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Afghan central bank drained dollar stockpile before Kabul fell

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The Afghan central bank ran down most of its U.S. dollar cash reserves in the weeks before the Taliban took control of the country, according to an assessment prepared for Afghanistan’s international donors, exacerbating the current economic crisis.

The confidential, two-page brief, written early this month by senior international economic officials for institutions including the World Bank and International Monetary Fund, said the country’s severe cash shortage began before the Islamic Emirate of Afghanistan (IEA) took control of Kabul, Reuters reported.

It criticised how the central bank’s former leadership handled the crisis in the months before the IEA’s conquest, including decisions to auction unusually large amounts of U.S. dollars and move money from Kabul to provincial branches.

“FX (foreign exchange) reserves in CB’s (central bank) vaults in Kabul have depleted, the CB cannot meet … cash requests,” the report, seen by Reuters, said.

“The biggest source of the problem is the mismanagement at the central bank prior to the Taliban (IEA) takeover,” it added.

Shah Mehrabi, chairman of the central bank’s audit committee who helped oversee the bank before the IEA took over and is still in his post, defended the central bank’s actions, saying it was trying to prevent a run on the local Afghani currency.

The extent of the cash shortage can be seen on the streets of Afghan cities, where people have been queuing for hours to withdraw dollar savings amid strict limits on how much they can take out.

Even before the shock of the Western-backed government’s collapse, the economy was struggling, but the return of the IEA and abrupt end of billions of dollars in foreign aid has left it in deep crisis.

Prices for staples like flour have spiralled while work has dried up, leaving millions facing hunger as winter approaches.

Aid dries up

Under the previous government, the central bank relied on cash shipments of $249 million, delivered roughly every three months in boxes of bound $100 notes and stored in the vaults of the central bank and presidential palace, according to three people with direct knowledge of the matter.

That money has dried up as foreign powers shy away from dealing directly with the IEA.

The central bank, which plays a key role in Afghanistan because it distributes aid from countries like the United States, said on Wednesday it had finalised a plan to meet the country’s foreign currency needs. It gave no details.

The hard currency crunch is making it difficult for the IEA to meet basic needs, including paying for power or dispersing salaries to government employees, many of whom have not been paid in months.

Afghanistan’s roughly $9 billion of offshore reserves were frozen as soon as the IEA captured Kabul, leaving the central bank with just the cash in its vaults.

According to the report, the central bank auctioned off $1.5 billion between June 1 and August 15 to local foreign exchange dealers, which it said was “strikingly high”.

“By August 15, the Central Bank had an outstanding liability of $700 million and 50 billion Afghanis ($569 million) towards the commercial banks,” it said, adding that this had been a major factor in emptying its coffers.

Afghan central bank official Mehrabi said, however, that although almost $1.5 billion of auctions had been announced, the actual amount sold was $714 million.

He said the central bank had “continued its foreign exchange auction to reduce the depreciation and inflation.”

Money missing?

The report also questioned a decision by the central bank to shift some of its reserves to provincial branches, putting it at risk as IEA forces made advances across the country from late 2020 in the runup to their victory.

It said around $202 million was kept in these branches at the end of 2020, compared with $12.9 million in 2019, and that the cash was not moved as provinces started to fall to the IEA.

“Some money is reportedly lost (stolen) from ‘some’ of the provincial branches,” the report said, without specifying how much.

Mehrabi said the central bank was investigating money “stolen” from three of its branches, although not by the IEA. He gave no further details.

Former central bank governor Ajmal Ahmady, who left the country the day after Kabul fell, did not respond to emails and other messages requesting comment on his and the bank’s actions in the months before the IEA returned to power.

Ahmady has said on Twitter in recent weeks that he did his best to manage the situation, and blamed any cash shortfall on the freezing of central bank assets abroad.

In his statements, he also said the central bank had managed the economy well prior to the fall of Kabul and that he felt bad about leaving staff behind but feared for his safety. He has said no money was stolen from any reserve account.

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Afghan women’s situation highlighted at SCO Forum amid ongoing global debate

She urged member states of the SCO to show solidarity with Afghan women and not remain indifferent to their situation.

