WASHINGTON — The World Bank is suspending all funding to projects in Afghanistan, citing questions of the legitimacy of the Taliban regime.
“We have paused disbursements in our operations in Afghanistan, and we are closely monitoring and assessing the situation in line with our internal policies and procedures,” said Marcela Sanchez-Bender, a spokesperson for the World Bank.
“As we do so, we will continue to consult closely with the international community and development partners.”
“Together with our partners, we are exploring ways we can remain engaged to preserve hard-won development gains and continue to support the people of Afghanistan.”
“The international financial institution also expressed deep concern with regard to “the impact on the country’s development prospects, especially for women.”
The World Bank has invested $5.3 billion for development projects in the country since 2002, according to the organization’s website.
As of February, 12 active projects were handled by the International Development Association (IDA) alone for the poorest countries in the world. It also had a contribution to 15 more projects worth $1.2 billion jointly with the Afghanistan Reconstruction Trust Fund (ARTF) through the International Development Association.
The move comes shortly after the International Monetary Fund started blocking Afghanistan’s access to all its resources. This includes $440 million worth of Special Drawing Rights (SDRs) to which Afghanistan was entitled from a total of $650 billion worth of Special Drawing Rights the Fund allocated on Aug. 23 to its members in an effort to boost the post-pandemic recovery.
Afghanistan, as a war-ravaged nation, relies heavily on foreign aid. Recently, the United States froze access to $9 billion in assets, most of which are held by the Federal Reserve, including United States bonds or bills, the World Bank’s Reserve Advisory and Management Partnership, Gold and cash accounts.
“Given Afghanistan’s large current account deficit, DAB (Da Afghanistan Bank) was reliant on obtaining physical shipments of cash every few weeks,” said Ajmal Ahmady, governor and economic advisor to the President who fled Afghanistan on Aug. 23.
“The amount of such cash remaining is close to zero due (to) a stoppage of shipments as the security situation deteriorated, especially during the last few days.”
The Taliban was sanctioned by the United Nations and by the United States as far back in time as 2001, which means restrictions like frozen access to assets, travel restrictions, and discontinuing transactions with Afghanistan have made delivery of any foreign aid all the more unlikely. Given the power the United States dollars hold in global finance, the Taliban will burn through any crucial funding any time soon.
(With inputs from ANI)
Edited by Amrita Das and Krishna Kakani