “barter trade mechanism recommendations” for both governments in a bid to boost bilateral trade.