The Afghan economy may be on the brink of collapsing, just two weeks after the Taliban seized control and toppled the U.S.–backed government in Kabul in a sudden military blitz.
The country’s economy was already struggling before the Taliban regained power, and the Islamic group’s sudden ascension has prompted the international community to crack down on Afghanistan’s finances, freezing assets and pausing crucial foreign aid.
Prices of everyday essentials such as flour, cooking oil and fuel have surged. Salaries have stopped being paid. Residents in pursuit of cash queue outside banks and at automated teller machines.
“Afghanistan was already facing the triple threat of COVID-19, conflict and drought. Even before recent events, the World Food Programme had announced that up to 14 million Afghans were food insecure,” Ajmal Ahmady, the former head of Afghanistan’s central bank, wrote in an op-ed for the Financial Times.
Days after Kabul collapsed, the Biden administration froze Afghan government reserves held in U.S. banks, blocking the Taliban from accessing billions of dollars, FOX Business confirmed.
“Any Central Bank assets the Afghan government has in the United States will not be made available to the Taliban,” an administration official told FOX Business.
The Afghanistan Central Bank holds total assets of about $10 billion assets – $7 billion of which are stashed with the Federal Reserve Bank in New York.
Following the White House’s decision, the International Monetary Fund announced that it would prevent the Taliban from accessing nearly $500 million in aid. The Washington-based group was slated to deliver a new allocation of assets, known as special drawing rights, on Aug. 23, with about $450 billion designated for Afghanistan.
“As is always the case, the IMF is guided by the views of the international community,” an IMF spokesperson said in a statement. “There is currently a lack of clarity within the international community regarding recognition of a government in Afghanistan, as a consequence of which the country cannot access SDRs or other IMF resources.”
Days later, the World Bank said it would suspend financial aid to Afghanistan in the wake of the Taliban’s sudden takeover.
“We are deeply concerned about the situation in Afghanistan and the impact on the country’s development prospects, especially for women,” a World Bank spokesperson told FOX Business.
The World Bank has committed more than $5.3 billion for development projects in the country since 2002. (www.foxbusiness.com/ FT.com)
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