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IMF freezes Afghanistan’s access to funds

IMF freezes Afghanistan's access to funds

Afghanistan will no longer be able to access the International Monetary Fund (IMF) resources.

This follows the Taliban’s takeover of the country last weekend, a situation that has left the country in political, economic, and social turmoil.

According to the BBC report, an IMF spokesperson said it was due to a “lack of clarity within the international community” over recognising a government in Afghanistan.

Resources of over Ksh.40.5 billion (US$.370m) from the IMF had been set to arrive on August 23, 2021.

“As is always the case, the IMF is guided by the views of the international community,” the spokesperson added.

The facility was the country’s 42-month ECF arrangement of Ksh.40.5 billion was approved by the Executive Board on November 6, 2020.

It was meant to support Afghanistan’s recovery from the COVID-19 pandemic, anchor economic reforms, and catalyze donor financing.

Since the onset of the pandemic, Afghanistan also benefitted from the IMF’s disbursement of Ksh.24 billion (US$.220 million) under the Rapid Credit Facility and a debt service relief of Ksh.1 billion (US$10 million) under the Catastrophe Containment and Relief Trust.

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The cancellation can be reckoned based on an official from the U.S President Joe Biden administration telling the BBC that any central bank assets the Afghan government has in the U.S will not be made available to the Taliban.

In a letter to the US Treasury Secretary Janet Yellen, Congress members called for assurances that the Taliban would receive no US-backed aid.

“The potential of the SDR allocation to provide nearly half a billion dollars in unconditional liquidity to a regime with a history of supporting terrorist actions against the United States and her allies is extremely concerning,” 17 signatories wrote.

Earlier, the head of Afghanistan’s central bank said the US had cut off access to its assets – around Ksh. 766.45 (US$.7 billion) of which are held at the U.S. Federal Reserve.

Ajmal Ahmady, Afghanistan’s Central Bank Governor who fled the country at the weekend, tweeted that Da Afghanistan Bank’s total reserves were approximately Ksh.985.44 (US$9 billion) as of last week.

But he said as per international standards, most of this was held in safe, liquid assets such as US Treasury bonds and gold offshore.

“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,” Mr Ahmady tweeted.

“We can say the accessible funds to the Taliban are perhaps 0.1-0.2% of Afghanistan’s total international reserves. Not much.”

Humanitarian crisis in Kabul

According to Reuters report, however, armed members of the Taliban kept people desperate to flee Afghanistan from reaching Kabul’s airport on Wednesday, witnesses said, while President Joe Biden vowed to keep U.S. troops in the country until all Americans are evacuated.

Since the Taliban entered Kabul over the weekend, scenes of chaos have unfolded as thousands seek to leave, fearing a return to the austere interpretation of Islamic law imposed during the previous Taliban rule that ended 20 years ago.

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