The latest: In February, the board of the Swiss-based trust fund which is handling some $3.5 billion in frozen Afghan central bank assets met for a second time to discuss options for disbursing funds in line with achieving monetary stability in the country.
- The frozen central bank reserves were transferred from Washington into the “Fund for the Afghan People” last year where US officials say it will be shielded from the Taliban. The latter has condemned the transfer, calling it a violation of international norms.
- Trustee Shah Mehrabi, a US academic who also remains on the Afghan central bank’s Supreme Council, said a meeting of the four trustees was held virtually last month.
- He said that the meeting was held to carve out necessary steps to disburse funds and potential options for achieving monetary stability.
- Mehrabi said he believed the funds should only be used for achieving monetary stability and reducing volatility in Afghanistan’s exchange rate. He said he was against the funds being used to make payments for electricity, paying off Afghanistan’s loans at multilateral institutions and other payments the state should be responsible for.
- He said one way to achieve price stability, if needed in future, was to engage in foreign exchange auctions to sell dollars and take some of the Afghani currency out of circulation, which would help keep inflation in check.
- Mehrabi said the board had also agreed at the meeting to seek external funding to cover the fund’s operational and administrative expenses so that the costs of running it would not eat into the assets.
- He said the funds transferred last year by the United States had included an extra $36 million in interest earned since they were frozen in 2021. Since the transfer in September, they had earned an additional $34 million in interest as of the end of January.
Back story: The US in cooperation with the Swiss authorities have established a trust fund for the $3.5 billion Afghan assets which is half of the $7 billion in reserve of the New York Banks.
- Taliban’s foreign affairs ministry in September condemned the United States’ decision to transfer Afghan central bank reserves into a Swiss-based trust, saying it was against international norms.
- The board of trusties include two Afghans, Shah Mahmood Mehrabi, who is also a member of Da Afghanistan Bank’s supreme council and former Minister of Finance, Anwar ul-haq Ahady as well two representatives from the US and Swiss.
- Mehrabi, said that the $3.5 billion in Afghan assets, which was transferred to the Bank for International Settlements, has made $8.5 million in interest.
Zoom out: The Taliban’s Ministry of Economy said that the Afghan assets should be transferred to their government in Afghanistan.
- “The Afghan assets and the interest earned from the $3.5 billion should be given to the Taliban,” said Abdul Latif Nazari, deputy Minister of Economy.
- On November 2022, the board of a Switzerland-based trust fund, which is in charge of disbursing billions of dollars of assets belonging to Afghanistan, had met for the first time in Geneva.
- Many people have criticised the US for politicising the funds against the Taliban despite the fact that it was the terror group, Al Qaeda, that was actually behind the 9/11 attacks.