Sinking currency, soaring prices: How Afghanistan looks as Taliban take charge

The Taliban are finding it difficult to keep hospitals and government machinery running, news agencies reported. Prices have soared amid the tumultuous state of economic affairs, and the financial system is in shambles after 40 years of war while liquidity and inflation continue to rise.

With the United States finally completing its evacuation mission in Afghanistan on Tuesday morning, ending its extended two-decade-long war, the Taliban are now in charge of a country where the economy is in chaos, prices have soared, and humanitarian crises loom large. In the administrative vacuum that has since followed the retreat of the erstwhile Ashraf Ghani regime, the Taliban rulers are struggling the keep the country afloat with their newfound administrative duties at the end of 20 long years of military activity and chaotic warfare.

A Taliban soldier stands on a street in Kabul, Afghanistan, on September 1, 2021. (via REUTERS)

The Taliban are finding it difficult to keep hospitals and government machinery running, news agencies reported. Prices have soared amid the tumultuous state of economic affairs, and the financial system is in shambles after 40 years of war while liquidity and inflation continue to rise. Foreign aid and currency reserves now seem largely out of reach for Afghanistan, as many in power in the international monetary community take to a policy of alienating the Taliban. The new rulers of the country, too, have provided little detail so far on how they will acquire funds to get the financial system fully functional.

Under the Taliban's previous rule between 1996 and 2001, Afghanistan had little functioning banking sector and although a handful of commercial banks retained licences, none were operational and few loans were made. This time, too, their immediate concern is staving off economic collapse. However, it seems unlikely that the militants will get quick access to most of the roughly $10 billion in assets held by DAB, much of which is outside of the country.

The Taliban have ordered banks to reopen, but strict weekly limits on withdrawals have been imposed. Since 80% of the transactions done by banks are in dollars, it is critical that the Taliban leaders make their relationship with the US, bankers say.

Washington, on the other hand, says that it would keep having conversations with the Taliban that serve US interests and look at how it could give aid to Afghanistan without benefiting any government that it forms. The European Union has also said that it will need to engage with the Taliban but won't rush into formally recognising them as the new rulers of Afghanistan anytime soon.

The Kabul airport, too, lies currently inoperable, but the Al Jazeera television reported that technical experts from Qatar had arrived at the Taliban's request to discuss resuming operations there.

Outside the Afghan capital of Kabul, humanitarian organisations have warned of impending catastrophe as severe drought has hit farmers and forced thousands of rural poor to seek shelter in the cities. But foreign donors are unsure about who to speak to. Taliban officials have, however, said the problems will ease once a new government is in place, and urged other countries to maintain economic relations.