New Delhi: The United States Wednesday announced the establishment of a fund to enable spending of $3.5 billion — that President Joe Biden had frozen and seized from the Afghan central bank last year — for the welfare of people in Afghanistan, while keeping it out of the “hands of the Taliban and other malign actors”.
The ‘Afghan Fund’ will be funded through the US Department of the Treasury and the Department of State, and international partners including the government of Switzerland and Afghan economic experts, the US Department of State said in a statement.
Outlining that Taliban will not be part of the fund and robust safeguards have been put in place to prevent the funds from being used for “illicit activity”, the statement mentioned that “US remains committed to supporting the people of Afghanistan”.
The country has been battling intense financial and humanitarian crises since the Taliban took control on 15 August last year. “Disbursements from the Afghan Fund could include keeping Afghanistan current on its debt payments to international financial institutions, which would preserve their eligibility for development assistance, and paying for critical imports, such as electricity,” the statement said.
Earlier this year, Biden had signed an executive order allowing for $7 billion in frozen assets from Afghanistan’s central bank to be used for humanitarian needs of the Afghan people. The remaining $3.5 billion, the order said, would remain in the United States and be used to fund ongoing litigation by families of victims of the 9/11 attack.
What is the “Afghan Fund”
The ‘Afghan Fund’ has been set up to “protect, preserve, and make targeted disbursements of $3.5 billion in order to help provide greater stability to the Afghan economy.”
The fund will maintain its account with Switzerland-based Bank for International Settlements (BIS). An external auditor will monitor and audit the Afghan Fund as required by Swiss law.
“The Afghan Fund will help mitigate the economic challenges facing Afghanistan while protecting and preserving $3.5 billion in reserves from Da Afghanistan Bank (DAB), Afghanistan’s central bank, for the benefit of the people of Afghanistan” said United States Deputy Secretary of the Treasury Wally Adeyemo.
Afghanistan’s financial crisis
According to the World Bank, income and economic output in Afghanistan have fallen by 20-30 %, imports have declined by approximately 40% and roughly 70% of Afghan households report they are unable to fully meet basic food or non-food needs.
“The people of Afghanistan face humanitarian and economic crises born of decades of conflict, severe drought, Covid-19 and endemic corruption,” said United States Deputy Secratary of State Wendy Sherman.
Sherman also noted, in response to the critical challenges facing Afghanistan, the United States is the largest donor of humanitarian assistance. The US has worked with the World Bank and Asian Development Bank to provide more than $1 billion in assistance for basic services and needs. In addition, $814 million in US humanitarian aid was provided to implementing partners to support the Afghan people while preventing funds from benefiting the Taliban.
“Now, the Afghan Fund will be part of our ongoing diplomatic and humanitarian efforts on behalf of the people of Afghanistan,” she said.
According to an Associate Press report, Afghanistan has more than $9 billion in reserves, including just over $7 billion in reserves held in the United States. The rest is largely in Germany, the United Arab Emirates and Switzerland.
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