8 votes

A painful trade shock is coming to Afghanistan

1 comment

  1. skybrian
    (edited )
    From the article: […] […]

    From the article:

    […] demand for electricity increased rapidly over the last fifteen years, and production has yet to catch up. Instead, it relies heavily on imported electricity from neighbors like Uzbekistan.

    Finally, Afghanistan imports most of its medicine and medical supplies. Last year, Afghanistan’s public health minister, Ahmad Jawad Osmani, reportedly said that Afghanistan imports $400 to $600 million worth of medicine each year. For years, experts have lamented Afghanistan’s failure to develop its domestic capacity to manufacture pharmaceuticals. Now the nation could be forced to drastically scale back its use of medicine.


    More than 300,000 civilians worked in some capacity for the United States. These were exporters, of a sort, providing the country with more currency reserves. So too were people who did any kind of paid work for foreigners staying in the country; even if it was something as simple as providing them with a meal.

    Most of this is going away. Foreigners are withdrawing, and most or all of their money will leave with them. Overall, Afghanistan is about to lose access to a substantial amount of foreign currency—very quickly.


    Ahmady writes that [Afghanistan’s central bank] held about $9 billion in dollars or other assets that are easily traded globally and hold purchasing power outside of Afghanistan.

    Critically, most of those assets are held in New York, where the DAB has electronic accounts with large institutions like the Federal Reserve. There are no vaults holding billions in physical cash. That would be inelegant and dangerous, especially in a country like Afghanistan.

    Ahmady predicted, correctly, that the U.S. government would freeze those assets as the government collapsed. The U.S. position is clear: “any central bank assets the Afghan government have in the United States will not be made available to the Taliban,” a U.S. official told the BBC. Other institutions where the DAB had assets, such as the IMF, followed suit.

    5 votes