Afghanistan’s Economy on Brink of Collapse as Taliban Take Control

Economic Crisis Deepens Following Taliban Seizure of Power

Kabul, Afghanistan - The sudden takeover of power by the Taliban has sent Afghanistan’s economy into a tailspin. Long queues have formed outside banks and ATMs as people struggle to access cash, with the country’s internal banking system freezing up following the militant group’s August 15 coup.

International Aid Suspended

Foreign aid, which accounted for around 40% of Afghanistan’s GDP, has been suspended by Western powers. The World Bank and International Monetary Fund have halted payments, exacerbating the crisis. Da Afghanistan Bank (DAB), the central bank, holds reserves of around $9 billion, but most of this is held in US Treasury bonds and gold offshore.

Accessible Funds Limited

According to former governor Ajmal Ahmady, accessible funds for the Taliban are only 0.1-0.2% of Afghanistan’s total international reserves. “Not much” is available to the new government.

International Transfer Companies Suspend Services

International transfer companies Western Union and MoneyGram have suspended their services in Afghanistan, cutting off the supply of family money from abroad. This has left civilians without access to hard currency, with banks almost all closed.

Local Currency Loses Value

The local currency, the afghani, has lost most of its value, causing widespread desperation among citizens. People are sharing their experiences on social media, highlighting the severity of the crisis.

• “Gas is too expensive, all banks closed, other foodstuff shortage in Kabul stores, can’t find mobile top-up - and also afraid for our lives.” - A citizen’s tweet
• “The banks don’t have the currency. It doesn’t matter if you have afghani currency, because that money has lost most of its value. And the central bank, the resources, the assets that helped to really sustain the afghani currency have been frozen.” - Fawaz Gerges, professor of international relations at the London School of Economics

Confidence in Economy Plummets

Confidence in the Afghan economy has plummeted, leaving civilians reliant on foreign NGOs and humanitarian organizations.

Devastating Drought and Healthcare Crisis

Afghanistan is also facing a devastating drought, which has left around half of the country’s children malnourished. The Taliban takeover has exacerbated multiple crises that already existed, including high rates of poverty and a health system “at breaking point” due to the Covid-19 pandemic.

International Leaders Hope for Compromise

International leaders are hoping that the Taliban will want to prove they can govern effectively and compromise on foreign funding. G7 countries, including the UK and US, have substantial leverage with the Taliban, including withholding funds. The question remains whether the Taliban will be willing to compromise on their politics and ideology in order to get foreign funding reinstated.