Speaker 1: Hello, and welcome to another episode of the ad Loots Podcast.
Speaker 1: I'm Tracy Alloway and I'm Joe, So Joe. Clearly, one
Speaker 1: of the top news stories, probably the top news story
Speaker 1: at the moment, is the situation in Afghanistan and the very,
Speaker 1: very swift change in the direction of events there. So,
Speaker 1: just a week ago, things were I guess, I want
Speaker 1: to say, relatively normal. Obviously, the Taliban had advanced throughout
Speaker 1: the country, but Cappal was still operating on a fairly
Speaker 1: normal basis. And then fast forward just seven days or so,
Speaker 1: we're recording this on August, everything has changed. I think
Speaker 1: it was last Saturday or last Sunday. I'm sort of
Speaker 1: losing track of the days. There was clearly a very
Speaker 1: rapid advance of the Taliban, but then there was some
Speaker 1: questions like, oh, how many days or weeks will there
Speaker 1: be a pressure on Cobbo, And then it seemed to
Speaker 1: happen in basically an instance. So clearly there are a
Speaker 1: lot of questions swirling around the situation in Afghanistan right now.
Speaker 1: But given that this is all thoughts, we're going to
Speaker 1: focus on one question in particular, which is what exactly
Speaker 1: happens to the Afghani economy, and we have the perfect
Speaker 1: person to talk about it. We're going to be speaking
Speaker 1: with Ajmal Ahmadi, who has been the central Banker in
Speaker 1: Afghanistan since the middle of last year. Before that, he
Speaker 1: was the Minister of Commerce and Industry. He has left
Speaker 1: the country under very very chaotic circumstances, but he's been
Speaker 1: very gracious in his time and agreed to come on
Speaker 1: odd lots. So Jemal, thank you so much for joining
Speaker 1: the show. Thank you very much for happening. So, I
Speaker 1: guess my first question asked to be what was your
Speaker 1: experience like of actually getting out of the country, Because
Speaker 1: the scenes that we saw in capital over the weekend,
Speaker 1: people desperately trying to get to the airport and leave
Speaker 1: on a very limited number of planes were very very upsetting,
Speaker 1: um and and disturbing and memorable as well. So how
Speaker 1: did you manage to get out? Well? Thank thank you
Speaker 1: again for having me. On the day of the fall,
Speaker 1: which was last Sunday, I was in my office um
Speaker 1: conducting work. Obviously, the situation was rapidly deteriorating, and so
Speaker 1: as new information came in, we found out that Pulcha
Speaker 1: heat prisoned, which is just slightly west of Cobble had fallen,
Speaker 1: and that the reports that til then had entered the city.
Speaker 1: At that point, I decided to go for the airport. UM.
Speaker 1: I didn't have a ticket for that day, but I
Speaker 1: thought it perhaps would be the safest place to go
Speaker 1: to be, and so we we drove there. UM. The
Speaker 1: airport road, which which now you can see on CNN
Speaker 1: was was crowded, but yet had not become as chaotic
Speaker 1: as you've seen now. We were able to make it
Speaker 1: in and UM. What I attempted to do was trying
Speaker 1: to find a ticket for that evening, and I was
Speaker 1: able to secure a ticket for that evening on a
Speaker 1: flight which subsequently was canceled. It's plane that you see
Speaker 1: on the tarmac. Everyone was trying to scramble upon we
Speaker 1: went on that flight. UM, but I think around four
Speaker 1: pm we received the notice that the president himself had
Speaker 1: already left. And at that point I think I kind
Speaker 1: of instinctively knew that chaos would would would begin at
Speaker 1: that point, so everyone tried to fight on the plane.
Speaker 1: I gone on the plane for a little while but
Speaker 1: realized it wasn't leaving. UM at which point when on
Speaker 1: the tarmac and there are already hundreds of people there.
Speaker 1: It was. It was a bit of a surreal scene
Speaker 1: where helicopters were taking off, a mill terry plane was
Speaker 1: taking off. I think anyone who had access to any
Speaker 1: type of aircraft were just scrambling to jump on a plane.
Speaker 1: There was one military plane not from the US, from
Speaker 1: a third country, and people were scrambling to to get
Speaker 1: on board. That is it was. I think I believe
Speaker 1: it's called a C seven team where the back comes
Speaker 1: down and up, and that was going up. And my
Speaker 1: friends helped me push me on that plane. Uh, And
Speaker 1: they were evacuating their own embassy staff, So I was
Speaker 1: not supposed to be on that plane, but I think
Speaker 1: they felt that they probably believe that I was embassy staff,
Speaker 1: and they let me on that plane. And I'm very
Speaker 1: fortunate to get out. Wow. Incredible. You know, you you've
Speaker 1: been tweeting these pretty these threads about the sort of
Speaker 1: the situation right now and including the last several days,
Speaker 1: given the intensity of the moment and the chaos in general. Uh,
Speaker 1: there's you know, they're incredibly lucid and clear and helpful.
