New Afghani banknotes arrived in Kabul this week after the United States paved the way for Afghanistan’s central bank to pay a Polish company to print the much needed cash.
Shah Mehrabi, a member of Da Afghanistan Bank’s supreme council, told Reuters assurances to banks and companies had been given by the U.S. Treasury that they would not be prosecuted for accepting a transaction by Afghanistan’s central bank, which has two Taliban members in its leadership,
Mehrabi said a Polish firm delivered 10 billion Afghani worth of banknotes, mostly in small denominations, to Kabul this week.
He said the banknotes started arriving on Tuesday.
The payment represents a shift for Afghanistan’s central bank, which has been largely cut off from the international financial system since the Taliban came into power in August last year.
Prior to the collapse of the former government, the central bank held a contract with a Polish company for the printing of its banknotes – but because of sanctions, the central bank was unable to pay the company for the much needed cash.
Without access to fresh banknotes for more than a year, Afghanistan’s cash has been deteriorating, with notes torn in shreds or held together with sellotape. With Afghanistan’s markets run primarily on cash, this has added to the country’s financial woes.
Two transactions facilitated by US
Two weeks ago, U.S. State Department’s Spokesman Ned Price said that two transactions to pay to print new banknotes had been facilitated by the U.S.
He said at a press conference that “these two transactions have been underway for several months now. Banks dealing with Afghanistan see any banking transactions originating from or going to Afghanistan as extremely high-risk.”
He said the United States and its partners had been working hard with international banks “to facilitate payment transfers from Afghanistan’s central bank to European printing companies where new banknotes would actually be produced.
“These companies will now prepare new Afghanis, which will be used to replace worn-out banknotes. And this will address one of the aspects of Afghanistan’s ongoing liquidity crisis, consistent with U.S. efforts to support basic human needs and avoid an economic collapse,” he said.
Mehrabi meanwhile said Wednesday: “These transactions that were facilitated by the Treasury are welcomed by all Afghans.”
He said the contract was for notes valued at 10 billion Afghanis, mostly in small denominations and that a second contract with a French company had been reached for a similar value.
New notes as replacements only
A spokesperson for Afghanistan’s finance ministry told Reuters that the new banknotes would be used solely by the central bank for replacing old notes, and not to fund the budget.
Mehrabi in turn said that the bank would release its financial statements to ensure the cash was accounted for.
He said the central bank had agreed to be subject to third party monitoring and the U.S. Treasury had approved of an agency to carry out the monitoring.
