The International Monetary Fund (IMF) Suspends Afghanistan’s Access to Fund

The International Monetary Fund (IMF) has said Afghanistan will no longer be able to access the lender’s resources.

The International Monetary Fund said on Wednesday that Afghanistan will not be able to access IMF resources, including a new allocation of Special Drawing Rights reserves, due to a lack of clarity over the recognition of its government after the Taliban seized control of Kabul.

The IMF’s announcement came amid pressure from the U.S. Treasury, which holds a controlling share in the Fund, to ensure that Afghanistan’s share of a Special Drawing Rights reserves allocation scheduled for Monday does not fall into Taliban hands after the Taliban’s takeover of Afghanistan last week.

An IMF spokesperson said it was due to a “lack of clarity within the international community” over recognizing a government in Afghanistan is the reason why the country cannot access either SDRs or IMFs funds.

Resources of over $370m (£268m) from the IMF had been set to arrive on 23 August.

These funds were part of a global IMF response to the economic crisis.

Access to the IMF’s reserves in Special Drawing Rights (SDR) assets, which can be converted to government-backed money, have also been blocked. SDRs are the IMF’s unit of exchange based on sterling, dollars, euros, yen, and yuan.

Earlier this month, The Board of Governors of the IMF has approved a general allocation of Special Drawing Rights (SDRs) equivalent to US$650 billion (about SDR 456 billion) on August 2, 2021, to boost global liquidity.

The general allocation of SDRs will become effective on August 23, 2021. The newly created SDRs will be credited to IMF member countries in proportion to their existing quotas in the Fund.

In 2019, the IMF suspended Venezuela’s SDR access after more than 50 member countries representing a majority of the Fund’s shareholding refused to recognize President Nicolas Maduro’s government following his disputed re-election. The IMF also suspended dealings with Myanmar after the military seized power in a February coup.

The decision to increase reserves is aimed at strengthing the balance sheets of poorer countries that have been severely strained by the coronavirus pandemic.

Related Articles

Leave a Reply

Your email address will not be published.

Back to top button