Speaker 1: Can you talk about those few days earlier? Look, what
Speaker 1: was your expectation you're running the central bank, and we'll
Speaker 1: get into what management of the central bank looks like.
Speaker 1: But obviously it was sort of a split second decision.
Speaker 1: It sounds like to actually get to the airport and leave.
Speaker 1: Where was your head at say three or four days earlier,
Speaker 1: as you're thinking about, Okay, there's this rapid advance of
Speaker 1: the Taliban, but your job is to keep the banking
Speaker 1: system running. I think I'm still trying to run the
Speaker 1: bank in a normal, everyday fashion while trying to mitigate risks.
Speaker 1: So it was Thursday that a number of important, very
Speaker 1: important provincial centers fell, including Kandahar, Herat Umlus maybe Logo
Speaker 1: fell on the same day, and at that point I
Speaker 1: called some people I don't want to name, but I
Speaker 1: called some people in to have some discussions as to
Speaker 1: what our plans should be. And I think one we
Speaker 1: worried about our staff. We have had some staff killed
Speaker 1: in loc Are, so worried about what we do with staff,
Speaker 1: if we need to bring them into the capital, if
Speaker 1: the banks and the Central Bank would continue to operate
Speaker 1: in telign health areas. I think secondly, yeah, so I
Speaker 1: think the second was the in terms of operations what
Speaker 1: will we do? Uh? And then third sort of risk
Speaker 1: mitigation at the center. So as we saw the situation deteriorate,
Speaker 1: else did we need to think about it do to
Speaker 1: take care of staff operations and contingency plans? So would
Speaker 1: the central bank operate or continue operating in Taliban controlled areas?
Speaker 1: Or I guess maybe it would be good if you
Speaker 1: talked a little bit about what the central bank does
Speaker 1: in a normal situation versus what ended up happening over
Speaker 1: the past a couple of months or so. Sure, so
Speaker 1: the central bank is I think, as in any country,
Speaker 1: the core mandate here is inflation to make sure that
Speaker 1: inflation doesn't rise. And we provide a banking services to
Speaker 1: two commercial banks. So I'd say those are the key
Speaker 1: operations that in a day to day environment typically move forward.
Speaker 1: And during the last week or last month even we
Speaker 1: began to focus more on provincial activities. We have provincial
Speaker 1: activities to a bank branch, central bank branch, and every
Speaker 1: single province of Afghanistan. And you know, we we came
Speaker 1: up with a color coded map where we would see
Speaker 1: the risk to a certain province. We would rate it
Speaker 1: based on risks and then you know, in terms of
Speaker 1: cash management, bringing cash in from the province or sending
Speaker 1: it out, we would we would manage it based on
Speaker 1: the risk seen in that province. Um if a province
Speaker 1: was expected to fall, we would try to bring in
Speaker 1: all the cash to the center. I think here we
Speaker 1: were worried about dollars because we get supplied internationally and
Speaker 1: so that was a key concern of our international partners.
Speaker 1: So a place where the talentman came close to make
Speaker 1: sure that we withdrew dollars and try to repatriate most
Speaker 1: of the Afghanians as well. In terms of the banking sector,
Speaker 1: the decision we came to was that we did not
Speaker 1: allow banks so you utilize dollars in the provinces where
Speaker 1: Taliban were operating. But we left it up to the
Speaker 1: banks themselves whether they wanted to operate using Afghanis based
Speaker 1: on their own risk plans and contingency plants. Can you
Speaker 1: just describe a little bit about what the how the
Speaker 1: currencies are used, So obviously the dollar is important, to
Speaker 1: what degree is activity dollarized? What is the role of
Speaker 1: the Afghani the currency and what degree? To what degree
Speaker 1: did you see your job is to achieve the inflation
Speaker 1: goals by maintaining a stable relationship between the two mm hmm.
Speaker 1: So Afghanistan is a heavily dollarized economy, about se maybe
Speaker 1: six the five of all deposits are maintained in dollars samply.
