Afghanistan dispatches: “commercial banks run out of US dollars” – JURIST – News
EXCLUSIVE JURIST – Law students and lawyers in Afghanistan file reports with JURIST on the situation there after the fall of Kabul to the Taliban. Here, a lawyer from Kabul with experience in the country’s financial sector presents his observations and perspective on the circumstances facing the country’s banks and banking system under the new regime. For reasons of confidentiality and security, we retain his name and institutional affiliation. The text has only been slightly retouched to respect the author’s voice.
The Acting Governor of the Central Bank of Afghanistan issued another letter instructing commercial banks not to allow corporate bank accounts to 1) withdraw money for any purpose and 2) conduct electronic transactions inside and outside Afghanistan.
Afghanistan pays around US $ 7 billion electronically through correspondent banking services. The last restriction will significantly increase the price of imported products.
In addition, only the main offices of commercial banks are open. No branch is currently operating, at least as far as I can see in Kabul. In addition, commercial banks are strapped for US dollar liquidity because they do not receive it from the Central Bank. The US Treasury has decided to stop the supply of physical dollar banknotes to Afghanistan. It also increased the prices of raw materials. As an example, I bought a 16 liter bottle of oil for 1400 AFN. Today was AFN 2500.
In another incident, one of the members of the Central Bank’s Supreme Council in an interview with Reuters urged the US Treasury and the IMF to take the necessary steps to provide the Taliban-led government with limited access to the country’s reserves. . It has been in the media all day today and many have commented on it.
In Afghanistan, there are currently 11 commercial banks, but five are not in a stable situation. Some time ago, the central bank looked at some of these banks and concluded that at least two of them would become insolvent within the next year. Given the current situation, they will be insolvent sooner than expected. In addition, in Afghanistan, only about 4 million people use banking services out of almost 35 million people. This low number of customers is due to the fact that Afghans do not trust the banking system and think their money will be safer with themselves. This situation will worsen further due to recent policies implemented by the Central Bank.
Surprisingly, some of the people who support the US / IMF idea of ââgiving the Taliban limited access to the country’s foreign exchange reserves are people who have opposed the rise of the Taliban. But the impacts the frozen accounts are expected to have on the country’s poor may be the only reason they said what they said.
Meanwhile, the Taliban are at direct war with the only party rising up against them in the Afghan province of Panjshir. It is very difficult for them to finance such a war and we fear that if they have access to more money from investments now frozen, they will use it to finance their war.