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A member of Taliban (centre) stands outside Hamid Karzai International Airport in Kabul, Afghanistan, August 16 2021. Picture: REUTERS/STRINGER
A member of Taliban (centre) stands outside Hamid Karzai International Airport in Kabul, Afghanistan, August 16 2021. Picture: REUTERS/STRINGER

London —  The Taliban took over Afghanistan with astonishing speed, but it may be unlikely that the militants will get quick access to most of the Afghan central bank’s roughly $10bn in assets.

The country’s central bank, Da Afghanistan Bank (DAB), is believed to hold foreign currency and gold, among other things,  in its vaults, according to an Afghan official.

However, most of the assets are held outside Afghanistan potentially putting most of them beyond the Taliban’s reach, according to Afghan officials, including the bank’s acting governor, Ajmal Ahmady, who has fled Kabul.

“Given that the Taliban are still on international sanction lists, it is expected that such assets will be frozen and not accessible to Taliban,” Ahmady said in a Twitter thread on Wednesday.

“We can say the accessible funds to the Taliban are perhaps 0.1%-0.2% of Afghanistan’s total international reserves. Not much,” he added.

The Taliban said on Saturday that the Treasury, public facilities and government offices were the property of the nation and “should be strictly guarded”.

The most recent financial statement posted online shows the DAB holds total assets of about $10bn, including $1.3bn worth of gold reserves and $362m in foreign currency cash reserves, based on currency conversion rates on June 21, the date of the report. Ahmady estimated total reserves stood at $9bn last week.

Central banks, especially in developing nations, often hold their assets overseas with institutions such as the Federal Reserve Bank of New York or the Bank of England.

The DAB’s consolidated statement showed that the New York Fed holds gold bars worth $1.32bn on behalf of the Afghan central bank in its vaults by end-2020.

The DAB’s June statement also states the bank owned investments worth $6.1bn. The June report did not provide details of those investments, but a breakdown in the year-end report showed the majority were in the form of US treasury bonds and bills.

Investments were made through the International Bank for Reconstruction and Development (IBRD), an arm of the World Bank, or through the New York Fed and held in New York. Among its smaller items are shares in an investment pool by the Bank for International Settlement (BIS), which is based in Switzerland, as well as the Economic Co-operation Organisation Trade and Development Bank in Turkey.

“As per international standards, most assets are held in safe, liquid assets such as treasuries and gold,” Ahmady said on Twitter, confirming assets were all held at the Fed, BIS, through the World Bank programme or other bank accounts.

Asked about the holdings, a New York Fed official said the bank does not acknowledge or discuss individual account holders, but is in contact with US government agencies to monitor events that may impact control of a foreign central bank.

“Any central bank assets the Afghan government have in the US will not be made available to the Taliban,” an official in the Biden administration said. 

The DAB’s foreign currency cash holdings, worth about $362m  in US dollars, were held at the bank’s head office and branches, as well as the presidential palace, which is now in the Taliban’s hands.

The DAB’s year-end statement also details that just under $160m worth of gold bars and silver coins were held at the bank’s vault at the presidential palace.

The central bank’s vaults also contain a hoard of 2,000-year-old gold jewellery, ornaments and coins known as the Bactrian Treasure, according to Unesco. The roughly 21,000 artefacts were presumed lost until 2003, when they were found in a secret vault in the central bank’s basement, having survived the previous era of Taliban rule undiscovered.

Afghan legislators in January floated the idea of sending the treasures abroad for safe keeping, warning they were vulnerable to theft, local broadcaster Tolo News reported.

The International Monetary Fund (IMF) estimated the Afghan central bank’s international reserves at $9.5bn in 2021 in its latest review published in June.

This translates into import cover of more than 15 months — well above the three months seen as a safe minimum.

A question will be the handling of Afghanistan’s share of a pending $650bn allocation of Special Drawing Rights (SDRs) currency reserves to the IMF’s 190 member countries on August 23.

This distribution of SDRs, the IMF’s unit of exchange based on dollars, euros, yen, sterling and yuan, aims to shore up the reserves of developing countries strained by the Covid-19 pandemic. As an IMF member Afghanistan is eligible for an allocation of about $455m, based on its 0.07% quota shareholding in the IMF.

The Taliban gaining access to those assets would be hard to digest in capitals around the globe, but not all countries have access to the SDRs they are allocated.

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 Nicolas Maduro’s government.

The fund has not responded to a request for comment on the pending SDR allocation to Afghanistan.

A source familiar with the matter said that IMF actions in such cases are guided by the views of its members. 

A group of 18 Republican US legislators  urged treasury secretary Janet Yellen in a letter to intervene at the IMF “to ensure that no allocated SDRs are made available to a Taliban-led Afghanistan”, requesting an update on the situation by Thursday.

The IMF membership also has not reached a consensus on whether to recognise Myanmar’s military leadership since they seized power in February.

“Not sure if that allocation will now proceed with respect to Afghanistan,” said acting central bank governor Ahmady.

Reuters 

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