Afghans struggle with empty ATMs, soaring prices
Afghans have been left scrambling for cash as banking and money transfer services remain suspended. The Taliban have named an acting head of the central bank to help ease the economic turmoil, which seems a tall order.
Over a week after the Taliban’s takeover of Afghanistan’s capital Kabul, its residents are reeling from a severe shortage of cash as banks remain shuttered and remittances from abroad dry up.
ATMs across the city are empty and money exchange is unavailable amid uncertainty surrounding exchange rates and fears of looting.
“The situation with the banks is very bad. People queue up in front of banks, but they remain closed. No one has access to banks, especially in Kabul,” Said Imam, a resident of the Afghan capital, told DW
“Some people haven’t been paid for more than a month. Government servants and teachers didn’t receive their salaries. People are running out of cash with their savings locked up in banks.”
The situation has been aggravated by an acute shortage of US dollars. The United States has blocked the Taliban government’s access to virtually all of the Afghanistan central bank’s $9 billion (€7.66 billion) in reserves, most of which are held in the US. The International Monetary Fund (IMF) has also suspended Afghanistan’s access to its resources following the Taliban’s seizure of Kabul.
With no new shipment of dollars arriving to shore it up, the local currency, afghani, has crashed to record lows, sending prices soaring. Prices of staples like flour, oil and rice have risen by as much as 10%-20% in a few days.
“You can find food itms in the market, but the prices are high,” Imam said. “For example, a month ago the price of a bag of flour was 1,800 afghanis, now you have to pay 2,180 afghanis. The price of a 16-liter oil can jumped to 2,150 afghanis from 1,700 afghanis.”
What about remittances?
Afghans have traditionally relied on cash transfers from their loved ones living abroad, but in the current crisis, even that lifeline has been lost.
Wire transfer services Western Union and MoneyGram have suspended their operations in the country. Last year, remittances to Afghanistan were around $790 million — around 4% of the country’s gross domestic product, the World Bank estimated.
These money transfers have been “extremely relevant” for years, says Afghani-born journalist and author Emran Feroz, as “Afghans have one of the biggest diasporas in the world” and have long relied on help from relatives in Pakistan, Iran, the UAE as well as Germany and the US.
“Average Afghans don’t make much money these days,” with many seeing their income drop by 90%, he told DW.
How are fuel prices in Afghanistan?
Gasoline prices in the country climbed to $900 per ton amid massive demand from Afghans fleeing cities to safety from Taliban militants.
Iran has chipped in to ease the situation following a request from the new Afghan government, Reuters news agency reported. Tehran, sanctioned by Washington, has resumed fuel exports to its neighbor, which had been suspended since August 6 on safety grounds.
The Taliban have reportedly cut tariffs on imports of fuel from Iran and other neighboring countries to arrest the price spike.
Afghanistan, which does not have enough oil refining capabilities, relies on oil imports from Iran, Turkmenistan, and Uzbekistan. Oil imports from Turkmenistan ceased a month ago because of the security situation, Reuters reported.
“The problem is the banks stopped working three days ago so we might be back to bags of cash,” the source told Reuters.