IMF puts hold on Afghanistan’s access to SDR reserves

Washington —  The International Monetary Fund said on Wednesday it had suspended Afghanistan's access to IMF resources, including about $455m in new monetary reserves, due to a lack of clarity over the country's government after the Taliban seized control of Kabul.

The IMF's announcement came amid pressure from the US treasury, which holds a controlling share in the IMF, to ensure that Afghanistan's share of a Special Drawing Rights (SDR) reserves allocation scheduled for Monday not fall into Taliban hands.

“There is currently a lack of clarity within the international community regarding recognition of a government in Afghanistan, as a consequence of which the country cannot access SDRs or other IMF resources,” an IMF spokesperson said in an e-mailed statement.

“As is always the case, the IMF is guided by the views of the international community,” the spokesperson added.

The IMF has traditionally relied on its membership to decide whether to engage with governments that take power in coups or disputed elections.

In 2019, the IMF suspended Venezuela’s SDR access after more than 50 member countries representing a majority of the IMF’s shareholding refused to recognise President Nicolas Maduro’s government following his disputed re-election. The IMF also suspended dealings with Myanmar after the military seized power in a February coup.

The IMF is due on Monday to complete a $650bn allocation of SDRs — the fund’s unit of exchange based on dollars, euros, yen, sterling and yuan — to its 190 member countries in proportion to their shareholdings in the IMF.

The increase in reserves is aimed at bolstering the balance sheets of poorer countries that have been severely strained by the coronavirus pandemic. Afghanistan, based on its 0.07% quota shareholding, stands to receive about $455m.

A US treasury official said earlier on Wednesday that the department was taking steps to prevent the Taliban from accessing the country’s SDR reserves.

The official, speaking on condition of anonymity, did not provide details on the specific actions being taken by the Treasury, which follow a letter from Republican legislators urging treasury secretary Janet Yellen to “intervene” at the IMF.

Reports said Washington also had blocked access to Afghanistan reserves in the US.

Even if Afghanistan were to regain access to the SDRs, it would be unlikely the Taliban could spend those resources because that would require another country to be willing to exchange the SDRs for underlying currencies, a transaction that would likely be blocked by long-standing US financial sanctions against the Taliban.

Reuters