Taliban face financial crisis without access to foreign reserves

Taliban face financial crisis without access to foreign reserves
The group promised to halt the export of narcotics from Afghanistan. Source: Getty Images
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Daily US Times: With foreign currency reserves largely unreachable and western aid donors already cutting off or threatening to cut payments, Afghanistan’s new Taliban rulers are likely to face a rapidly developing financial crisis.

While the Taliban has moved in recent years to become more independent of outside financial supporters including Pakistan, Iran and wealthy donors in the Gulf, its financial flows – amounting to $1.6bn last year – are far short of what it will require to govern.

Afghanistan’s central bank governor disclosed on Wednesday that the country has $9bn in reserves abroad but not in physical cash inside Afghanistan after the US ordered the freezing of Afghan government reserves held in US bank accounts on Sunday.

On Wednesday, Ajmal Ahmady wrote on Twitter that the majority of that – about 7 billion dollars – was being held in US Federal Reserve bonds, gold and assets. The governor said that the central bank’s holdings of US dollars were “close to zero” as Afghanistan had not received a planned cash shipment during the Taliban offensive that swept the country last week.

He wrote: “The next shipment never arrived. Seems like our partners had good intelligence as to what was going to happen.”

The governor noted that the lack of US dollars would probably cause the people of the country to depreciate and inflation to rise, hurting the poor.

Getting access to those reserves in the US banks will probably be complicated by the US government considering designating the Taliban as a sanctioned terror group.

“Taliban won militarily – but now have to govern. It is not easy,” he wrote.

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