Posted on Dec 15, 2019 2021 at 10:37Updated Dec 15, 2019 2021 at 14:02
The Afghan currency (afghani) fell 25% in 4 weeks. The Turkish lira is the only emerging currency to fall further (-30%). Like its Turkish counterpart, the Afghan central bank, now under the control of the Taliban, has proved unable to stabilize its currency despite its interventions and sales of dollars.
It is powerless in the face of the financial and economic chaos caused by the end of foreign financial aid – which represented more than a third of the GDP – and the freezing of Afghan assets in the United States and in Europe.
September 11, 2001
In total, afghani has plunged 30% since the Taliban came to power in August. This had led to the freezing of financial assets of the central bank, placed abroad. Of the $ 9.5 billion now out of the country’s reach, 7 are deposited into New York Federal Reserve accounts.
About ten years ago, the victims of the terrorist attacks of September 11, 2001 carried out by Osama bin Laden had obtained financial compensation of a comparable amount in court. But until now, the justice system had failed to recover the money from Afghanistan.
The situation could change with the freezing of the financial assets of the Taliban in the United States. Lawyers for the victims have contacted the Biden administration to assess how they could recover all or part of this sum for their clients. The Democratic administration is expected to clarify its position on the subject at the end of January.
Default of payment
By giving up a third of its value this year against the dollar, the afghani is pushing up inflation and worsening the economic crisis, which is one of the worst ever experienced by the country. Almost three quarters of the population live below the poverty line. This proportion could rise to 97% next summer, according to the United Nations Development Program.
Afghanistan has been isolated and cut off from the financial world for 4 months. He can no longer borrow. The central bank has limited over-the-counter withdrawals from banks to avoid a collapse of the banking system. Bank balance sheets are deteriorating rapidly. Bad loans are on the rise and many borrowers are struggling to repay.
“The country could also default on its international loans, which would complicate the restart of foreign aid,” warns consultant Adnan Mazarei, in an analysis published by the Peterson Institute for International Economics.