Business & Economy

Unfreezing bank assets, a crucial point in the Afghan crisis

By Moncho Torres

Kabul, Dec 26 (EFE).- Releasing the billions of dollars in frozen financial assets abroad following the Taliban’s arrival in power on Aug.15 will be a turning point to alleviate the severe economic crisis in Afghanistan, according to the financial authorities of the the Islamist government in the country.

An important step in that direction was taken last week after the United Nations Security Council adopted a resolution setting an exception for humanitarian assistance in the Asian country, allowing some of the sanctions to be circumvented.

Following the resolution, the US Treasury announced a mechanism for humanitarian aid sent by governments and organizations to avoid sanctions, allowing funds from the US, UN and nonprofits to reach the Afghan population.

The White House, however, has said it will follow up this mechanism to prevent the Taliban from being indirectly funded, which has demanded a release of the $10 billion in financial assets held by the US Federal Reserve.

“Definitely, the releasing of frozen assets will positively impact the situation in Afghanistan,” Da Afghanistan Bank (central bank) spokesperson Hasibullah Noori told EFE, adding that this would help the financial sitation recover normalcy.

Moreover, he said it will also resolve the liquidity problem, which led to restrictions on the amount of cash that can be extracted weekly from banks. The cap was put at $200 and was increased to $400 in November.

According to Noori, the value of the Afgani – the only currency allowed for transactions in the country – will also stabilize at a good exchange rate after falling from 80 Afganis per dollar in August to the current 103 Afganis per dollar.

“With stabilizing of the exchange rate, the prices will come down (and) businesses will start their normal activities which will help increase demand for Afghan currency, and export and import will also get better,” remarked Noori.

Even though lack of liquidity forced thousands of Afghans to wait endlessly in queues before banks to withdraw money amid skyrocketing inflation, the spokesperson ruled out a possible collapse of the financial system.

“All the commercial banks are active and are busy providing services to the people. We have increased the amount of payment in commercial banks for individual clients in order to avoid liquidity problems which means that we are going on the right path and there is no indication for bankruptcy in Afghanistan,” the spokesperson said.

Mobin Ahmad Amin, Deputy Chief Executive Officer of Afghan United Bank – one of the top banks in the country -, also told EFE that the situation will “improve very soon if they release all the accounts and the money that is stuck with them.”

The banker also pointed out that kickstaring the economy would also depend on the resumption of infrastructure projects such as dams, roads, or buildings – stopped with the arrival of the new Taliban government – as they would generate income and employment.

Amin, though sympathetic to the new Islamist regime, underlined the transformation of Afghanistan in the last 20 years of foreign presence, in which the country went from having “nothing” to having new infrastructures, and hoped it would continue if the sanctions are withdrawn.

He also spoke of an optimistic future with an Afghanistan less dependent on imports, which – according to 2019 World Bank estimates – accounts for 90 percent of its foreign exchanges. EFE


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