The Biden administration has frozen the Afghanistan government’s holdings in US banks, preventing the Taliban from accessing billions of dollars—a major, if indeterminate, part of the country’s foreign reserves.
Among the assets trapped in this freeze is a stash of gold bars deposited in the Federal Reserve Bank of New York. According to figures published by Afghanistan’s central bank, the deposit amounted to roughly 22 tons of gold as of December 2020, the most recent date for which this data is available. At current prices benchmarked by the London Bullion Market Association (LBMA), the gold is worth around $1.25 billion.
The US freeze was augmented, a day later, by the International Monetary Fund (IMF), which suspended Afghanistan’s access to its lending resources. The IMF was scheduled to extend a $370 million credit facility to the Afghanistan government on Aug. 23, as part of a response to the pandemic-induced economic crisis. That credit will now be withheld, hampering the Taliban’s resources further.
The gold in New York represents more than a tenth of the reserves the Afghanistan government holds, in banks at home as well as in various countries including the US. The central bank, named Da Afghanistan Bank (DAB), owned around $10 billion in reserve assets as of June, according to data published by the bank. In relative terms, this is a very significant figure for Afghanistan. By comparison, the country’s GDP in 2020 was roughly $20 billion, according to the World Bank.
Most of this $10 billion in reserves is parked overseas, although certainly the DAB’s own vaults hold at least $160 million in commercial gold and silver, as well as a treasury of ancient gold ornaments that are part of the so-called Bactrian Treasure, recovered from 2,000-year-old burial sites. Roughly $9.5 billion of the DAB’s holdings are international reserves, according to the IMF, which estimated in June that these reserves could pay for Afghanistan’s imports for 15 months.
It isn’t clear precisely what proportion of these international reserves resides in US bank accounts in particular. But roughly $4.2 billion of the DAB’s $9.5 billion in international reserves are held in the form of US treasury bonds, treasury bills, and US dollar-denominated government bonds.
The US had frozen Afghanistan’s assets back in 1999 as well, three years after the Taliban first took control of the country. In January 2002, after the US military overturned the Taliban’s government, the assets were thawed, releasing roughly $193 million in gold and $24 million in other assets held at the Federal Reserve Bank of New York.