The head of Afghanistan’s central bank head has predicted a tough time for the country’s economy after the Taliban takeover.
In a series of tweets, Ajmal Ahmady explained that the Taliban would have access to only 0.1-0.2 percent of the country’s foreign reserves of $9 billion.
However, not all of this is within the vaults of the Da Afghanistan Bank, the central bank.
Ahmady elaborated: “As per international standards, most assets are held in safe, liquid assets such as Treasuries and gold [sic].”
He even gave a breakdown of the funds, explaining that the US Federal Reserve has $7 billion of the reserves.
Even this is divided into $3.1 billion in US bills and bonds, $2.4 billion in the World Bank’s Reserve Advisory & Management Partnership assets, $2.4 billion in gold, and a mere $300 million in cash accounts.
Ahmady also said that of the remaining $2 billion, a further $1.3 billion was in international accounts, while another $700 million was in the Bank for International Settlements.
So how much in dollar terms does Afghanistan have left? Ahmady, who has fled the country, explained: “Given Afghanistan’s large current account deficit, DAB was reliant on obtaining physical shipments of cash every few weeks.”
He added: “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.”
Ahmady also assured people that the reserves were in no way compromised.
He explained: “We had a program with both IMF and Treasury that monitored assets. No money was stolen from any reserve account.”
He also said: “Given that the Taliban are still on international sanction lists, it is expected (confirmed?) that such assets will be frozen and not accessible to Taliban.”
Laying out the whole situation, Ahmady predicted some of the scenarios that are likely to play out in Afghanistan.
For one, he said, was that the currency would depreciate, something that already happened over the weekend the Taliban took Kabul.
Then, he said, inflation would rise as currency passthrough was very high.
The result, Ahmady explained, would be that food prices would rise, hurting the poorest the most.
Follow the full thread of his tweets here:
This thread is to clarify the location of DAB (Central Bank of Afghanistan) international reserves
I am writing this because I have been told Taliban are asking DAB staff about location of assets
If this is true – it is clear they urgently need to add an economist on their team
— Ajmal Ahmady (@aahmady) August 18, 2021
