The United States is blocking the Taliban’s access to Afghanistan’s financial reserves

The Ministry of Finance is also working to prevent the Taliban from gaining access to special drawing rights, a line of credit used instead of cash, from the International Monetary Fund.

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The United States froze Afghanistan’s reserves and halted shipments of dollars to the country, said a Biden administration official, which will hinder the country’s ability to exploit assets and control the economy.

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All central bank assets held by the Afghan government in the United States will not be made available to the Taliban, the official told CNBC on Wednesday. This freeze will cover all accounts monitored by the Federal Reserve or any other US bank.

“To make matters worse from an Afghan perspective, the previous government, which had a strong strategic link with the United States, had billions of dollars in their U.S. accounts, and with the blockchain order, they are losing access to that money,” Tom Block wrote Wednesday. a policy strategist at Fundstrat.

Independently, a Ministry of Finance official said the organization is working to prevent the Taliban from accessing Special Drawing Rights (SDRs) from the International Monetary Fund (IMF). SDR acts as a line of credit that a nation can exchange for cash. SDRs are printed at the IMF to be distributed to member countries and can be exchanged for US dollars, which the US is obliged to make available. Afghanistan is due to receive about $ 450 million in SDR reserves next week.

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Officials spoke on condition of anonymity to discuss the changed situation in Afghanistan, as the administration has the potential to change course.

Sanctions from the Treasury Department and the Federal Reserve have the ability to hinder a foreign economy by restricting access to dollars. Many types of imports, including oil and food, are often financed with US dollars.

“The new Afghan government has a real challenge in getting goods and services delivered to the country with the US imposed blocking order, which prevents US banks from making payments on their behalf and clearing settlements,” Block wrote. “Today, with the uncertainty over the Taliban government, every seller will want to be paid in a widely used currency, and the USD is almost always the preferred currency.”

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Ajmal Ahmady, Afghanistan’s acting head of Da Afghanistan Bank (DAB), fled the country on Sunday as the Taliban took control of Kabul. On Wednesday, he wrote on Twitter that he believes the U.S. Treasury Department will lock in the country’s assets and force the Taliban to impose capital controls. It would cause inflation and devalue Afghanistan’s currency, Ahmady added

“I think local banks have told customers they can not return their dollars – because DAB has not provided banks with dollars,” Ahmady wrote. “That’s right. Not because money has been stolen or kept in the safe, but because all the dollars are in international accounts that have been frozen.”

According to Ahmady, last week the country had about $ 9 billion in reserves and the Federal Reserve had $ 7 billion of Afghanistan’s assets.

Ahmady added on Friday that there would be no further USD shipments, saying one was expected on Sunday the day Kabul fell under Taliban control.

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