After Taliban's Kabul Takeover, Afghanistan Faces Severe Economic Crisis: "Banks and Shops Closed, Inflation Soars" (Comprehensive)

Cash Disappears Amid Bank Closures... "Businesses Unable to Operate"
Taliban Hastily Appoints Acting Central Bank Governor but Falls Short
International Community's Taliban Sanctions Increase Need for Inclusive Government Formation

[Image source=AP Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] Since the Taliban, an armed faction in Afghanistan, seized control of the capital Kabul, the economic crisis within Afghanistan has worsened significantly. As the central bank governor and key economic officials fled abroad en masse, banks have closed, cash has dried up, and businesses and shops have shut down, creating a vicious cycle that is reportedly putting strong pressure on the Taliban as well. With sanctions and pressure from the United States and other Western countries beginning, there are also expectations that the Taliban will form an inclusive government including many former Afghan government officials to overcome the economic situation.

According to Bloomberg News on the 23rd (local time), the Taliban announced in a statement that "Mohammad Idris of the Taliban Economic Committee is appointed as the acting governor of the Afghan Central Bank." Zabihullah Mujahid, the Taliban spokesperson, stated, "Through Idris's appointment, we will restore Afghanistan's economic order."

Previously, just before the fall of Kabul, Azmal Ahmadi, the central bank governor, fled abroad, paralyzing the central bank's functions, leading to the closure of all banks and the suspension of all related departments. Since the Taliban's occupation of Kabul, the currency value has plummeted, causing prices of essential goods such as flour and cooking oil to surge by more than 50%.

Cash Dried Up in Afghanistan, Economic Vicious Cycle Continues

[Image source=EPA Yonhap News]

According to The Wall Street Journal (WSJ), banks and exchange offices in Kabul, the capital of Afghanistan, have been closed since the Taliban's takeover on the 15th. Bahir, who worked as a finance officer at a construction company, told WSJ in an interview, "People have money, but it is kept in banks. In other words, no one can withdraw money," adding, "Since cash is not visible, businesses in Kabul have stopped operating."

WSJ reported that ATMs in Kabul are operational but the daily withdrawal limit has been reduced to 10,000 Afghanis (about 136,000 KRW), down to one-third of the previous 30,000 Afghanis. WSJ also noted that many ATMs are unusable because banks are not loading cash into them. Toriali, a government official in Kabul, said, "People are fearful of the future and want to hold cash for now," adding, "They plan to use it only when they need to leave the country, preparing for upcoming difficulties."

The only thing that has decreased is rent, as many people are leaving Kabul, and landlords are sometimes asking tenants to stay for free. This is reportedly due to concerns that if houses become vacant, the Taliban might move in.

U.S. and Western Sanctions Also Intensify

[Image source=EPA Yonhap News]

The intensification of sanctions by the U.S. and Western countries is also putting pressure on Afghanistan's economy. Earlier, the U.S. government banned dollar remittances to Afghanistan, fearing they could be exploited as a funding source for the Taliban. Two widely used remittance companies among overseas Afghans, Western Union and MoneyGram International, have also suspended remittances to Afghanistan due to concerns over sanction violations.

The International Monetary Fund (IMF) announced that it would withhold the scheduled allocation of Special Drawing Rights (SDR) to Afghanistan and suspend other financial support, citing uncertainty over whether the international community will recognize the Afghan government. As a result, many exchange offices within Afghanistan have closed. Since overseas aid and remittances have played a significant role in Afghanistan's economy, prolonged disruptions are expected to cause severe damage.

Pressure for Inclusive Government Formation... Taliban Focuses on Negotiations

[Image source=EPA Yonhap News]

Fearing that the severe economic crisis could destabilize their regime, the Taliban is engaging in negotiations to form an inclusive government. Since last weekend, the Taliban has begun negotiations for an inclusive government with not only the existing government but also various regional warlords. Some officials who had fled abroad have reportedly started returning in response to the Taliban's negotiation requests.

According to the Associated Press, Omar Zakhilwal, the former finance minister who returned to Kabul this week to negotiate power-sharing with the Taliban, said, "The sooner we reach a political agreement, the more we can save Afghanistan from serious economic impacts," adding, "We are cooperating with the Taliban to reopen banks, shops, and government offices to restore daily life in Kabul."

This content was produced with the assistance of AI translation services.