Afghanistan on verge of economic collapse as cash crisis continues

KABUL:

Afghanistan

's already weak

economy

has taken a nosedive after the Taliban's takeover of

Kabul

last month, according to multiple reports.

Soon after the Taliban's siege of Kabul on August 15, foreign assistance was immediately frozen. Besides this, the US stopped USD 9.4 billion in reserves to the country's central bank, The New York Post reported.

Moreover, the International Monetary Fund and World Bank have also stoped loans, and the Financial Action Task Force warned its 39 member nations to block Taliban assets.

Scores of people have been seen waiting in long lines to withdraw their savings since the Taliban's takeover in August. Reports of freezing of Afghanistan's bank assets by the US as well as the announced halt of funds by the international agencies have fueled concerns among Afghans.

"With much of the international community refusing to recognize the Taliban regime, officially termed the Islamic Emirate of Afghanistan, hard cash is barely trickling in," Hollie McKay wrote in The Post. McKay said that currency has been crumbling and the financial crisis is fast morphing into a humanitarian catastrophe.

According to other experts, an informal economy may be the only way for Afghans, including the new government, to stay afloat. According to The Post, the Taliban themselves primarily relied on hawala to survive during their insurgency years.

Amid the worsening economic situation in the country, the United Nations has pledged more than USD 1 billion in aid for Afghanistan, warning that majority of the population could soon plummet below the poverty line.

Muhammad Suleiman Bin Shah, the deputy minister of commerce and industries in the last Afghan government said the country had a fragile economy before the takeover.

"Although there was a lot of (foreign) money thrown at it, very little time or attention was given to the economy and economic development in the last 20 years," said Bin Shah.

"Money was mostly spent on security and political issues. And right now, we are communicating anything in terms of trade and finance with the rest of the world. Whatever processes were started, even if they were moving at a snail's pace, they have stopped now."