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Afghanistan facing Cash Crisis, Economic Slowdown

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Followed by the Taliban takeover of Afghanistan, the country’s already fragile economy has taken a setback with several international financial institutions withdrawing their funds.

Read further for details.

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The Taliban is facing difficult challenges a month after conquering Kabul, as they try to turn their rapid military success into a long-term peaceful government. Afghans are concerned about reports stating that the US has frozen Afghanistan’s bank assets and that international agencies have announced a funding suspension.

A Halt on International Aid

Foreign aid into the country was immediately halted with the Taliban seizing Kabul on August 15. The US also halted USD 9.4 billion in reserves to the country’s central bank, according to The New York Post. In addition, the International Monetary Fund and World Bank have suspended lending. The Financial Action Task Force has also issued a warning to its 39 member countries to freeze Taliban assets.

Pre-Existing Challenges

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Drought and famine are compelling tens of thousands of people in Afghanistan’s countryside to flee to cities. As reported by Reuters, the World Food Programme has expressed concerns about food shortages. Food resources could likely run out by the end of this month. This could put up to 14 million people on the verge of starvation.

Uncertainty Among Citizens

With diminishing reserves causing a severe cash crisis, the country has set weekly cash withdrawal limits at $200 (20,000 in Afghan currency). However, people are continuing to gather in long lines outside banks. Across Kabul, impromptu markets have sprung up despite the scarcity of consumers, for residents to sell home goods for cash.

UN Promises Help

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The United Nations has offered more than USD 1 billion as financial aid to Afghanistan, despite the country’s worsening economic circumstances. The international body has warned that the majority of the population could soon fall below the poverty line.

Furthermore, there has been widespread suspicion regarding senior government figures, like the new Interior Minister Surajiddin Haqqani. Haqqani has a $10 million bounty on his head after being labelled as a global terrorist by the US.

Officials claim that the government is attempting to restore services and that the streets are now safe. But as the battle draws to a close, resolving the economic situation will become a bigger issue for the country’s future.

Click here to read more news at the DU Express.

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