On December 22, 2001, an interim administration under Hamid Karzai mandated from above under the Bonn peace argeement took charge of Afghanistan. The country's economy had already disintegrated at the time of formation of the interim administration. The economy in 2002 was seen to be structurally at an early stage of modern development with 85 percent of the population reportedly dependent on agriculture and 53 percent of the GDP estimated to be originating in agricultural, livestock and forestry. As against this, light industry contributed 28 percent, trade 8 percent and construction 6 percent. Extremely rough estimates quoted by the Asian Development Bank (ADB) suggest that in 2002, Afghanistan´s GDP amounted to USD 4.4 billion. Per capita this works out to an abysmally low USD 170 per head.
These figures, however, could overstate the level of backwardness implicit in the initial conditions from which Afghanistan must begin its process of reconstruction and revival. Two factors have contributed to the high "aggregate poverty" indicated by a per capita income that is less than half of the international poverty norm of a dollar per day per head by 2001. The first is the war that led to the ouster of the Taliban. An earlier estimate, also quoted by the ADB, relating to 1989, placed Afghanistan´s GDP at a much higher USD 6.9 billion and its per capita income at around USD 300. The situation could have further improved in the years following 1989, since reports indicate that at least in regions fully occupied by the Taliban, economic conditions were stable during the early and the mid-1990s.
Underlying the subsequent massive contraction of the economy was the war which devastated the limited infrastructure of the country, triggered the exodus of more than 3 million refugees to Pakistan, Iran and elsewhere and displaced a large number of people within the country. This disrupted or even brought to a standstill much of the economic activity within the country. A corollary of this role of the late 1990s war in worsening economic condition is that a concerted reconstruction effort focused on quick-impact projects combined with the observed large-scale return of refugees to Afghanistan, could have ensured a sharp rise in GDP and per capita income to levels in the early 1990s.
Secondly, nature added to the woes of an already war ravaged economy, with a protracted drought that began in 1999 and lasted till 2001. According to estimates by the World Bank, crop production during this period was halved and livestock herds substantially depleted, making the situation desperate by 2002. According to a March 2002 Food and Agriculture Organisation (FAO) survey, the livestock count in the country had declined by 60 percent due to the distress sale of livestock herds in the summer and autumn of 2001 triggered by the persisting drought. The crucial role of the drought in worsening economic conditions is indicated by an FAO and World Food Programme estimate that agricultural production in 2002 rose by 82 percent, following better rainfall conditions. However, even for that year cereal production was estimated at 4 percent below its 1998 level. Given the importance of agriculture for employment and GDP, these figures suggest that the rough GDP estimates relating to 2002 may be exaggerating the poor state of the economy.