US freezes poor Afghanistan's assets after Taliban takeover

US President Joe Biden's administration froze Taliban's access to billions of dollars held in American bank accounts after the insurgent group seized control of the country. 

The International Monetary Fund (IMF) estimated the Afghan central bank's international reserves at $9.5 billion in 2021 in its latest review published in June.

Depriving Kabul access to funds will make it even more difficult for war-torn Afghanistan to feed its more than 38 million people. 

Central banks around the world keep part of their US dollar assets with the US Federal Reserve.

Afghanistan's currency reserves are mostly held in foreign accounts and are probably inaccessible to Taliban rulers, leaving the country desperately low on dollars, Ajmal Ahmady, who led the central bank until the capture of Kabul, has said.

Da Afghanistan Bank (DAB) controlled about $9 billion, some $7 billion of which was held as a mixture of cash, gold, bonds and other investments at the US Federal Reserve, Ahmady, the acting governor, who has now fled Afghanistan, said on Twitter.

Most of the rest is in other international accounts and at the Bank for International Settlements, a bank for central banks based in Switzerland, and not physically in DAB vaults, he said — leaving about 0.2 percent or less of the total accessible to the Taliban.

"Given Afghanistan's large current account deficit, DAB was reliant on obtaining physical shipments of cash every few weeks," he said.

"The amount of such cash remaining is close to zero due a stoppage of shipments as the security situation deteriorated."

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Pressure on Afghan currency

A US administration official also told Reuters that no assets of the Afghan government held in the United States would be made available to the Taliban.

The Taliban, who now control Kabul, have said treasury, public facilities and government offices were the property of the nation.

READ MORE: US ramps up Kabul evacuation, says Taliban promised 'safe passage'

Ahmady said he had been told Taliban were asking bank staff about the location of assets, but added that they should have foreseen it would be impossible to access them.

He now expects the local currency, the Afghani, to fall as the central bank cannot supply enough dollars to local banks and for the Taliban to use capital controls to prevent outflows.

"Inflation will rise as currency pass-through is very high," he said. "This will hurt the poor as food prices increase."

Another issue has to do with the IMF loan of $455 million that is due to be released to Afghanistan.