Afghanistan faces a financial crunch amid its takeover by the Taliban as the nation braces to be cut off from the next transfer of hundreds of millions of dollars from the International Monetary Fund.
About $340m (£247m) is due to be transferred from Monday as part of an IMF disbursement to its members next week. However, countries led by the US are planning a vote to block the payment to the regime that seized control in a lightning takeover of Kabul.
The move comes amid growing fears of a humanitarian crisis as Britain offers to take 20,000 refugees fleeing the country.
Ajmal Ahmady, the central bank governor who fled Afghanistan at the weekend, said the country depended on shipments of dollars that ceased at the end of last week.
Interesting note was that the IMF had approved a SDR650 billion allocation recently.
DAB was set to receive approximately $340 million on August 23rd.
Not sure if that allocation will now proceed with respect to Afghanistan https://t.co/T2ewqLIDOJ
— Ajmal Ahmady (@aahmady) August 18, 2021
“Given that the Taliban are still on international sanction lists, it is expected that such assets will be frozen and not accessible to Taliban,” he tweeted.
The central bank, the DAB, has about $9bn of assets, largely held with the Federal Reserve but also in US bonds, gold, international accounts and with the Bank for International Settlements, Mr Ahmady added. “I can’t imagine a scenario where Treasury/OFAC (the Office of Foreign Assets Control) would give Taliban access to such funds.”
As a result banks are running short of dollars as customers seek to take cash from their accounts, he said, with the central bank last week telling banks to limit withdrawals.
“It’s going to be quite dire [when] people will not be able to access the funds they need from the banking sector,” he told the Financial Times.
In a case of difficult timing, the IMF was already planning to distribute funds to its members next week to help them cope with the pandemic and its economic fallout.
Once the decision has been made, the funds are due to be sent automatically unless a majority of IMF members vote otherwise in the coming days.
Mr Ahmady said the “DAB was set to receive approximately $340m on August 23rd” but that he was “not sure if that allocation will now proceed with respect to Afghanistan”.
A comparable situation is that in Venezuela when the US assembled its allies to block the recognition of President Maduro, cutting the regime off from IMF funds.
The IMF and the Treasury have been contacted for comment.