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Home POLITICS In Taliban Afghanistan, Nearly Bankrupt Central Bank Somehow Still Works: NPR

In Taliban Afghanistan, Nearly Bankrupt Central Bank Somehow Still Works: NPR

People sit outside a bakery, waiting for someone to buy them bread, in Kabul in July.

Claire Harbage/NPR


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Claire Harbage/NPR


People sit outside a bakery, waiting for someone to buy them bread, in Kabul in July.

Claire Harbage/NPR

A recent visit to Afghanistan showed a country facing an economic crisis. The banking system has been paralyzed, credit cards do not work. Afghans abroad struggle to send money to relatives back home.

Under the leadership of the Taliban, who took power a year ago, many government agencies function and also collect taxes to pay government workers; but times are tough for many. Women sit outside bakeries, hoping someone will buy them bread. Many people, especially women, have lost their jobs. As an NPR crew drove through slow-moving traffic in Kabul, children followed our vehicle asking for money; once a girl climbed on the running board and refused to get down.

In the field we met Sherif Nazari, 55, who said he once worked as a highway engineer. He is now unemployed and no one is repairing the road near his house, which was battered during 20 years of war. Nor is anyone rebuilding the adobe-walled houses in his village, many of which were destroyed during the fighting. It is hard to imagine where the funds would come from.

Heavy inflation has eroded the value of the currency, the Afghan, and the central bank, which is in charge of fighting inflation, can’t do much about it. Under the previous government, Da Afghanistan Bank deposited billions of dollars in cash, US Treasury bonds, and gold in the United States. But when the Taliban seized power a year ago, the Biden administration froze assets. The officials said they did not want the militant group to seize and misappropriate the money in the same way it seized US-made weapons.

A year later, the assets are on the books and even in the storage rooms of the Federal Reserve Bank of New York. President Biden diverted $3.5 billion of the money to potentially pay families of 9/11 victims who have been fighting in court for a share of the funds. Some of the money went to Afghan humanitarian aid, and the future status of at least another $3.5 billion is unclear.

Shah Mohammad Mehrabi, who is a member of its supreme council or board of directors, gave us an insight into the current condition of the bank. Mehrabi was appointed by the previous Afghan government. He remains on the job under the new rulers. Mehrabi continues his work even though he lives outside of Washington, DC and hasn’t been to Afghanistan since the change of power.


A man buys snacks from a street vendor in Kabul in July.

Claire Harbage/NPR


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Claire Harbage/NPR


A man buys snacks from a street vendor in Kabul in July.

Claire Harbage/NPR

Mehrabi contends that Da Afghanistan Bank once did a respectable job of keeping inflation in single digits despite years of war. But inflation has skyrocketed since the Taliban took power; an analysis finds that the price of basic goods has risen 43% in a year, and the value of the currency, the Afghan, continues to fall.

The currency has not plummeted to the levels of the previous Taliban regime, when a single meal could cost 600,000 Afghans and a necessary skill of daily life was quickly counting giant piles of cash. But savings and salaries are worth much less than in 2021.

“The bank has money,” he said, “but not enough to be able to perform the necessary function of the central bank.”

However, Mehrabi says that bank branches are still open despite the lack of liquidity.

“The Taliban have not really interfered,” he said. He chairs the board’s audit committee, which has overseen the work of auditors who travel to bank offices across the country.

“The audit department had a lot of security problems during the previous administration,” he said, but now that the Taliban who once tried to kill the auditors are in charge, “that security problem is gone.”

A year after the Taliban took power, neither the US nor any other nation has recognized the Taliban government, and some of its officials are under US sanctions for extremist acts. The United States wants guarantees that the central bank will be fully independent of the Taliban.


People buy fruits and vegetables from street vendors in Kandahar in August.

Claire Harbage/NPR


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Claire Harbage/NPR


People buy fruits and vegetables from street vendors in Kandahar in August.

Claire Harbage/NPR

While the Biden administration has taken several steps to get the money flowing, especially for humanitarian aid, Mehrabi argued that “no increase in humanitarian aid can offset the macroeconomic damage of rising commodity prices.”

He acknowledged that the US concerns are “legitimate” and said that in order to resume normal functions, the bank would need “constant supervision” and rebuild its professional staff.

Some staff members have left the country. And the Taliban sent the employees home. “The United States spent a lot of money in terms of educating these people,” she said, adding that his departure left a “void” to be filled.

The shortage of central bank funds is far from Afghanistan’s only banking problem. Private banks have had trouble doing business with foreign banks, which fear possible entanglement with US sanctions against the Taliban. This has complicated both remittances and day trading.

“The isolation of the international financial system will have to end,” Mehrabi warned. He said the country’s poverty will only worsen in the harsh winter months ahead.

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