Afghanistan’s Taliban-controlled central bank on Thursday announced the receipt of $32 million in cash from the United Nations, ostensibly to finance humanitarian aid.
In December, the U.N. reportedly agreed to begin sending cash to Afghanistan every week to fund humanitarian efforts, ramping the amounts up to $20 million per week by March 2022.
The cash aid program is intended to stabilize the Afghan economy by infusing it with dollars to stave off a liquidity crisis. Afghanistan’s banking system went into crisis mode after President Joe Biden’s disastrous withdrawal and the Taliban takeover in August.
The U.N. Development Program (UNDP) reported in November that a “colossal” failure of the banking system could be imminent.
UNDP conceded that efforts to stabilize the banking system by injecting U.S. dollars would face the risk of the Taliban simply stealing the cash.
“We need to find a way to make sure that if we support the banking sector, we are not supporting the Taliban,” UNDP Afghanistan head Abdallah al Dardari said in November.
“We are in such a dire situation that we need to think of all possible options and we have to think outside the box. What used to be three months ago unthinkable has to become thinkable now,” Dardari said.
UNDP worried about Afghan citizens hoarding their money under mattresses because they feared the banks might collapse, and warned a financial meltdown could make it impossible for Afghans to buy food and medicine. Other U.N. agencies said they needed to send cash into Afghanistan to pay staff and local workers.
In late December, the U.N. announced an ambitious $8 billion aid program for Afghanistan on top of the $1 billion already spent – one of the largest demands for funding it has ever made for a single country.
U.N. officials said their agenda went far beyond basic humanitarian assistance to include rebuilding the economy, subsidizing education, restoring social services, and stabilizing the financial system.
“A human being needs more than being handed a piece of bread. They need dignity, they need hope. We do not want to become an alternative government of Afghanistan. But is it important to support systems, not lose the gains made in past years,” U.N. humanitarian coordinator Ramiz Alakbarov said.
Shipments of cash were a major element of the U.N. plan, as U.N. Emergency Relief Coordinator Martin Griffiths explained: “Humanitarian agencies inside Afghanistan can only operate if there’s cash in the economy which can be used to pay officials, salaries, costs, fuel and so-forth. So, liquidity in its first phase is a humanitarian issue, it’s not just a bigger economic issue.”
U.N. Secretary-General Antonio Guterres made a similar argument last week when he called for an infusion of funds into the Afghan banking system.
“International funding should be allowed to pay the salaries of public-sector workers, and to help Afghan institutions deliver healthcare, education and other vital services,” Guterres said.
“The function of Afghanistan’s Central Bank must be preserved and assisted, and a path identified for conditional release of Afghan foreign currency reserves. We must do even more to rapidly inject liquidity into the economy and avoid a meltdown that would lead to poverty, hunger and destitution for millions,” he insisted.
Guterres said the U.N. was “taking steps to inject cash into the economy through creative authorized arrangements,” but the sums involved would be only “a drop in the bucket.”