The Kabul times, Afghanistan Trustable News Agency.
Opinion

Delay in release of Afghan assets to cause economic crisis

FILE PHOTO: European flags fly outside the European Commission headquarters in Brussels, Belgium, September 20, 2023. REUTERS/Yves Herman/File Photo

In 2022, around $3.5 billion was transferred to a Swiss-based Afghan Fund, which will decide
on how to disburse the money to the Da Afghanistan Bank (DAB), Afghanistan’s central bank. The
board of the fund includes Dr. Anwar ul-Haq Ahady, Dr. Shah Mehrabi, Dr. Jay Shambaugh, and
Ambassador Alexandra Baumann. The U.S. State Department picked the two Afghan nationals on
the board.

The United States has been repeatedly urged to release Afghanistan’s foreign assets as the country is facing with the worst humanitarian crisis. The Islamic Emirate of Afghanistan (IEA) and the people of Afghanistan have repeatedly asked the United States to release the frozen assets of Afghanistan’s central bank. It has been more almost two years since a special fund was created to disburse Afghanistan’s foreign assets. It is time and essential to immediately release the money to stabilize Afghanistan’s faltering banking system, which is important to kick-start economic activity. When the Islamic Emirate took over control of Afghanistan in August 2021, Afghanistan had $7 billion in foreign currency reserves with the Federal Reserve Bank of New York. The assets, which belong to the people of Afghanistan, were frozen. In 2022, around $3.5 billion was transferred to a Swissbased Afghan Fund, which will decide on how to disburse the money to the Da Afghanistan Bank (DAB), Afghanistan’s central bank. The board of the fund includes Dr. Anwar ul-Haq Ahady, Dr. Shah Mehrabi, Dr. Jay Shambaugh, and Ambassador Alexandra Baumann. The U.S. State Department picked the two Afghan nationals on the board. All four trustees have been in the office for over a year now and they very rarely have a unified vote on disbursing the funds. The four of them can only make decisions on that trust fund assets if there’s a unanimous vote. But one thing all four trustees agree on is that they do not want to touch the principal of the $3.5 billion and instead start discussing the use of the interest earnings and the trust principle. The trustees now want to see how they can use that interest to help them, the poorest of Afghanistan people. Accrued interest on the $3.5 billion is estimated to be around $200 million, which members say could be released immediately. But they still haven’t agreed on how to do that. Afghanistan had roughly $9 billion in reserves held in banks across the U.S. and Europe, which were immediately frozen following the Islamic Emirate takeover. About $500 million belonging to private account holders in Afghan banks was also frozen. Managed by DAB, these foreign funds were traditionally used to maintain currency stability, finance imports, and ensure the banking system had enough cash to operate smoothly. Afghanistan is facing a severe humanitarian and economic crisis, which some analysts believe has been exacerbated by the delay in the release of foreign currency reserves, which Da Afghanistan Bank needs to carry out essential central banking functions like maintaining stable exchange rates and prices. The delay in the release of Afghanistan’s foreign assets exacerbates poor economic conditions in Afghanistan. Banks play a crucial role in lending money to businesses and individuals who want to invest in capital or trade. And this can be done only when there’s enough liquidity in the banking system. Releasing Afghanistan’s central bank’s foreign assets will have a direct impact on the improvement of the economic situation in Afghanistan. In current circumstances in which the people of Afghanistan need humanitarian aid, releasing the country’s foreign assets as national monetary support and trust funds for the country’s trade can play a key role in the improvement of the economic situation. Afghan citizens have protested several times to call on the U.S. to return billions in dollars of Afghanistan’s central bank foreign assets. The people of Afghanistan want this asset to be released as soon as possible as the people are facing with increasing poverty in the country.

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The Kabul times, Afghanistan Trustable News Agency.