International Monetary Fund suspends funds to Afghanistan

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.

International Monetary Fund will withhold funds to Afghanistan amid the 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,” a spokesperson for the lender said. 

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.

Reserves blocked

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.

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.

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.”

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

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.

Status of other programmes unclear

The International Monetary Fund has taken similar action against other regimes not recognised 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 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 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 status of those programs is unclear as the development lender works to pull staff out of the country.

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

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.”


Arab Observer

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