Afghanistan: Currency Reserves Held Abroad a Means of Pressure Against the Taliban

If the Taliban won the war on the ground in Afghanistan, it will be harder on the economic front. It will be difficult for them to get their hands on the country’s billions of dollars in reserves. These are largely held overseas, the great unknown being the share located in the United States.

“The Central Bank assets that the Afghan government owns in the United States will not be made available to the Taliban,” a Biden administration official said on Monday. In total, the gross reserves of the Afghan Central Bank stood at $ 9.4 billion at the end of April, according to the International Monetary Fund (IMF).

The bitterness of the governor of the central bank
President Ashraf Ghani’s flight abroad leaves a bitter taste for the governor of the Afghan Central Bank, Ajmal Ahmady. “Once the president’s departure was announced, I knew chaos would ensue within minutes. I can’t forgive him for creating this without a transition plan, ”he tweeted on Monday. “It shouldn’t have ended this way. I am disgusted by the lack of planning of the Afghan leadership. I saw them at the airport leave without telling the others. ”

Ajmal Ahmady, who received threats, also fled the country on Sunday, saying he was “pushed” into a military plane by his close colleagues after trying to stabilize the currency amid the Taliban’s advance. The Central Bank was informed on Friday that “given the deteriorating environment, we would no longer have shipments in dollars”, and he met with bankers and brokers on Saturday to reassure them, he said.

The United States could also try to block the aid planned by the IMF and the World Bank. Reducing aid in an attempt to bring the regime to its knees by draining it financially will not be smooth: “it will have consequences on the functioning of schools, hospitals, governments”, explains Vanda Felbab-Brown, specialist in Afghanistan at the Brookings Institution. Another difficulty, the countries will fall into two distinct camps according to their interests: “those who want to cut off all inflows of money, the countries motivated by human rights”, facing “those who want the money to continue to flow. circulate for strategic or anti-terrorist reasons such as, for example, China ”.

The IMF approved on November 6, 2020 a $ 370 million aid program for Afghanistan to be spread over 42 months, with an immediate disbursement of $ 115 million. A second installment of 149.4 million was paid in early June. Some $ 105.6 million therefore remains to be paid. The World Bank, meanwhile, has several development projects underway in the country and has provided $ 5.3 billion to date, mostly in the form of grants.