Afghanistan Is on Brink of Economic Meltdown, Says Ex-Finance Chief

• A former Afghan finance chief mentioned the nation’s economic system is “on a freeze” with an unsure future.
• “Proper now, the state of affairs seems to be actually, actually dangerous,” Khalid Payenda mentioned this week.
• Payenda, who resigned August 10 and fled the nation, spoke at Georgetown College.

The latest performing Afghan finance minister mentioned his nation’s economic system was maybe days from a meltdown, with the Afghan foreign money poised for speedy devaluation.

The pace at which the Afghan authorities collapsed “shocked everybody,” Khalid Payenda mentioned this week throughout a chat at Georgetown University. 

Payenda on August 10 resigned as acting finance minister, exiting a number of days earlier than the nation’s authorities primarily broke down.

He mentioned he submitted his resignation, however did not hear from President Ashraf Ghani for 3 days, so he packed his baggage and left. Ghani on August 15 fled the nation.

The nation’s economic system grew from 2001 to 2012 at a mean price of about 10% every year, Payenda mentioned. However that progress got here to a screeching halt, mainly dropping to zero for the previous couple of years, he mentioned. The World Financial institution mentioned the nation’s economic system contracted by 1.9% in 2020 

“Proper now, the state of affairs seems to be actually, actually dangerous,” Payenda mentioned. “It is on a freeze, as a result of all the things has collapsed, the banks have closed, you do not know the extent of it.”

In the previous couple of weeks, Afghanistan’s foreign money has slipped in worth, falling about 10% versus the US greenback. Within the week after the Taliban took management, it slipped from about 79 afghanis per greenback to 86 afghanis per greenback. 

“Nevertheless it’s as a result of most of those banks and cash suppliers are closed,” Payenda mentioned. “Possibly it should shoot as much as 200 per greenback in per week or two.” 

Rahmat Gul/AP Picture

After the Taliban took management of the nation, they put in their very own finance minister, Gul Agha Ishakzai, Reuters reported.

Ishakzai previously led the Taliban’s monetary fee, in line with the UN, which added him in 2010 to the record of individuals and teams who may face financial sanctions.

The UN Safety Council mentioned in a bulletin that Ishakzai had traveled overseas to purchase weapons, been concerned with accumulating cash for suicide assaults, and helped create new taxes for the Taliban. 

About half of the nation’s federal funds comes from exterior help organizations and international governments. Because the Taliban took over, the World Financial institution paused its aid to the nation.

The Worldwide Financial Fund likewise mentioned the nation could not entry tens of millions whereas there was a “lack of clarity” over whether or not the Taliban authorities can be acknowledged by the worldwide neighborhood.

“It should be not possible” with out international help, Payenda mentioned this week. Different officers have mentioned the nation’s economic system could also be weeks from collapse.

Payenda added: “Even in case you have the individuals and the workers, however the funding is stopped by the World Financial institution … how are you going to pay? It seems to be actually troublesome.”

The Taliban was additionally reportedly unable to get its palms on about $10 billion in central bank reserves as a result of a lot of the funds have been held in New York.

“Giving full entry to the reserves can be catastrophic,” Payenda mentioned. “You might be coping with a terrorist group which nonetheless offers with Al Qaeda and others.” Having that a lot cash at their disposal just isn’t good for the US or international safety, he added.