Days after the United States blocked the Taliban from accessing the country’s sovereign reserves maintained with the US Federal Reserve, the global lender International Monetary Fund (IMF), has followed suit
Days after the United States blocked the Taliban from accessing the country’s sovereign reserves maintained with the US Federal Reserve, the global lender International Monetary Fund (IMF), has followed suit.
Citing the lack of clarity over the government as the Taliban violently seized power in the country, the IMF too blocked the country from accessing around $440 million. The action reportedly came due to the pressure from the US which has controlling stakes in the IMF.
“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,” an IMF spokesperson was quoted as saying by Reuters.
“As is always the case, the IMF is guided by the views of the international community,” the spokesperson added.
However, the IMF relies on member countries with controlling stakes to decide if any government which comes to power through a coup or disputed transition should be allowed access to the fund.
According to Reuters, even if the Taliban were to regain access to the SDRs, it would be unlikely the group 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.
The fundamentalist Islamist group seized power in Afghanistan last week, toppling the US-backed democratically elected government in the country. However, as they focus on governance and services, the group might face the daunting task of getting their funds released from the reserves maintained in the US.
The country is also in need of huge humanitarian assistance as the war has uprooted over 300,000 people from main cities, and destroyed businesses and shops. If the funds are not released, experts pointed out, it could lead to a grave humanitarian disaster for a country like Afghanistan.
The US has already blocked around $10 billion worth of Afghan reserves. And so has Germany frozen all development assistance to Afghanistan.