The sale of the drug, which is usually refined to produce heroin, accounts for 40% to 50% of Afghanistan’s economy.

In its first full review of Afghanistan's economy in 12 years, the International Monetary Fund said opium, made from poppies grown on fertile lands in the south, breeds violence and instability.
 
“There will need to be considerable attention paid to this area,” Adam Bennett, the IMF's mission chief for Afghanistan, told a news conference in Dubai on the fringes of the annual IMF-World Bank annual meetings.

Violence

Violence in poppy-growing areas has surged recently. Police blame this on ousted Taliban rulers intent on retaining their grip on a $2.5 billion export business.

“I think the international community remains fully engaged with Afghanistan and Afghanistan's needs in the period ahead”

Adam Bennett,
mission chief,
IMF
Afghanistan


   
Bennett said he had not seen signs of donor fatigue with Afghanistan even though the world's focus had turned to rebuilding Iraq.
   
“I think the international community remains fully engaged with Afghanistan and Afghanistan's needs in the period ahead,” he said.
   
Twenty-five years of ruinous conflict has turned poppy growing into one of the only viable economic activities in Afghanistan.

Development

Any attempt to reduce Afghanistan’s dependence on the revenue generator will need to be coupled with accelerated development efforts.
   
Some progress has been made toward this aim since the US-led invasion of the country in late 2001. The IMF forecasts growth this year of some 20%, a strong recovery albeit from a miserly low base.

Economic considerations have played second fiddle to political and military upheavals in Afghanistan over the past two decades.


   
The country's budget was mostly financed by donor grants but domestic revenues are increasing, the IMF said. Opium production was not accounted for in the IMF's estimate for Afghan economic growth.

Economic expansion in Afghanistan this year will mostly be driven by donor grants and the end of severe drought.

Eradication campaign

The government of President Hamid Karzai, under pressure from the US issued a decree in January 2002 forbidding poppy culitvation and trading and began an ambitious eradication campaign.

Still, his efforts have proved relatively ineffectual due to the government's weak authority over provinces and delays in donor assistance for alternative crops and farmer support.

Economic considerations have played second fiddle to political and military upheavals in Afghanistan over the past two decades. Vast tracts of the population fled the country in the 1980’s and subsequently as war lords battled each other for control of the barren lands.

Both Pakistan and Iran combined shelter some 4 million refugees.