INT'L BIZ
IMF PUTS EMBARGO ON FUND ACCESS AMID TALIBAN TURMOIL
A
mong other major steps by the International Monetary Fund, the IMF had said that it had out embargo on the access of IMF resources like: a sum of about USD 440 million in new monetary reserves. It all happened soon after the Taliban seized control of Kabul. The situation however caused uncertainty over the existence of the government. Recent announcement of the IMF came amid pressure from the US Treasury that holds a controlling share in the Fund to ensure that the share of Afghanistan, a Special Drawing Rights reserves allocation scheduled for Monday, does not fall into the hands of Taliban. In a statement through email, an IMF spokesperson said, “At present there is an uncertainty of any systematic establishment within the international community, especially regarding recognition of a government in Afghanistan. As a result of which the country cannot access SDRs or other IMF resources”. He added that as was always the case, the IMF is guided by the views of the international community. The Fund has usually relied on its membership to make a decision whether to engage with governments that take power in coups or disputed elections. Noticeably, the IMF had in the year 2019 suspended, the SDR access of Venezuela when altogether 50 member countries representing a majority of the Shareholding of fund had refused to recognize the government of President Nicolas Maduro following his disputed re-election. The IMF also put an embargo in dealings with Myanmar after the military seized power in a February coup. Very soon, the organization has planned to complete a USD 650 billion allocation of SDRs – the unit exchange of fund based on dollars, euros, yen, sterling
because of the deadly Coronavirus over the past two years. The IMF spokesperson said that on behalf of Afghanistan, the IMF would allocate almost 310 million SDRs. It would be valued at about USD 440 million based on SDR exchange rate set up.
The growth in reserves is focused at bolstering the balance sheets of those poorer nations that have seriously strained because of the deadly Coronavirus over the past two years
“The department is taking proper action to prevent the Taliban from accessing the SDR reserves of the country”, a US Treasury official said. While speaking on the condition of anonymity, the official did not provide details on the specific actions being taken by the Treasury. It all followed a letter from Republican lawmakers that used Treasury Secretary Janet Yellen to ‘intervene’ at the IMF to ensure that no IMF Special Drawing Rights are made available to the Taliban.
and yuan - to its 190 member nations in proportion to their shareholdings in the Fund. The growth in reserves is focused at bolstering the balance sheets of those poorer nations that have seriously strained
Although, Afghanistan was to regain access to the SDRs, it would be unlikely the Taliban could spend those resources because that would need another country to be willing to exchange the SDRs for underlying currencies, a transaction that would likely be blocked by long-standing US financial sanctions against the Taliban. The United States and Afghan authorities have said that most of the Afghan central bank’s nearly USD10 billion in assets are held outside Afghanistan, likely putting them beyond the reach of insurgents. A Biden administration official said previously that any Afghan central bank assets held in the United States would not be made accessible to the Taliban. The national security adviser of White House, Jake Sullivan, had on August 18, 2021 said that it was too soon to determine whether the United States would recognize the Taliban as the legitimate governing power in Afghanistan. He also stressed on the rampant ‘chaotic situation in Kabul’.
September 2021
DAWN 63
