IMF curbs funds, US halts arms sales to Afghan

The International Monetary Fund said that the new government in Afghanistan is cut off from using fund reserve assets days before the nation was set to receive almost $500 million, depriving the Taliban of key resources.

The country has been in line to automatically receive new reserves, known as special drawing rights or SDRS, on Monday as part of a recently approved IMF plan to inject $650 billion of liquidity into the troubled global economy. While Afghanistan will still receive the assets, it won’t be able to use them because the new regime lacks international recognition, the IMF said.

“As is always the case, the IMF is guided by the views of the international community,” an IMF spokesperson said by email Wednesday. “There is currently a lack of clarity within the international community regarding recognition of a government in Afghanistan, as a consequence of which the country cannot access SDRS or other IMF resources.” By the IMF’S rules, all 190 members get the assets allocated on their balance sheets, with the total divided roughly proportionately based on their share of global economic output. For Afghanistan, that’s 0.07 per cent of the total, or $455 million. The vast majority of nations will be allowed to exchange the reserves for cash to pay debt or provide fund pandemic health spending.

Meanwhile,the Biden administration has suspended all arms sales to the government of Afghanistan following the Taliban takeover of the country. In a notice to defence contractors posted Wednesday, the State Department's Political/military Affairs Bureau said pending or undelivered arms transfers to Afghanistan had been put under review. “In light of rapidly evolving circumstances in Afghanistan, the Directorate of Defense Sales Controls is reviewing all pending and issued export licenses and other approvals to determine their suitability in furthering world peace, national security and the foreign policy of the United States,” it said.