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The Taliban Have an Economic Crisis on Their Hands
Afghanistan‘s new leadership has some tough choices to make if they want to avoid hyperinflation
One of the first places the Taliban went when they entered Kabul in August was the country’s central bank. There, they asked to “inspect” the bank’s billions of dollars in foreign exchange reserves. Apparently, they expected to find those reserves stacked in old oil drums in the basement, the way Taliban field commanders kept the dollars they needed to buy weapons and pay bribes during the war. It was reportedly a big shock to find that central bank reserves existed only as electronic entries on the books of the Federal Reserve Bank of New York, and that the U.S. government was not keen to release them.
As a result of the blocking of reserves and a cutoff of aid, the Taliban, and the Afghan economy as a whole, are facing an economic crisis. There are shortages of everything, money included. It is not just dollars, which formerly circulated freely, that are in short supply. The local currency, the afghani, is also scarce and getting scarcer. Like many less-developed countries, Afghanistan does not print its own currency. Instead, afghani banknotes are printed in the UK, and the printer does not appear to be making new shipments.
