The International Monetary Fund has said that Afghanistan will no longer be able to access IMF resources, including a new allocation of Special Drawing Rights reserves worth USD 460 million, due to a lack of clarity over the recognition of its government after the Taliban seized control of Kabul.
“As is always the case, the IMF is guided by the views of the international community,” an IMF spokesperson said in a statement. “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.”
The IMF’s move follows the Taliban’s takeover of the country last weekend.
The country’s access to the IMF’s reserves in Special Drawing Rights (SDR) assets, which can be converted to government-backed money, have been blocked.
“As is always the case, the IMF is guided by the views of the international community,” the spokesperson added.
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.
But Afghanistan is suspended from doing so, joining a small set of countries, including Venezuela and Myanmar.
In 2019, the IMF suspended Venezuela’s SDR access after more than 50 member countries representing a majority of the Fund’s shareholding refused to recognize President Nicolas Maduro’s government following his disputed re-election. The IMF also suspended dealings with Myanmar after the military seized power in a February coup.
The IMF is due on Monday to complete a $650 billion allocation of SDRs – the fund’s unit of exchange based on dollars, euros, yen, sterling and yuan – to its 190 member countries in proportion to their shareholdings in the Fund.
The increase in reserves is aimed at bolstering the balance sheets of poorer countries that have been severely strained by the coronavirus pandemic.
The IMF will allocate 310 million SDRs on Afghanistan’s behalf, an IMF spokesperson said. That is valued at about $440 million based on Wednesday’s SDR exchange rate.
The World Bank has more than two dozen development projects ongoing in the country and has provided $5.3 billion since 2002, mostly in grants.
The status of those programs is unclear as the development lender works to pull staff out of the country.
A US Treasury official said earlier on Wednesday that the department was taking steps to prevent the Taliban from accessing the country’s SDR reserves.
Any central bank assets the Afghan government have in the United States will not be made available to the Taliban,” an administration official told The Washington Post.
Even if Afghanistan were to regain access to the SDRs, it would be unlikely the Taliban could spend those resources because that would require another country to be willing to exchange the SDRs for underlying currencies, a transaction that would likely be blocked by long-standing US financial sanctions against the Taliban.
Afghan and US officials have said most of the Afghan central bank’s nearly $10 billion in assets are held outside Afghanistan, likely putting them beyond the insurgents’ reach. A Biden administration official said previously that any Afghan central bank assets held in the United States would not be made available to the Taliban.
