World Bank says Taliban spend $1.4b on security in FY2025
Photo from Taliban parade in Patkia in August 2024.
Taliban have spent nearly half of public expenditure on security in the first nine months of the 2025 fiscal year, while the economy faced mounting pressures from falling incomes, migrant returns and trade disruptions, the World Bank said in its latest assessment.
In its December 2025 Afghanistan Economic Monitor, the World Bank said security-related expenditure reached 96.9 billion Afghanis ($1.4 billion), accounting for 47.8% of total spending during the period, while development spending remained limited at 15.7 billion Afghanis despite a year-on-year increase.
Total government expenditure reached 202.9 billion Afghanis in the first nine months of the fiscal year, slightly exceeding revenues of 200.9 billion Afghanis and resulting in a fiscal deficit of about 2.0 billion Afghanis, equivalent to 0.1% of gross domestic product, the report said.
The World Bank warned that Afghanistan’s economy continues to struggle under growing challenges, including the return of migrants, prolonged border closures with Pakistan and weak private investment that is limiting productivity growth. It projected that per capita GDP would fall by around 4% in fiscal year 2025, keeping poverty widespread.
Inflation pressures intensified in late 2025, with headline inflation rising to 4.7% year-on-year in November, up from 3% in October, driven by higher food and non-food prices. Food inflation was fuelled by sharp increases in the prices of fresh and dried fruits and cereals, while non-food inflation was led by rising housing and health costs, the report said.
Housing inflation rose as rental demand increased amid the continued return of migrants, while health-related prices jumped following the rerouting of medicine imports after Pakistan border closures disrupted traditional supply routes, according to the World Bank.
The Afghan currency continued to strengthen, appreciating modestly against the U.S. dollar in December and recording a year-on-year gain of nearly 6%, supported by market stability and relatively lower inflation compared with key trading partners. However, the World Bank said the real effective exchange rate showed signs of eroding price competitiveness in the short term.
Trade imbalances widened sharply, with the cumulative trade deficit reaching $8.5 billion in the first nine months of fiscal year 2025, equivalent to 39% of annual GDP, up from $7.1 billion in the same period a year earlier. The deterioration was driven by robust import demand and higher transport and logistics costs linked to trade rerouting.
Exports fell sharply in December, dropping 25% month-on-month and 15% year-on-year to $162 million, largely due to border disruptions with Pakistan. Food products accounted for 84% of total exports during the fiscal year to date, increasing Afghanistan’s vulnerability to climate shocks and price volatility, the report said.
India emerged as Afghanistan’s largest export destination, accounting for more than 61% of exports in December and 43% cumulatively during the fiscal year, while Pakistan’s share continued to decline. Uzbekistan increased its share of Afghan exports to 7.7%, reflecting growing reliance on alternative regional markets.
Imports remained resilient despite trade disruptions, rising 5% year-on-year in December to $1.2 billion, supported by increased inflows from Iran and Central Asia. Over the first nine months of the fiscal year, total imports rose 16% to $9.9 billion, driven by higher demand for raw materials, machinery and transport equipment.
Domestic revenue collection remained relatively strong, rising 15.1% year-on-year to 200.9 billion Afghanis in the first nine months of fiscal year 2025, supported by improved tax enforcement and customs administration despite revenue losses at Pakistan-facing border crossings, the World Bank said.
The report said subsidies and transfers increased significantly, reflecting higher assistance to returnees, earthquake-affected households and vulnerable families, but warned that Afghanistan’s heavy reliance on security spending, weak investment and external vulnerabilities continued to pose serious risks to sustainable growth and living standards.