Speaker 1: We run a very large current account deficit, which means
Speaker 1: that we have to be supplied with dollars from our
Speaker 1: own national partners, and so the dollar plays a very
Speaker 1: important role UM in the Afghan context. The Afghani is
Speaker 1: utilized on a day to day basis for for most transactions,
Speaker 1: and there's a significant pass through inflation where we have
Speaker 1: an inflation targeting mandate. But I think the key thing,
Speaker 1: although we don't target a specific currency rate, is that
Speaker 1: we worry about the currency because there's a high inflation
Speaker 1: passed through. So during this period, we were even as
Speaker 1: provinces were falling, we were able to maintain Afghan year
Speaker 1: around between seventy eight one to the dollar, which which
Speaker 1: was a success in might view UM and inflation remained
Speaker 1: within the single digits. Yeah. I think during your tenure
Speaker 1: most people recognize your success on that front. So single
Speaker 1: digit inflation and also effects appreciation of only about five
Speaker 1: percent or so UM, which is pretty amazing in the
Speaker 1: context of the situation. Now, now you mentioned the current
Speaker 1: account deficit, and here I kind of have to ask,
Speaker 1: maybe a sensitive question, but what role does opium play
Speaker 1: in the economy? Because I cannot imagine that drug proceeds
Speaker 1: show up as exports in the current account, and yet
Speaker 1: most people would say that they are an important, although
Speaker 1: not necessarily desirable part of the economy. So I think
Speaker 1: they finance a portion of the current account deficit. Um.
Speaker 1: If you take a look at opium um, I think
Speaker 1: I believe the US The recent UNODC reports states for
Speaker 1: this are about two hundred thousand hectors of opium being produced.
Speaker 1: Each hector produces about twenty sevens and the prices about
Speaker 1: two hundreds. When multiply all this together, it ends up
Speaker 1: being roughly about a billion dollars in farm gate receipts.
Speaker 1: And when you take a look at our current account deficit,
Speaker 1: the current account deficit x AID because it is including it,
Speaker 1: but x AD, so the trade deficit we can say
Speaker 1: is roughly around six billion dollars seven billion dollars. Of
Speaker 1: the seven billion dollars we auction off or provide liliquity,
Speaker 1: around two and a half billion or three billions. So
Speaker 1: there is a significant part of the current account deficit
Speaker 1: which is also being financed through other means, but there's
Speaker 1: obviously a portion that's probably being financed through opium receipts,
Speaker 1: although we don't have formal data on receipts. Now. One
Speaker 1: thing I'm interested in in terms of your perspective at
Speaker 1: the Central Bank is, I know Afghanistan is not a
Speaker 1: heavily banked country and the sort of does it Actually
Speaker 1: was reading a Bloomberg article today about you know, there's
Speaker 1: the informal money changers and that is a big part
Speaker 1: of how people do day to day finance, not through
Speaker 1: a formal banking system. To what degree does that complicate
Speaker 1: the job of the central bank. That's so much activity
Speaker 1: or day to day activity is just not through the
Speaker 1: sort of traditional regulated identities. So what we call them
Speaker 1: sarah fas. Sara fas play a large role in terms
Speaker 1: of um even even accepting deposit services for individual Afghans
Speaker 1: or transferring money. They've been They've been it forever and
Speaker 1: so they were able to operate and money even now.
Speaker 1: If someone if I wanted to send money to a
Speaker 1: certain province, I would call a Sarafan and he would
Speaker 1: be able to send that money immediately there. So they
Speaker 1: do play a key role. I think over the past year,
Speaker 1: what we tried to do was corporate tize them so
Speaker 1: they had individual licenses. We went through this process where
Speaker 1: we provide them corporate licenses so they could be more
Speaker 1: normally regulated. They protect proticting what we have a dollar option,
Speaker 1: so we provide liquidity to the market and they a
Speaker 1: very important role in terms of money transfers throughout the country.
Speaker 1: And I think the reason is is what we're seeing
Speaker 1: today is the financial inclusion or banking coverages around twelve
Speaker 1: percent in Afghanistan, and so of people realize informal money
Speaker 1: exchangers to be able to send money throughout the country.
Speaker 1: I'd make one last point here is that the Central
Speaker 1: Bank actually made significant progress and you wouldn't believe it.
Speaker 1: In Afghanistan. We digitalized all the payment streams, so we
Speaker 1: connected all the banks, all of the telecom companies to
Speaker 1: the central Bank, and we launched just this last month
Speaker 1: a new service through which a person could send money
Speaker 1: using a short code start two four six and you
Speaker 1: could check your balance and you could send money anywhere
Speaker 1: in Afghanistan, and we were expecting to create a bank
Speaker 1: account for everyone in Afghanistan through that mechanism. Of course,
Speaker 1: um I didn't move forward. What's your impression of how
Speaker 1: the Taliban has been financing itself. So there's obviously a
Speaker 1: lot of speculation about illegal activities UM, such as opium money, UM,
Speaker 1: possibly donations from entities abroad. But I think a lot
Speaker 1: of people don't necessarily appreciate that the Taliban was already
Speaker 1: extorting a lot of money from people in the provinces,
Speaker 1: basically a form of taxation. I think there was a
Speaker 1: u N report from last year that said the Taliban
Speaker 1: was collecting as much as one point five billion dollars,
Speaker 1: which is something like a quarter of the official budget
Speaker 1: of Afghanistan. But I'd be curious to get your views
Speaker 1: on this. Where was the money actually coming from. I
Speaker 1: think you could say from from a few different sources.
