WASHINGTON — As the Taliban attempt the precarious shift from insurgent movement to functioning government, Afghanistan is facing the heightened risk of a financial collapse after being propped up for the past two decades by foreign aid that now accounts for nearly half its legal economy.
The fate of the Afghan economy will be determined by decisions that the Biden administration and other countries must make on whether to recognize the Taliban as a legitimate government. In the meantime, the United States and the international community are already shutting the flow of money, leaving Afghanistan in the stranglehold of sanctions that were designed to cut the Taliban off from the global financial system. Analysts say the looming shock threatens to amplify a humanitarian crisis in a country that has already endured years of war.
Signs of strain were evident this week as the value of Afghanistan’s currency, the afghani, plunged to record lows and the nation’s most recent central bank governor, Ajmal Ahmady, warned that inflation would likely send food prices soaring. The United States, which has poured about $1 trillion into Afghanistan over 20 years, moved to block the Taliban’s access to Afghanistan’s $9.4 billion in international reserves. And the International Monetary Fund suspended plans to distribute more than $400 million in emergency reserves to the country. » | Alan Rappeport | Saturday, August 21, 2021
