The Afghan economy is heavily dependent on foreign exchange inflows for international aid. Most donors have stopped releasing their promised funds since the Taliban took control of Kabul.
Banks in Afghanistan have been closed for two weeks since the Taliban seized power. There is no money in the hands of the people and there has been abnormal inflation of daily commodities. In this situation, ordinary people are crowding in front of the bank to withdraw their savings.
Anxiety about a difficult economic and humanitarian crisis in the days ahead has also overwhelmed them. All in all, the country’s banking sector is on the verge of collapse.
Thanks to the image from Kabul, the world is watching the crowd in front of the banks. Some international media outlets have reported on the mob’s unruly behavior, as well as reports that Taliban fighters on guard have beaten them with tree branches. They also threw stones at people to disperse the crowd.
Sources in the Afghan central bank told US media outlet CNN that transactions at the bank had been suspended for a long time following a Taliban order. It is not possible to provide other services provided by the bank due to running out of money. In fact, the banks have almost zero money.
The main reason for this is that the Afghan economy is heavily dependent on foreign exchange inflows for international aid. Most donors have stopped releasing their promised funds since the Taliban took control of Kabul.
According to the World Bank, 75 percent of government spending in Afghanistan came from various grants. Therefore, after the donor community turned its back, a cloud of the deep economic and humanitarian crisis has gathered in the fate of the Central Asian country’s economy, where 48 percent of households are living in poverty.
Inflation is on the rise in the import crisis, with crowds of helpless people in front of another bank in Kabul as people run out of money. The Afghan-American Chamber of Commerce released a memo on August 23, written by a banking and finance group comprising major commercial banks, customers, and investors in Afghanistan. fresh Bazar
It read, “Afghanistan and the country’s banking sector are heading for an imminent crisis, such as an existential crisis, where the institutional financial system could collapse completely.”
An Afghan economist, speaking on condition of anonymity because of security concerns, told CNN: “Everything is about to collapse like a huge house of cards. As soon as the bank opens, everyone will realize how weak the foundation of the whole system is.”
Another banker said, “My colleagues are now worried about the uncertain future.” There are enough reasons to hold the future dark. The Biden administration froze more than 900 million in assets of the Afghan central bank in the United States shortly after the Taliban took control of Kabul.
The Taliban government or the central bank under them will not get this money even if they want it.
The International Monetary Fund (IMF), a major Washington-based donor group, suspended ছাড় 450 million in aid to Afghanistan earlier this week. Similarly, the World Bank has suspended its promised assistance. The Afghan Banking Group called on the United States to release the central bank’s assets without delay, citing the fact that cash was running out fast.
The former enemy of the new rulers, the United States, is yet to see the future of the Taliban-US alliance, but the country’s bankers are desperate to make the call. While the financial crisis is detrimental to any country, the huge trade deficit is a life-threatening problem for Afghanistan.
The Afghan Banking and Finance Group further wrote, “If we do not get the reserve money quickly, we fear that the entire Afghan economy will fail, then we will be forced to sell vital assets. There will be chaos and conflict because of his anger. “
Another source told CNN that the economic crisis posed a “sudden challenge” to the Taliban government that would destabilize all countries. As the country’s rival jihadist groups engage in fierce power struggles over the crisis, instability will spread throughout the region.
Former Afghan central bank governor Ajmal Ahmadi, who fled the country before the Taliban took control of Kabul, had earlier warned the country of imminent economic woes, huge inflation, and a large influx of people fleeing the country.
He told CNN, “It is important that humanitarian assistance from outside the world continues at this time, but that it will increase in the coming months. There is no need to wait for another crisis.”
A Taliban spokesman said on Tuesday that the bank would be reopened soon. He was speaking after the fall of the Western-backed government and the closure of the banking sector for more than a decade. At this time, the country’s financial sector institutions have come to a complete standstill.
However, no top-level move by the Taliban to reopen the bank, contrary to the spokesman’s claims, is apparently visible. As a result, crowds of harassing people were seen on the streets in front of commercial banks on Wednesday. Ghazal Gailani, trade and economics adviser at the Afghan embassy in London, said: “Banks are closing down, there is no sign of reopening. fresh Bazar
Afghanistan’s banking system is on the verge of collapse, and people are running out of money.” In many parts of Afghanistan, living without money is impossible, but living in urban areas is impossible. Moreover, most government employees were paid by bank checks. As the economy is dependent on cash transactions, people’s suffering is also becoming limitless.
Lenders are also not getting confidence. They cannot be blamed in the current situation. The main reason for the distrust is the extent to which the Taliban administration’s efforts to manage and mobilize the economy will succeed after four decades of war. In this reality, the country has no big legal export sector except illegal drugs.
If there was a legitimate export sector, the internal liquidity crisis could have been tackled by earning foreign exchange from there. Meanwhile, imports from neighboring countries on a dollar basis have stopped. As a result, former governor Ajmal Ahmedi has expressed fears of a crisis in medicines, food, and other daily necessities.