The U.S.administration has frozen approximately $9.5 billion reserves belonging to the Afghan central bank and stopped shipments of cash to the nation to block Taliban-led government from accessing the money.
As per the sanctions from an executive order approved after the September 11, 2001, terrorist attacks, the US administration did not need any new authority to block the reserves as the Taliban is already under it.
In a series of tweets, Governor of ‘Da Afghan Bank’ (DAB) – Afghanistan’s central bank, Ajmal Ahmady informed that, “ the shipments of dollars would stop as the United States tried to block any Taliban effort to gain access to the funds.”
Giving detailed information on Afghanistan’s international reserve, Ahmady said the total DAB reserves were approximately $9.0 billion, but not physically in the vault of the bank. As per international standards, most assets are held in safe, liquid assets such as Treasuries and gold.
Breakdown of Aghinstan’s international reserves:
(1) Federal Reserve = $7.0
– U.S. bills/bonds: $3.1
– WB RAMP assets: $2.4
– Gold: $1.2
– Cash accounts: $0.3
(2) International accounts = 1.3
(3) Bank for International Settlements (BIS) = $0.7
The vast majority of DAB’s assets are not currently held in Afghanistan. It is in other international accounts and at the Bank for International Settlements – a bank for central banks based in Switzerland.
The Governor of the apex bank of Afghanistan further informed that “Given that the Taliban are still on international sanction lists, it is expected (confirmed?) that such assets will be frozen and not accessible to the Taliban. Therefore, we can say the accessible funds to the Taliban are perhaps 0.1-0.2% of Afghanistan’s total international reserves.”
As per Governor Ajmal Ahmady, the following cases are in place:
– United States Department of the Treasury has frozen Afghanistan’s international assets
– The Taliban have to implement capital controls and limit dollar access
– Afghan Afghani (Afghanistan’s currency) will depreciate
– Inflation will rise as currency pass-through is very high
– The situation will hurt the poor as food prices rise
Meanwhile, the International Monetary Fund (IMF) has blocked Afghanistan’s access to the Special Drawing Rights (SDR) funds worth USD 460 million as the Taliban’s captured nation has drawn uncertainty for the country’s future.