IMF squeezes Taliban by curbing Afghanistan’s access to reserves
- The move comes just days before the country was set to receive nearly US$500 million as part of a plan to inject liquidity into a troubled global economy
- The US has also frozen nearly US$9.5 billion in assets belonging to the Afghan central bank and stopped shipments of cash to the nation
The International Monetary Fund said that the new government in Afghanistan is cut off from using fund reserve assets days before the nation was set to receive almost US$500 million, depriving the Taliban of key resources.
The country has been in line to automatically receive new reserves, known as special drawing rights or SDRs, on Monday as part of a recently approved IMF plan to inject US$650 billion of liquidity into the troubled global economy. While Afghanistan will still receive the assets, it will not be able to use them because the new regime lacks international recognition, the IMF said.
“As is always the case, the IMF is guided by the views of the international community,” an IMF spokesperson said by email on Wednesday. “There is currently a lack of clarity within the international community regarding recognition of a government in Afghanistan, as a consequence of which the country cannot access SDRs or other IMF resources.”
By the IMF’s rules, all 190 members get the assets allocated on their balance sheets, with the total divided roughly proportionately based on their share of global economic output. For Afghanistan, that’s 0.07 per cent of the total, or US$455 million. The vast majority of nations will be allowed to exchange the reserves for cash to pay debt or provide fund pandemic health spending.
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But Afghanistan is suspended from doing so, joining a small set of countries, including Venezuela and Myanmar, who will receive the assets at the IMF but be unable to control them due to a lack of international recognition.