Afghanistan’s central bank gets shipment of new banknotes

A Polish firm delivered Afghani banknotes to Kabul this week after the United States paved the way for the Da Afghanistan Bank to make a payment via international banking systems, a member of the bank’s supreme council told Reuters on Wednesday.

The payment represents a shift for Afghanistan’s central bank, which has been largely cut off from the international financial system since the Islamic Emirate of Afghanistan (IEA) came into power last year.

State news outlet Bakhtar also reported that the shipment arrived on Wednesday.

The Afghan central bank held a contract with a Polish company for the printing of its banknotes but had been unable until early July to begin payment, Reuters reported.

Without access to fresh banknotes for more than a year, Afghanistan’s cash has been deteriorating, with notes torn in shreds or held together with sellotape, exacerbating the country’s liquidity crisis.

“Afghanistan’s markets run primarily on cash, but existing banknotes are crumbling …The Central Bank will be able to replace old and damaged banknotes, and this will improve the Afghan people’s ability to purchase food and other necessary items,” a U.S. State Department spokesperson said.

Shah Mehrabi, a member of the Afghan central bank’s supreme council, said assurances to banks and companies by the U.S. Treasury that they would not be prosecuted for allowing a transaction by Afghanistan’s central bank had been instrumental.

“These transactions that were facilitated by the Treasury are welcomed by all Afghans,” Mehrabi said.

He said the banknotes began arriving on Tuesday. The contract was for notes valued at 10 billion Afghanis, mostly in small denominations. A second contract with a French company had been reached for a similar value.

A spokesperson for Afghanistan’s finance ministry told Reuters that new banknotes would be used solely by the central bank for replacing old notes, not to fund the budget.

Mehrabi said that the bank would release its financial statements to ensure the cash was accounted for.

He said the bank had agreed to be subject to third party monitoring and the U.S. Treasury had approved of an agency to carry out the monitoring.