TALIBAN GAINS GIVE INVESTORS CAUSE FOR CONCERN BEYOND AFGHANISTAN
KABUL: The Taliban’s rapid advance towards Kabul is not only causing concern about Afghanistan’s future but also about the impact on other countries in the region and their economies.iran and then Iraq lie to the west of Afghanistan. Tajikistan, Turkmenistan and Uzbekistan are to the north. But the immediate focus for financial markets and investors is Pakistan to the east.
Pakistan has a large public debt, a sizeable equity market (.KSE) and is dependent on a $6-billion IMF programme. The prospect of years of violence and waves of refugees will add pressure to its fiscal repair plans.“it is a very troubling situation and unfortunately has set the region back many years,” said Shamaila Khan, head of emerging market debt at Alliancebernstein. “I think the neighbouring countries will have to deal with an influx of refugees in the coming months/ years”.
The United Nations refugee agency UNHCR estimates 400,000 Afghans have fled their homes this year. Only a few hundred of these displaced persons are known to have fled Afghanistan but the UNHCR estimates there are 2.6 million Afghan refugees worldwide, with 1.4 million in Pakistan and 1 million in Iran.
Pakistan’s bond prices have already fallen nearly 8% this year, though many financial analysts think this has probably had more to do with delays in it obtaining its latest tranche of IMF money than with the security situation.
Nearly 10,000 Pakistani civilians were killed in attacks between 2010 and 2015 South Asia Terrorism Portal figures show. Those numbers have fallen since then but there are concerns they will now rise again.
“Another influx of refugees and the spillover of violent groups motivated to destabilise urban areas and infrastructure, particularly, on the western side of Pakistan... could set Pakistan’s recovery and reform story back,” said Hasnain Malik, an analyst at research firm Tellimer.
He suggested risk might be reduced if the Taliban were included in the Afghan government.
Pakistan’s IMF programme is its thirteenth in 30 years and is needed to help the government tackle a public debt of about 90% of GDP.
Any Taliban attacks inside Pakistan could raise security concerns and make it harder for Islamabad to meet targets set by the IMF. At the same time, some investors say, they could increase Pakistan’s strategic important for the West.