KABUL: Afghanistan’s Central Bank on Wednesday eased restrictions on weekly withdrawals and doubled its cap, a day after the Taliban government banned all foreign currency transactions.
On Wednesday, the Central Bank announced the cap would increase to the equivalent of $400 a week, or $1,200 a month. The bank said those who deposit money starting Wednesday will be able to withdraw funds without restrictions.
These decisions come at a time as Afghanistan economy is deteriorating at a rapid pace. The Taliban announced on Tuesday that it will ban all foreign currency transactions as a way of to stabilize economy, warning of a crackdown against violators.
This is as much of Afghanistan’s economy revolves around foreign trade, foreign aid and remittances from abroad as the local currency has depreciated since the Taliban takeover of Afghanistan in August.
After the Taliban takeover, bank withdrawals were limited to $200 a week, which saw huge crowds formed outside banks every day as Afghans tried to get money for daily needs.
The economic situation remains dire. The Taliban’s seizure of power resulted in an abrupt halt to most donor funds. These disbursements accounted for 45 percent of GDP and financed 75 percent of state expenditures, including public sector salaries. In 2019, total government expenditures were nearly $11 billion. Humanitarian agencies say they’ve seen a sharp increase in hunger, with a drought and the onset of winter worsening the situation.
In addition to the economic woes, the Taliban have also been faced with a sharp rise in attacks by its main rival, the extremist group Islamic State. Hardest-hit has been the IS stronghold of Jalalabad, the capital of the eastern province of Nangarhar.