How Taliban's foreign currency ban affects Afghanistan
The Taliban has banned all foreign currency in Afghanistan and ordered its citizens to only use Afghan currency for trade. The Taliban-led government instructed all citizens, shopkeepers, traders, businesspersons, and the general public to use Afghanis for all transactions, Taliban spokesperson Zabihullah Mujahid said in an online statement on Wednesday. The interim government threatened legal action against dissenters, Mujahid said.
Why does it matter?
The ban on foreign currencies comes at a time when Afghanistan is already facing a severe economic crisis. Incidentally, the US dollar is extensively used for trade in Afghanistan. Further, Afghanistan's billions of dollars worth of assets have been frozen overseas by the US Federal Reserve and central banks in Europe. The Taliban has been pressing for the release of these frozen funds.
Taliban cites economic, national interests
Mujahid said on Twitter that the Islamic Emirate has decided to ban foreign currency to protect Afghanistan's national interests and economy. The Islamic Emirate of Afghanistan is the Taliban's name for the interim government in the country.
Afghanistan's economic crisis
Afghanistan is witnessing a severe economic crisis after the withdrawal of international financial assistance in the wake of the Taliban's hostile takeover of the country in August. Apart from Western countries, the International Monetary Fund (IMF) and the World Bank have stalled foreign aid toward Afghanistan's public spending. Meanwhile, a severe drought has ruined much of Afghanistan's wheat crop, leading to inflation.
Humanitarian crisis predicted
Last month, the IMF had warned that Afghanistan's economy might shrink by 30% this year. It said the country's economic woes would push millions into poverty. This could spur a refugee crisis impacting the neighboring countries of Turkey and Europe. Millions of Afghans could face starvation due to a combination of drought, conflict, and COVID-19, warned the United Nations World Food Programme.
Unfreeze overseas assets: Taliban
The Taliban has been pushing for the release of Afghanistan's funds frozen overseas. Last month, Deputy US Treasury Secretary Wally Adeyemo told the US Senate Banking Committee that Western sanctions against the Taliban must continue. Adeyemo, however, said legitimate humanitarian assistance must be extended. Notably, no country has so far recognized the Taliban government in Afghanistan.
