IMF, US restrict funds to Afghanistan after Taliban takeover

Despite its swift takeover of the government in Afghanistan, the Taliban will not have access to most of the nation’s cash and gold stocks, while the IMF announced it won’t provide aid.

A spokesperson for the Washington-based crisis lender on Wednesday said it had decided to withhold its assistance to Afghanistan amid uncertainty over the status of the leadership in Kabul.

“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… IMF resources,” the official said.

Central bank governor Ajmal Ahmady said on Twitter the Da Afghanistan Bank (DAB) had around $9 billion in reserves, but most of that is held overseas, out of reach of the Taliban.

“As per international standards, most assets are held in safe, liquid assets such as Treasuries and gold,” said Ahmady, who fled the country on Sunday, fearing for his safety as the Taliban swept into the capital.

The US Federal Reserve holds $7 billion of the country’s reserves, including $1.2 billion in gold, while the rest is held in foreign accounts including at the Basel-based Bank for International Settlements, Ahmady said.

A US administration official told AFP on Monday that “any central bank assets the Afghan government have in the United States will not be made available to the Taliban.”

Amid reports the Taliban were quizzing central bank staff on the location of the assets, Ahmady said, “If this is true — it is clear they urgently need to add an economist on their team.”

He repeated that Washington on Friday had cut off cash shipments to the country as the security situation deteriorated, which may have fueled reports the Taliban stole the reserves since the country’s banks could not return dollars to account holders.

“Please note that in no way were Afghanistan’s international reserves ever compromised,” and are held in accounts that are “easily audited,” Ahmady said.

No SDRs for Kabul

The IMF’s aid would include an existing $370 million loan program, as well as access to reserves in the form of Special Drawing Rights (SDR), the lender’s basket of currencies.

“As is always the case, the IMF is guided by the views of the international community,” the fund official said.

The International Monetary Fund has taken similar action against other regimes not recognized by a critical mass of member governments, as in the case of Venezuela.

The IMF is set to distribute 650 billion in SDRs on August 23 to all eligible members, of which Afghanistan’s share was valued at about $340 million, Ahmady said.

The IMF in June released the latest installment of the $370 million loan to Afghanistan approved in November and aimed at helping support the economy amid the Covid-19 pandemic.

The World Bank has more than two dozen development projects ongoing in the country and has provided $5.3 billion since 2002, mostly in grants.

The status of those programs is unclear as the development lender works to pull staff out of the country.

An internal memo to World Bank personnel obtained by AFP said “senior management is working around the clock to arrange an urgent evacuation of our staff and their family members.”

Meanwhile, Western Union announced Wednesday it was temporarily cutting off wire transfers to the country — another vital source of cash for the people.