KABUL, Afghanistan – In a letter to United States President Joe Biden on Wednesday, more than 70 economists and experts, including Nobel Laureate Joseph Stiglitz, urged Washington to release Afghanistan’s central bank assets, according to reports.
The letter, also addressed to US Treasury Secretary Janet Yellen, was signed by 71 economists and academic experts, many based in the United States as well as Germany, India and the United Kingdom.
Among those who organized the letter was Yanis Varoufakis, the former Greek Minister for Finance; and Joseph Stiglitz, a recipient of the Nobel Memorial Prize in Economic Sciences (2001) and is on the advisory board to the Washington-based think tank, the Center for Economic and Policy Research.
They urged foreign capitals needed to return the roughly $9 billion in Afghan central bank assets to Da Afghanistan Bank (DAB) to allow the economy to function.
“In order to mitigate the humanitarian crisis and set the Afghan economy on a path toward recovery, we urge you to allow DAB to reclaim its international reserves,” Reuters said, quoting the letter.
According to the letter, Afghanistan’s economy has plunged deep into crisis since the Islamic Emirate took over Afghanistan amid foreign troops withdrawal from the country.
Economists believe the country is severely hampered by the inability of its central bank to function without access to its reserves, with DAB officials saying it has the ability to manage well if the frozen assets of Afghanistan are released.
“This is Afghans’ money, we are prepared for a third department to oversee it, and we are aware of its uses,” said Lutfulhaq Noor Pesarlai, a senior advisor of the bank, as TOLOnews quoted.
“What more can you say about the central bank’s independence,” he question? “We totally agree with the investigation of money and its use in accordance with the law, the financing of terrorism, and the application of the drug legislation.”
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Since the takeover last August, nearly seven billion dollars of Afghan assets are kept in the United States of America, and half of this money is waiting for the court’s decision on whether it will be handed over to the victims of the 9/11 attacks or not, according to the report.
But some economists argue that the Afghan reserve should not be spent on government expenses.
“Foreign reserves greatly benefit a nation, especially the central bank, in terms of exchange rate risk,” said Siyar Quraishi, an economist. “There is no need to exchange one’s own currency with a reserve currency to conduct transactions.”
“One thing is clear, though—and this is connected to how the usage of nine billion dollars is managed—it will really have its effects on the Afghan economy, but short-term,” said Sayed Masoud, another economist.
Da Afghanistan Bank (also known as the Afghan central bank) funds have been frozen in thirteen banks and eight countries since the collapse of former government, paralyzing its operations that regulate all banking and money handling in Afghanistan.
Afghanistan Economy in a Glance
The ongoing political crisis since the takeover last August has “hit hard” private sectors in Afghanistan, where businesses were halted and put to uncertainty, according to a latest survey conducted by the World Bank.
Due to shortage in sells, private companies have laid off more than a half of their employees on average, a rising concern on unemployment rate in the country.
“The majority of surveyed businesses reported a drastic decline in consumer demand for their products and services and have been forced to scale back operations, reduce investments, and lay off employees,” the report said.
According to the survey, small enterprises have been hit hardest with about 38 percent of them seizing operation, comparing to a 25 percent among medium and 35 percent among large businesses in the country.
The finding shows Afghan domestic inputs have become more expensive and yet difficult to obtain due to supplier closure and supply chain disruptions, which all lead to price inflation since the beginning of political uncertainty.