Economy on the brink, Taliban lean on former technocrats
KABUL, Afghanistan – When the Taliban took power, they saw the Afghan economy rapidly approaching the brink of collapse and faced heartbreaking predictions of growing poverty and hunger. So they ordered the CFOs of the collapsed former government to get back to work, with an urgent directive: do your job, because we can’t.
In the 20 years since the last Taliban rule, Afghanistan has grown from an economy focused primarily on illicit enterprises to a sophisticated multibillion-dollar system fueled by donor aid and international trade. The Taliban, a movement born out of the rural clergy, struggled to grasp the scale of the transformation.
Four employees of financial institutions told The Associated Press how the Taliban ordered bureaucrats from the previous government’s finance ministry, central bank and other state banks to return to work. Their accounts were confirmed by three Taliban officials.
“They told us: ‘We are not experts, you know what is best for the country, how we can survive in the face of these challenges'”, recalled an official of the state bank, who, like d others, requested anonymity as he was not authorized to speak on the case.
They told him: “Do what you must”, but warned: “God is watching you and you will be responsible for what you do on the day of judgment.”
Quietly, these technocrats advise the Taliban leaders in the management of the crippled financial sector. They tell them what to do and how to do it. But, as seasoned experts, they see no way out of Afghanistan’s economic quagmire: With billions of international funds frozen, the best they can muster in domestic revenue is $ 500-700 million, not enough to pay public wages or provide basic goods and services.
The Taliban are strengthening their relationships with local businessmen to keep them active, while leaders advocate for international recognition in meetings with foreign officials.
The Taliban’s seizure of power in mid-August saw most donor funds come to a screeching halt. These disbursements represented 45% of GDP and financed 75% of government spending, including public sector salaries. In 2019, total government spending was almost $ 11 billion.
With the ongoing drought, the United Nations predicts that 95% of the population will go hungry and that 97% of the country is at risk of falling below the poverty line.
The United States has frozen billions of dollars in reserves in accordance with international sanctions against the Taliban, eroding central bank and commercial bank liquidity and limiting their ability to conduct international transactions.
This has undermined international trade, a mainstay of the Afghan economy. Intermediary banks abroad are reluctant to engage in transactions due to the risk of sanctions. However, informal trade continues. The International Monetary Fund predicts that the economy will contract sharply.
At the Ministry of Finance and the central bank, almost daily meetings revolve around the purchase of basic products such as flour to fight hunger, the centralization of customs collections and the search for sources of income in a context critical shortage of household items. In Afghanistan, all fuel oil, 80% of electricity and up to 40% of wheat is imported.
The frustrations of technocrats are numerous.
Regardless of the dollars, there is not enough local currency, the afghani, in circulation, they said. They accuse the previous government of not printing enough before the fall of Kabul in August.
The corridors formerly animated by employees are quiet. Some ministry employees only show up once or twice a week; no one received a salary. A Donor Relations Department formerly had 250 members and dealt with up to 40 countries; today it has at best 50 employees, and a single interlocutor: the United Nations.
There are no women.
Many are increasingly enraged by the Taliban leadership.
âThey don’t understand the magnitude,â a ministry official said. “We had a $ 9 billion economy in circulation, now we have less than $ 1 billion.”
But he was quick to excuse them. “Why would I expect them to understand international monetary policy?” They are guerrilla fighters at heart.
Returning officials said the Taliban appeared sincere in their desire to root out corruption and provide transparency.
We don’t tell them everything. A well-kept secret of the Taliban is how much money is left in state coffers. Ministry and bank officials estimate it could be as low as $ 160 million to $ 350 million.
“They are very sincere about the country, they want to boost morale and create friendly relations with neighboring countries,” another bank official said. âBut they don’t have expertise in banking or financial matters. That’s why they demanded that we come back and do our job honestly.
Mawlawi Abdul Jabbar, an adviser to the Taliban government, said the returning experts are “with the government.” And they are working on financial matters to resolve these issues.
The Taliban are strengthening relations with businessmen who trade basic necessities with neighboring countries.
Taliban adviser Abdul-Hameed Hamasi is an active supporter of building trade relations. He was recently greeted warmly at the wedding of the son of prominent businessman Baz Mohammed Ghairat.
Ghairat factories process everything from cooking oil to wheat. Hamasi said the Taliban provided him with security, including permission to drive in armored vehicles, so that his transactions could continue.
But the central bank’s limits on withdrawals are Ghairat’s main concern. Without access to deposits, he cannot pay traders, he said.
Economic difficulties preceded the rise of the Taliban. Corruption and mismanagement were rampant in the old government.
In the first months of 2021, economic growth slowed and inflation accelerated. Drought has undermined agricultural production as fuel and food costs have skyrocketed.
The Taliban’s capture of border posts and transit centers before the fall of Kabul has exacerbated matters.
Government officials, teachers and civil servants had not received a salary for two to three months before the government collapsed. Many have sold household items or racked up debts with neighbors and relatives to make ends meet.
Sayed Miraza, an employee of the Ministry of Agriculture, arrived at the bank at 4 a.m. on a Saturday morning. People had already lined up to access their weekly withdrawal limit of 20,000 Afghanis, or $ 200.
Miraza’s account is empty. He came to pick up a Western Union transfer from a nephew in the United States. âWe ran out of food, so we had to ask for help,â he said. At 9 a.m. he was still waiting.
In a Kabul flea market, Hematullah Midanwal sells the items of people who are short of funds.
âSometimes they come with their entire living room, right down to the spoons,â he said.
Many hope to leave Afghanistan. If the opportunity presented itself, the technocrats who manage the country’s finances would also leave, said every person interviewed by the PA.
A central bank official said he was waiting for his asylum papers to travel to a Western country. âIf it comes, I’ll definitely leave. I would never work with the Taliban again.
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