Thursday, August 26, 2021

World Bank freezes Afghanistan aid after Taliban takeover

 

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The World Bank this week became the latest international organization to suspend financial aid to Afghanistan in the wake of the Taliban's sudden takeover.

"We are deeply concerned about the situation in Afghanistan and the impact on the country’s development prospects, especially for women," a World Bank spokesperson told FOX Business. The Washington-based organization plans to monitor how the leadership transition proceeds and consult with the international community and development partners.

The World Bank has committed more than $5.3 billion for development projects in the country since 2002. It also had another 15 projects with the Afghanistan Reconstruction Fund, a donor-funded trust administered by the bank. The fund has raised almost $12.9 billion from 34 donors, the World Bank said in April.

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The bank had committed $800 million to the country in 2021.

The Afghan government collapsed last week after nearly two decades of U.S.-backed rule, following a slow but steady military blitz by the Islamic militant group.


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Chaos in Kabul as Taliban takes control of Afghanistan

Since then, international groups, along with the U.S., have taken steps to limit the Taliban's cash access. The International Monetary Fund said last week it would prevent the Taliban from accessing nearly $500 million in aid. The IMF was slated to deliver a new allocation of assets, known as special drawing rights, on Aug. 23, with about $450 billion designated for Afghanistan.

"As is always the case, the IMF is guided by the views of the international community," an IMF spokesperson said in a statement. "There is currently a lack of clarity within the international community regarding recognition of a government in Afghanistan, as a consequence of which the country cannot access SDRs or other IMF resources."

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Cutting the Taliban off from the allocation follows a decision by the Treasury Department to freeze Afghan government reserves held in U.S. banks, essentially blocking the group from accessing billions of dollars in aid.

Treasury Secretary Janet Yellen and officials in the Treasury Department's Office of Foreign Assets Control made the decision. The State Department was also involved in discussions over the weekend, with White House personnel are monitoring the developments.

"Any Central Bank assets the Afghan government have in the United States will not be made available to the Taliban," an administration official told FOX Business.

About 80% of Afghanistan’s budget is funded by the U.S. and other international donors, John Sopko, the special inspector general for Afghanistan reconstruction, told Reuters in the spring.

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