IMF and Western Union suspends Afghanistan’s access to funds following Taliban takeover

The International Monetary Fund (IMF) has suspended Afghanistan from accessing funds following the Taliban’s takeover of the country last weekend.

Resources of over $370m (£268m) from the IMF had been set to arrive on 23 August. These funds were part of a global IMF response to the economic crisis in the country.

An IMF spokesperson said on Thursday, August 19, it was due to “lack of clarity within the international community” over recognising a government in Afghanistan.

Access to the IMF’s reserves in Special Drawing Rights (SDR) assets, which can be converted to government-backed money, have also been blocked. SDRs are the IMF’s unit of exchange based on sterling, dollars, euros, yen and yuan.

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

Also, in another development, Independent money transfer giant, Western Union also announced it had suspended money transfer services to Afghanistan “until further notice”.

Western Union said it’s service will not be used to finance terrorists activities by terrorists regimes.

The announcement by the IMF comes after an official from the Biden administration told the BBC that any central bank assets the Afghan government has in the US will not be made available to the Taliban.

Earlier, the head of Afghanistan’s central bank said the US had cut off access to its assets – around $7bn of which are held at the U.S. Federal Reserve.

Ajmal Ahmady, who fled the country at the weekend, tweeted that Da Afghanistan Bank’s total reserves were approximately $9bn as of last week.

However, he said as per international standards, most of this was held in safe, liquid assets such as US Treasury bonds and gold offshore.

“Given that the Taliban are still on international sanction lists, it is expected (confirmed?) that such assets will be frozen and not accessible to Taliban,”  Ahmady tweeted.

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

The Afghan currency, the Afghani, has fallen to record lows. Ahmady added that Washington’s suspended shipments of physical dollars were causing Afghanistan’s currency to depreciate.

“I believe local banks have told customers that they cannot return their dollars — because [Da Afghanistan Bank] has not supplied banks with dollars,” he tweeted.

“This is true. Not because funds have been stolen or being held in vault, but because all dollars are in international accounts that have been frozen.”