US to move $4.9 billion in Afghan central bank assets to Swiss-based trust

The Afghan Fund, managed by a board of trustees, will be shielded from the Taliban. PHOTO: AFP

WASHINGTON - The United States on Wednesday announced that it would transfer US$3.5 billion (S$4.9 billion) in Afghan central bank assets into a new Swiss-based trust fund that will be shielded from the Taliban and used to help stabilise Afghanistan's collapsed economy.

The Afghan Fund, managed by a board of trustees, could pay for critical imports like electricity, cover debt payments to international financial institutions - protecting Afghanistan's eligibility for development aid - and fund the printing of new currency.

"The Afghan Fund will protect, preserve and make targeted disbursements of that US$3.5 billion to help provide greater stability to the Afghan economy," the US Treasury said in a statement.

US officials said no money would go to the Afghan central bank, known as DAB, until it is "free of political interference" - diplomatic parlance for replacing the bank's top Taliban officials, two of whom are under US and UN sanctions, with banking professionals - and anti-money laundering safeguards are instituted.

"Until these conditions are met, sending assets to DAB would place them at unacceptable risk and jeopardise them as a source of support for the Afghan people," US Deputy Treasury Secretary Wally Ademeyo said in a letter to the central bank's Supreme Council seen by Reuters.

The new fund is housed in the Basel-based Bank for International Settlements, which provides financial services to central banks.

The fund will not resolve serious problems driving dire economic and humanitarian crises that are threatening to worsen as winter approaches.

Nearly half of Afghanistan's 40 million people face "acute hunger", according to the United Nations.

The Taliban's biggest fiscal challenge is developing new revenues to compensate for financial aid that provided up to 75 per cent of government spending that the US and other donors ended after the Islamists seized Kabul in August 2021 as the last American troops left, ending two decades of war.

"The economy of Afghanistan faces serious structural issues, exacerbated by the Taliban takeover," a senior US official, speaking on condition of anonymity, told reporters in a briefing about the new fund.

The crises also have been fuelled by decades of war, drought, the Covid-19 pandemic, endemic corruption and a cut-off of the central bank from the international banking system.

Creation of the new trust fund comes after months of talks between US President Joe Biden's administration, Switzerland, other parties and the Taliban, who demanded the return of US$7 billion in Afghan central bank assets held in the US.

The talks continued despite US anger at the Taliban's harbouring of late Al-Qaeda chief Ayman al-Zawahiri - killed on July 31 in a CIA drone strike on his Kabul safe house - and international outrage at the militants' human rights crackdown, including barring girls from state-run secondary schools. REUTERS

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