When the Taliban stormed to power in Afghanistan, they found the country’s economy on the verge of collapse, with dire forecasts of rising poverty and starvation. So they sent an urgent message to the finance managers of the defunct old government, telling them to “do your jobs” since they couldn’t.
Afghanistan has progressed from an economy based primarily on illegal activity to a sophisticated, multibillion-dollar system powered by donor money and international trade in the 20 years since the Taliban last governed. The Taliban, which arose from the rural clerics, failed to comprehend the magnitude of the change.
The Taliban ordered bureaucrats from the former government’s Finance Ministry, central bank, and other state-owned banks to return to work, according to four workers from financial institutions who spoke to The Associated Press. Three Taliban officials corroborated these claims.
“They told us, ‘We are not experts, you know what is better for the country, you know how we can live under these circumstances,'” remembered one state bank official, who, like others, spoke on the condition of anonymity because he was not allowed to talk on the record.
“Do what you must,” they said, but added, “God is watching you, and you will be held accountable for your actions on Judgment Day.”
These technocrats are quietly counseling the Taliban leadership on how to handle the country’s damaged banking system. They instruct them on what they should do and how they should accomplish it. However, as seasoned professionals, they see no way out of Afghanistan’s economic quagmire: with billions in foreign funding frozen, the most they can come up with in domestic income is $500 million to $700 million, which is insufficient to pay public salaries or supply essential commodities and services.
The Taliban are bolstering their ties with local businesspeople in order to keep their operations afloat, while the leadership makes its case for worldwide recognition in talks with foreign authorities.
Following the Taliban’s takeover of power in mid-August, most donor money came to a standstill. These payments accounted for 45 percent of GDP and covered 75 percent of state spending, including salaries in the public sector. In 2019, the federal government spent about $11 billion.
With the prolonged drought, the UN forecasts that 95 percent of the people would go hungry, with up to 97 percent of the country at risk of falling into poverty.
In accordance with international sanctions against the Taliban, the US froze billions in dollar reserves, depleting the liquidity of both the central bank and commercial banks and limiting their capacity to conduct international operations.
This has harmed foreign commerce, which is an important part of the Afghan economy. Because of the danger of sanctions, foreign intermediary banks are hesitant to participate in transactions. Informal trade, on the other hand, persists. According to the International Monetary Fund, the economy will decline significantly.
Near-daily discussions in the Finance Ministry and central bank center upon obtaining basic necessities such as wheat to combat hunger, centralizing customs collecting, and identifying income streams in the face of acute shortages of household items. All fuel oil, 80% of power, and up to 40% of wheat are imported into Afghanistan.
The complaints of the technocrats are numerous.
They said that there isn’t enough of the native currency, the afghani, in circulation to compensate for the lack of dollars. They attribute this to the previous government’s failure to issue enough currency before to the fall of Kabul in August.
The once-bustling halls are now deafeningly quiet. Some ministry employees just come up once or twice a week, and no one is paid. A department in charge of donor relations used to have 250 members and worked with up to 40 nations; currently it has no more than 50 workers and just one interlocutor: the United Nations.
There are no ladies in this world.
Many people are becoming increasingly frustrated with the Taliban’s leadership.
One ministry official stated, “They don’t grasp the enormity.” “We used to have a $9 billion economy, but now we’re down to less than $1 billion.”
He, on the other hand, was eager to forgive them. “Why should I expect them to comprehend international monetary policy?” says the author. At their core, they are guerilla fighters.”
The Taliban appear sincere in their desire to weed out corruption and provide transparency, according to the returning government personnel.
They aren’t given all of the information. The amount of money in the Taliban’s treasury is a tightly guarded secret. Officials from the ministry and the bank anticipate the cost to be between $160 million and $350 million.
Another banking official added, “They are really passionate about the country; they want to raise morale and build positive connections with neighboring countries.” “However, they lack competence in banking and financial matters.” That’s why they asked us to come back and perform our jobs honestly.”
The returning specialists are “with the administration,” according to Mawlawi Abdul Jabbar, a Taliban government aide. They’re also addressing the financial concerns that are causing these challenges.”
The Taliban are bolstering ties with local businesspeople who trade in essential products with neighboring nations.
Taliban advisor Abdul-Hameed Hamasi is a strong supporter of forming commercial relationships. At the wedding of famous businessman Baz Mohammed Ghairat’s son, he was recently received with a loving embrace.
Everything from cooking oil to wheat is processed at Ghairat’s facilities. Hamasi said that the Taliban were giving him with protection, including the ability to drive in bulletproof cars, so that he could continue his business.
Ghairat, on the other hand, is concerned about central bank withdrawal limitations. He claims he can’t pay traders because he doesn’t have access to money.
The Taliban’s ascent was preceded by economic difficulties. The old regime was rife with corruption and incompetence.
Economic growth stagnated and inflation increased in the early months of 2021. Drought hampered agricultural productivity, as fuel and food prices skyrocketed.
The Taliban’s seizure of border checkpoints and traffic hubs in the run-up to Kabul’s fall aggravated the situation.
Before the administration dissolved, government officials, schoolteachers, and public workers had been without pay for two to three months. To make ends meet, many people sold their belongings or accrued loans with neighbors and relatives.
An Agriculture Ministry official named Sayed Miraza came at the bank at 4 a.m. on a Saturday morning. People have already formed lines to withdraw their weekly allotment of 20,000 afghanis ($200).
Miraza’s account is now inactive. He had come to collect a Western Union transfer from a nephew in the United States. “We ran out of food and had to seek assistance,” he explained. He was still waiting at 9 a.m.
Hematullah Midanwal sells the belongings of individuals who have run out of money at a Kabul flea market.
“They sometimes bring their complete living rooms, down to the spoons,” he explained.
Many Afghans wish to flee the country. Every single person questioned by the AP indicated that if given the option, the technocrats in charge of the country’s finances would likewise depart.
According to one central bank officer, he is awaiting his asylum documents in order to travel to a Western nation. “I’ll surely leave if it arrives.” I’d never collaborate with the Taliban again.”