Thursday, December 8, 2022
HomeWorldWhy Taliban can't lay its hands on Afghanistan's $9 billion reserves

Why Taliban can’t lay its hands on Afghanistan’s $9 billion reserves

In a series of tweets, Ajmal Ahmady, Governor of Da Afghanistan Bank (DAB), explains why the country's shipments of USD are in doubt & how it could affect their economy.

Text Size:

New Delhi: The Taliban, which took over Aghanistan’s capital Kabul Sunday, may not be able to access a majority of the country’s central bank’s assets.

In a series of tweets posted Wednesday, Ajmal Ahmady, Governor of the country’s central bank Da Afghanistan Bank (DAB), explained why the country’s shipments of US dollars are in doubt and how it could affect the economy.

Ahmady, who fled Afghanistan Monday, said most of the country’s central bank assets were parked in the United States. Of the $9 billion reserves, $7 billion are with the US Federal Reserve, he tweeted.

Currently, the Taliban is on the UNSC sanctions list. On Wednesday, the US Federal Reserve blocked the Taliban’s access to DAB’s assets — blocking more than 70 per cent of the country’s reserves.

US Treasury bills ($3.1 billion), World Bank Reserve Advisory & Management Partnership ($2.4 billion), gold ($1.2 billion), cash accounts ($0.3 billion), international accounts ($1.3 billion) and Bank of International Settlements ($0.7 billion) form Afghanistan’s major investment categories, Ahmady tweeted.

Apart from the assets parked in international institutions, Afghanistan’s dollar supply will also face a crunch, he said.

“Given Afghanistan’s large current account deficit, DAB was reliant on obtaining physical shipments of cash every few weeks. The amount of such cash remaining is close to zero due (to) a stoppage of shipments as the security situation deteriorated, especially during the last few days.”


Also read: US’ failure to push back Pakistan has brought Taliban to Kabul. India had seen it coming


Shipments of US dollars

Ahmady said he was informed Friday that there will be no further US dollars shipments to the country.

He further said that as a result, he, for the first time, had to limit USD access to both banks and dollar auctions to conserve remaining DAB dollars. A withdrawal limit was also imposed on customers, leading to the depreciation of the Afghan currency.

 

The DAB governor also claimed that former President Ashraf Ghani was informed about the dollar crisis, who then requested US Secretary of State Antony Blinken to resume the shipment, which was approved ‘in principle’ but never arrived.

“Seems like our partners had good intelligence as to what was going to happen,” he said.

IMF blocks access to SDR reserves

Ahmady also explained that the International Monetary Fund had approved Special Drawing Rights (SDR) of $650 billion recently, of which the DAB was supposed to receive around $340 million by 23 August.

SDR is an interest-bearing international reserve asset created by the IMF to supplement other reserve assets of member countries.

On Thursday, the IMF said it suspended Afghanistan’s access to IMF resources due to the lack of clarity over the country’s government.

Ahmady also said that the financial crisis will not be caused by the decisions of the country’s central bank but the ones taken by the international institutions, which will put pressure on the existing dollar supply of the country. The Taliban will be forced to impose limits on dollar transactions that will trigger inflation, bring misery to its people, he said.

(Edited by Neha Mahajan)


Also read: Did India rely too much on US? Taliban siege of Kabul is affecting our regional power status


 

Subscribe to our channels on YouTube & Telegram

Support Our Journalism

India needs fair, non-hyphenated and questioning journalism, packed with on-ground reporting. ThePrint – with exceptional reporters, columnists and editors – is doing just that.

Sustaining this needs support from wonderful readers like you.

Whether you live in India or overseas, you can take a paid subscription by clicking here.

Support Our Journalism

Most Popular