The Taliban has banned the use of foreign currencies in Afghanistan, and advised the citizens to use the Afghani currency.
The Taliban announced, “The economic situation and national interests in the country require that all Afghans use Afghani currency in their every trade”.
The move to ban foreign currencies has come at a time when the country is already facing economic challenges owing to the withdrawal of international financial support after the Taliban took control.
The US dollar has been widely used in Afghanistan’s markets as well as in trade with neighbors such as Pakistan.
Taliban spokesman Zabihullah Mujahid issued a statement online saying, “The Islamic Emirate instructs all citizens, shopkeepers, traders, businessmen, and the general public to henceforth conduct all transactions in Afghanis and strictly refrain from using foreign currency”.
The statement further added, “Anyone violating this order will face legal action”.
Frozen assets and halted funds
Following the Taliban seizing control of the country in August, the US Federal Reserve along with the European central banks froze billions of dollars of Afghanistan’s overseas assets.
Earlier last month, Deputy United States Treasury Secretary Wally Adeyemo informed the US Senate Banking Committee, “We believe that it’s essential that we maintain our sanctions against the Taliban but at the same time find ways for legitimate humanitarian assistance to get to the Afghan people. That’s exactly what we’re doing”.
As the country is facing a cash crunch, the Taliban called for the release of Afghanistan’s assets.
Overseas grants contributed to three-quarters of the country’s public spending earlier. The lack of foreign aid has also caused a lot of challenges for Afghanistan.
Earlier this year, the International Monetary Fund (IMF) announced that its resources will no longer be accessible to Afghanistan. The World Bank also ceased funding for projects in the country.
Last month, IMF cautioned that Afghanistan’s economy could contract by 30% this year, forcing millions into poverty resulting in a humanitarian crisis.
IMF further added that the country’s economic woes could trigger a refugee crisis impacting countries including Turkey and Europe.
The country is also faced with a severe drought, which has destroyed much of its wheat crop and pushed prices higher.
The United Nations World Food Programme also warned that millions of Afghans could suffer starvation owing to a combination of the drought, conflict, and Covid-19.
The Western powers, however, have said that they want to avoid a humanitarian disaster in the country but they refused to officially recognize the Taliban government.