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Afghanistan was at the center of discussions at the Shanghai Cooperation Organization (SCO) Women’s Forum in Bishkek, where former head of the UN Assistance Mission in Afghanistan (UNAMA), Roza Otunbayeva, described the situation of women in the country as a serious human rights concern.

Speaking at the forum, Otunbayeva said restrictions imposed on women and girls in Afghanistan demonstrate how a return to conservative policies can rapidly affect women’s daily lives and opportunities.

Otunbayeva, who previously served as head of UNAMA in Afghanistan, stated: “Today in Afghanistan, girls cannot receive education beyond sixth grade. Women are prohibited from working, visiting parks and gyms, and traveling without a male companion.”

She urged member states of the SCO to show solidarity with Afghan women and not remain indifferent to their situation.

According to her, women in Afghanistan urgently need support in education, employment, and social participation, and these issues should be addressed at both regional and international levels.

Her remarks come at a time when the situation of women in Afghanistan remains a subject of ongoing international debate.

Meanwhile, the Islamic Emirate of Afghanistan has repeatedly stated that women’s rights in the country are ensured better than ever before.

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CSTO says Tajik-Afghan border security still ‘complicated’

The Islamic Emirate of Afghanistan has repeatedly stated that Afghan territory will not be used against any country.

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The Collective Security Treaty Organization (CSTO) says the security situation along the Tajik-Afghan border remains “complicated,” citing ongoing concerns over militant activity in northern Afghanistan.

Viktor Vasilyev, chairman of the CSTO Permanent Council, said this week that instability in Central Asia continues to stem from threats posed by militants operating near Afghanistan’s northern border region.

Speaking at a forum in St. Petersburg, Russia, Vasilyev said member states plan to intensify joint efforts to counter militant groups that, according to Tajik and Chinese authorities, have carried out attacks on Chinese-backed business interests and other sporadic cross-border incidents affecting Tajikistan. Afghanistan’s ruling authorities have expressed regret over such incidents, but he said the security situation remains fragile in remote border areas.

“Despite Russia’s and several Central Asian countries’ efforts to establish contacts with the current authorities in Kabul, the security situation remains complicated,” Vasilyev said, calling it the CSTO’s main concern in the region, according to the Russian state news agency TASS.

He added that the bloc plans to expand coordinated operations, including efforts to “neutralize militant and extremist groups” that he said continue to accumulate along Afghanistan’s northern borders. He also described reported shelling of Tajik territory from Afghanistan as a “particular concern.”

The CSTO, which includes Russia, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan, and Armenia, has previously supported Tajikistan through military equipment and joint exercises aimed at strengthening border security along its 1,200-kilometer frontier with Afghanistan.

However, Armenia has suspended its participation in the alliance, citing dissatisfaction over CSTO inaction during past conflicts with Azerbaijan, and has instead pursued closer ties with Europe and the United States. The issue of Armenia’s status is expected to be discussed at the ongoing forum in St. Petersburg.

Vasilyev, a veteran Russian Foreign Ministry official, assumed the rotating CSTO chairmanship in January and is set to remain in the position until the end of 2026.

Meanwhile, the Islamic Emirate of Afghanistan has repeatedly stated that Afghan territory will not be used against any country and has assured that it will not allow any armed group to operate from Afghan soil against neighboring states.

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TAPI project sees rapid progress in Afghanistan

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Afghanistan’s Islamic Emirate says work on the TAPI Pipeline is advancing steadily, with major infrastructure activities continuing at a rapid pace across the country.

Zabihullah Mujahid said around 130 kilometers of the route have been leveled so far, while 91 kilometers of pipeline have already been installed.

He said the total distance from the border of Turkmenistan to the Herat Industrial Park covers 153 kilometers, where the pipeline will extend.

According to Mujahid, completion of the project is expected to bring major economic transformation to Herat, with thousands of factories projected to become operational.

The 1,814-kilometer pipeline, including 816 kilometers passing through Afghanistan to Pakistan, is designed to transport 33 billion cubic meters of gas annually. Work on the Afghan section began in September 2024, with 52 percent completed so far, while the Herat section is expected to be finished by the end of 2026.

Once operational, the project is expected to provide Afghanistan with millions of dollars in annual transit revenue, while the country will also receive 500 million cubic meters of gas initially, increasing to 1 billion and later 1.5 billion cubic meters in future phases.

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