While the Taliban has taken over Afghanistan after the fall of the Ashraf Ghani government, it seems ruling the country will not be easy for the Islamist group. Apart from protests in the country, non-recognition from most governments, one of the biggest problems the Taliban regime may face is the lack of access to the federal reserve. This was confirmed by Ajmal Ahmady, the governor of the Da Afghanistan Bank, the central bank of the country. The confirmation from the governor came after reports that the US has frozen around $9.5 billion of Afghan funds in the US, and blocked its access to the Taliban.
DAB governor Ajmal Ahmady wrote posted a thread of several tweets today on Twitter to clarify the location of Afghan federal funds and the possibility of the Taliban accessing them. He informed that he has been told the Taliban has been calling the bank staff to know the location of the federal assets. Emphasising how it shows the lack of economics by the Islamist group, Ahmady said that the Taliban should urgently appoint an economist. “If this is true – it is clear they urgently need to add an economist on their team,” he tweeted.
He then went to explain how federal assets are maintained. He said that the total DAB reserves were around $9 billion last week, but this does not mean the Da Afghanistan Bank has cash worth $9 billion in its vaults. He said that as per international standards, most national assets are kept in safe and liquid assets such as Treasuries and gold.
According to the DAB governor, of the $9 billion reserves of the bank, $7 billion are federal reserves, out of which $3.1 billion are in the form of US bills and bonds, $2.4 billion in The Reserve Advisory & Management Partnership (RAMP) of the World Bank, gold worth $1.2 billion, and $0.3 billion in cash accounts. Apart from it, reserves worth $1.3 billion are in international accounts, and an amount of $0.7 billion is with the Bank for International Settlements based in Basel, Switzerland.
Ajmal Ahmady denied claims that as the US has frozen the money, Afghanistan has lost access to it. He clarified that Afghanistan’s international reserves are not compromised, as they are kept in various bank accounts, which are easily audited. He said that they had a program with both IMF and Treasury that monitored assets, and no money was stolen from any reserve account.
However, the fund will not be accessible to the Taliban, as the group remains in the international sanction lists, Ahmady said. He said that he can’t imagine a scenario where the US Treasury Department or the Office of Foreign Assets Control of the US govt will give the Taliban access to Afghan funds in the USA. Therefore, Ahmady estimated that the accessible funds to the Taliban are perhaps 0.1-0.2% of Afghanistan’s total international reserves, which is not much. He also speculated without the approval of the Treasury, it is unlikely that any donors would support the Taliban Government.
The DAB governor also said that the central bank has run out of Dollar bills, so there is not any dollar left in the country for the Taliban to use. As Afghanistan has a huge Current Account Deficit, which means it does not earn much foreign exchange from exports, it is reliant on physical shipments of foreign exchange cash every few weeks. At present, the amount of such cash is close to zero, as the latest scheduled shipment of Dollars was cancelled by the US.
He said that on Friday, he was informed that there won’t be any more shipment of USD banknotes from the USA, while the bank was expecting a shipment on Sunday. As the banks had bid for dollars in large amounts as people were withdrawing money from their accounts, President Ghani spoke with Secretary Blinken to request dollar shipments to resume, and the same was agreed in principle. But the scheduled shipment on Sunday never arrived, and the city fell on the same day.
Reportedly, the Biden administration cancelled the dollar shipment at the last moment to prevent it from falling into the hands of the Taliban, as the group was poised to capture Kabul.
It is very interesting to note that the US had decided to stop dollar shipments on Friday itself, because till that time the US was saying that Kabul will remain out of reach of the Taliban for some time. But the city fell on Sunday, and this led to speculate Ahmady if the US had good intelligence as to what was going to happen.
Now, Afghan banks have told their customers they can’t return their dollars because the DAB has not provided banks with dollars. Ajmal Ahmady asked the Taliban to note that the central bank or its staff can’t be blamed for this, as this is the direct result of US sanctions policy. He added that the Taliban and their backers should have foreseen this result.
The DAB governor said that the assets will remain frozen for the Taliban, the group will have to implement capital controls and limit dollar access. He added that the value of Afghan currency Afghani will depreciate, and inflation will rise. This will hurt the poor as the food prices will rise due to inflation, Ahmady said. Without foreign currency reserves, the Taliban regime will also find it difficult to import essential items.
DAB governor Ajmal Ahmady left Kabul on Sunday, when the Taliban forces had arrived at the gates of Kabul city. He said that on Saturday he saw security analysis that the city will fall in 36 hours, and bought tickets for Monday as a precaution when his family told him that most of the government has already left the country. On Sunday, while he was working at the bank, he got the reports of advances made by the Taliban and left for the airport, where he found other government officials.
While several flights booked by officials and ministers were cancelled, he secured a Kam Air flight at 7 pm. But when President Ghani fled, and it was chaos everywhere as the employees and military left the airport. 300 people, including Ahmady, boarded the Kam Air flight with 100 seats, but it had no fuel or pilot. Therefore, he left the plane and spotted a military plane, which he boarded with the help of some colleagues. A day after he left, he was informed that the Taliban came looking for him.
Ahmady also criticised former president Ghani and his aides for abandoning the people of Afghanistan and leaving the country without informing anyone.