Reports this week indicate the Afghan economy is not faring well under Taliban domination, thanks to a combination of public terror, Taliban mismanagement, and the termination of foreign aid programs that were propping up civil services.
Germany’s Deutsche Welle (DW) reported on Tuesday that Kabul residents are “reeling from a severe shortage of cash as banks remain shuttered and remittances from abroad dry up.”
Cash flow is especially dire for average citizens:
ATMs across the city are empty and money exchange is unavailable amid uncertainty surrounding exchange rates and fears of looting.
“The situation with the banks is very bad. People queue up in front of banks, but they remain closed. No one has access to banks, especially in Kabul,” Said Imam, a resident of the Afghan capital, told DW.
“Some people haven’t been paid for more than a month. Government servants and teachers didn’t receive their salaries. People are running out of cash with their savings locked up in banks.”
According to DW, Afghanistan’s banks are collapsing because the U.S., European Union, World Bank, International Monetary Fund, and other entities have frozen Afghanistan’s assets to keep them away from the Taliban. The Taliban has offered no solutions to this problem despite its increasingly desperate pleas with the world to take it seriously as a functional government.
Wire transfer services like Western Union have also suspended operations in Afghanistan, cutting off remittances from family abroad, a flow of cash worth $790 million and equivalent to about four percent of the impoverished country’s Gross Domestic Product.
“We recognize that our services provide a vital channel for our customers to support their loved ones, and we will continue to closely monitor this rapidly developing situation and keep our customers and associates apprised of any developments,” Western Union said last week.
The BBC declared a full-blown “crisis” in Afghanistan on Wednesday, describing an “economy on the brink of collapse, which threatens to worsen an already devastating humanitarian crisis.”
The BBC noted that fully 40 percent of Afghanistan’s GDP was the result of foreign aid, and quoted Ajmal Ahmady, former governor of the Afghan central bank estimating that only “0.1 to 0.2 percent” of the national money reserves would be available to the Taliban.
Ahmady doubted the Taliban would be able to replace all that lost revenue with profits from illegal mining, taxing trade routes, or the opium trade.
“Taliban revenues from such sources could be considered relatively large when only running an insurgency campaign. They are wholly inadequate to operate a functional government,” he said.
The BBC highlighted one melancholy indicator of the economic collapse in Kabul: landlords begging their tenants to stay in their properties without paying rent, because they fear the Taliban will seize their property if the buildings are unoccupied.