Afghanistan cash crisis hits new Taliban rulers

The Taliban will have access to only a fraction of Afghanistan’s wealth and ‘close to zero cash’, it has been revealed.

Taliban leader Mullah Abdul Ghani Baradar, right. Picture: AFP

The Taliban will have access to only a tiny fraction of the wealth of Afghanistan and “close to zero cash” the governor of the Afghanistan central bank Da Afghanistan Bank (DAB) and presidential economic advisor says.

Ajmal Ahmady, who fled the country on Sunday, said that the Taliban has been asking remaining bank staff about the location of assets, perhaps unaware that most of it was out of reach.

He revealed in a series of tweets that Afghanistan has $US9 billion of liquid assets and has explained the last few days of financial upheaval before the Taliban took control.

“But this does not mean that DAB (Afghanistan Bank) held $9bn physically in our vault,’’ he said.

“As per international standards, most assets are held in safe, liquid assets such as Treasuries and gold.’’

A Taliban fighter stands guard with others at an entrance gate outside the Interior Ministry in Kabul. Picture: AFP

Mr Ahmady said accessible funds to the Taliban would be “not much”, adding “perhaps 0.1-0.2% of Afghanistan’s total international reserves”.

He anticipated that if the US Treasury freezes assets that the Taliban will have to implement capital controls and limit the access to dollars, resulting in a depreciation of the currency and rising inflation which will hurt the poor as food prices increase.

Mr Ahmady said the country’s assets were split among the US Federal Reserve $US7bn, US bills/bonds $3.1bn, World Bank RAMP assets $2.4bn, gold $1.2bn and in cash accounts $0.3bn.

As well, $1.3bn was in international accounts and $0.7bn in Bank for International Settlements (BIS).

Mr Ahmady said the International Monetary Fund had approved a SDR650 billion allocation recently which meant the Afghanistan Bank was to receive approximately $US340 million on August 23. That may now not proceed after various countries have since lobbied the IMF to halt the payment.

Mr Ahmady said: “Given Afghanistan’s large current account deficit, DAB was reliant on obtaining physical shipments of cash every few weeks. The amount of such cash remaining is close to zero due a stoppage of shipments as the security situation deteriorated, especially during the last few days.’’

In the week before the Taliban takeover, the US government had cancelled the shipments fearing the Taliban was poised to take control of Kabul.

Last Friday, two days before a shipment was due, Mr Ahmady received a call from Washington telling him there would be no further US dollar shipments.

That shipment of cash had been due on Sunday, the day Kabul fell.

Mr Ahmady said that last Saturday the banks were looking for large US dollar bids as customer withdrawals accelerated.

Since the Taliban have taken control over nearly all of the country, Mr Ahmady said “in no way were Afghanistan’s international reserves ever compromised”.

He said the money is easily audited.

“We had a program with both IMF and Treasury that monitored assets. No money was stolen from any reserve account,’’ he said.

He said that the Taliban are still on international sanction lists, and it would be expected that the country’s assets will be frozen and not accessible to the Taliban.

“I can’t imagine a scenario where Treasury/OFAC (The US Office of Foreign Assets Control) would given Taliban access to such funds,’’ he said.

Mr Ahmady said the Taliban should have foreseen the US sanctions policy.

“Taliban won militarily – but now have to govern. It is not easy,’’ he said.

Mr Ahmady said that on Thursday in the time between leaving work and arriving home, that Herat, Kandahar, and Baghdis had fallen to the Taliban and Helmand was under serious attack.

He said by Saturday, DAB had to supply less currency to the markets which further increased panic.

“Currency spiked from a stable 81 to almost 100 then back to 86,’’ he recalled. “I held meetings on Saturday to reassure banks and money exchangers to calm them down. I can’t believe that was one day before Kabul fell”.

Mr Ahmady said once the president’s departure was announced on Sunday morning, he knew chaos would follow. “I cannot forgive him for creating that without a transition plan,’’ he said.

Mr Ahmady said he left the bank and deputies in charge and ‘’felt terrible about leaving staff’’, as he headed to the airport.

He later received a text from a friend:

“Taliban come to (area) and were looking for you. They were asking about Ajmal Ahmady DAB Governor.”

Mr Ahmady said: “Whatever their personal views, I also had many personal enemies. Or maybe they just wanted to greet me.’’