Afghanistan

The United States on Wednesday announced that it would transfer $3.5 billion in Afghan central bank assets into a new Swiss-based trust fund that will be shielded from the Taliban and used to help stabilize Afghanistan's collapsed economy, Reuters reported. The Afghan Fund, managed by a board of trustees, could pay for critical imports like electricity, cover debt payments to international financial institutions, protecting Afghanistan's eligibility for development aid, and fund the printing of new currency.
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A U.S. judge on Friday recommended that victims of the Sept. 11, 2001, attacks not be allowed to seize billions of dollars of assets belonging to Afghanistan's central bank to satisfy court judgments they obtained against the Taliban, Reuters reported. U.S. Magistrate Judge Sarah Netburn in Manhattan said Da Afghanistan Bank was immune from jurisdiction, and that allowing the seizures would effectively acknowledge the Islamist militant group as the Afghan government, something only the U.S. president can do.
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Afghanistan is inching closer towards economic collapse six months after the Taliban seized power, the Red Cross said on Friday, with a paralysed banking system stymieing international efforts to get financial aid into the war-ravaged country, Reuters reported. Organisations such as the Red Cross have been forced to rely on informal money exchanges to move cash in to pay the salaries of some workers, although most of Afghanistan's estimated 500,000 state employees have now worked without pay for months. "The banking system is totally paralysed.
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In Herat, a key axis of trade in western Afghanistan, a wave of bankruptcies is feared among traders, who express their “hopelessness” in the face of the deterioration of the country’s economic situation after the return of the Taliban to power in the middle of August, Market Research Telecast reported. “At the beginning, when the Taliban arrived, people were very happy, because we perceived that with them security was returning,” says Faghir Ahmad, a trader and importer of food products from Iran, very close to Herat.

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The Biden administration has no plans to release billions in Afghan gold, investments and foreign currency reserves parked in the United States that it froze after the Taliban's takeover, despite pressure from humanitarian groups and others who say the cost may be the collapse of Afghanistan's economy, Reuters reported. Much of the Afghan central bank's $10 billion in assets are parked overseas, where they are considered a key instrument for the West to pressure the Taliban to respect women's rights and the rule of law.
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The United States will continue to be a "very generous" donor of humanitarian aid to the Afghan people and will aim to prevent any of its assistance from passing through Taliban coffers, State Department spokesman Ned Price said on Friday, Reuters reported. "We can maintain a humanitarian commitment to ... the Afghan people in ways that does not have any funding or assistance pass through the coffers of a central government," he told reporters.
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Afghanistan's banks, critical to the country's recovery from crisis, are facing an uncertain future say its bankers, with doubts over everything from liquidity to employment of female staff after the Taliban swept to power, Reuters reported. Banks were expected to reopen imminently, a Taliban spokesman said on Tuesday, after they were closed for some ten days and the financial system ground to a halt as the Western-backed government collapsed amid the pullout of U.S. and allied troops.
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The World Bank said on Tuesday that it had halted disbursements of aid money to Afghanistan as it assesses how the Taliban plan to rule the country, the New York Times reported. A World Bank spokesperson said that the international development organization is “deeply concerned” about the situation in Afghanistan, particularly the impact that the new leadership will have on women in the country. The bank plans to monitor how the leadership transition proceeds and consult with the international community.
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Afghanistan’s new Taliban-led government faces a series of shocks that probably will lead to a weaker currency, faster inflation and capital controls, according to the nation’s exiled central bank chief, Bloomberg News reported. The Afghani, as the tender is known, likely will see renewed weakness after it reached a record low last week, Ajmal Ahmady, governor of Da Afghanistan Bank, known as DAB, said in an interview for Bloomberg’s Odd Lots podcast. That could spur a pickup in consumer-price increases by making imports more expensive, he said.
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The International Monetary Fund said it will prevent Afghanistan from gaining access to some $450 million in aid in the wake of the Taliban's takeover the country, after the U.S. Treasury Department moved to block the funds, Politico reported. The IMF, with U.S. backing, is issuing billions of dollars worth of new “special drawing rights,” a reserve asset that can be converted to government-backed money, to aid poorer countries. A portion of those assets was scheduled to be allocated to Afghanistan next week, an event that generated urgent pushback from Republican lawmakers.
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