Speaker 1: One is through opium receipts, so they would tax opium
Speaker 1: production to the farmers and receive a certain amount of tax,
Speaker 1: and I think that was quite well known. I think secondly,
Speaker 1: in the mining sector, there's significant areas that were controlled
Speaker 1: by the Taliban and they were able to tax mining
Speaker 1: production as well. A third, it was relatively well known,
Speaker 1: but even transport or transit through Afghanistan was being taxed
Speaker 1: by the Taliban. Typically a trucker would come, they pay
Speaker 1: at the customs facility, and then especially at the last
Speaker 1: year's situation deteriorated Taliban checkpoint and they would pay them.
Speaker 1: I can't remember the exact amount, but it was actually
Speaker 1: well known, maybe thirty thousand apps per truck to go through.
Speaker 1: And so they were they were taxing people um even
Speaker 1: prior to this past week, and then of course the
Speaker 1: international donations that flowed to them as well. I'm actually
Speaker 1: cure is about official taxation, infrastructure, and of course efficacy
Speaker 1: of taxing. Of taxation is something that varies pretty greatly
Speaker 1: across the country to what or across countries. Can you
Speaker 1: talk through a little bit about how the government of
Speaker 1: Afghanistan pre Taliban engaged in tax collection and how tax
Speaker 1: revenues matched up with revenue goals we collected if I
Speaker 1: remember correctly, roughly our target crisis was roughly around two
Speaker 1: billion apps, so let's call that about two point seven
Speaker 1: billion dollars of domestic generation and UM. Most of the
Speaker 1: revenue would come from either tax receipts, so businessmen and
Speaker 1: individuals who are taxed or through customs, and so I
Speaker 1: believe the split was perhaps, you know, maybe let's say
Speaker 1: forty taxes customs and then other one type revenues as well.
Speaker 1: So why don't we forward a little bit too, um,
Speaker 1: current or recent events, because I have so many questions
Speaker 1: about what has been going on and how you see
Speaker 1: things unfolding in the future. Um. But you know, Joe
Speaker 1: asked you about the importance of dollarization in the economy,
Speaker 1: and one of the things that you wrote on Twitter
Speaker 1: was that on Friday August you had received a call
Speaker 1: saying that Afghanistan wouldn't be receiving dollarshipments due from the
Speaker 1: I m F. So I guess I'm curious. You know
Speaker 1: who made the call, what was their reasoning, what was
Speaker 1: your response, and how big a deal was that? From
Speaker 1: your perspective, it was a very very big deal. So,
Speaker 1: as I mentioned on Thursday, a number of provincial capital
Speaker 1: still and I thought that was a bad situation, and
Speaker 1: that on Friday morning we received a call that an
Speaker 1: expected shipment which was which was due to arrive on Sunday,
Speaker 1: it would be canceled at this stage, we're still thinking
Speaker 1: even medium term. We're not thinking that the government will
Speaker 1: fall on Sunday. And so I met with some people
Speaker 1: and we thought through various strategies of how we would
Speaker 1: deal with the situation without dollar influence. Remember that we
Speaker 1: have a very large amount of international reserves, the nine
Speaker 1: billion that I've stated, and so by any typical metric,
Speaker 1: that's a large amount. So when you look at import
Speaker 1: coverage ratio, it's more than fourteen months. If you take
Speaker 1: a look at, you know, percentage of external debt, it's
Speaker 1: it's a very large amount. So we had the sufficient resources,
Speaker 1: but again we were depending on physical shipments to arrive
Speaker 1: so that we can supply the market. So with without
Speaker 1: that shipment, it was quite surprising. I was taken aback
Speaker 1: that it was a one off decision, or it wasn't
Speaker 1: even a process through which they said they would send less.
Speaker 1: It was just a complete stoppage, which was very worry
Speaker 1: and so we thought through various scenarios. How could we
Speaker 1: manage this, what would we be doing, How could we
Speaker 1: go through the next week without with the amount of
Speaker 1: dollars we had. So we ran through various scenarios. But
Speaker 1: I think at the end. Our international partners had good
Speaker 1: intelligence because they know the shipment was planning come on
Speaker 1: Sunday and they said, no, that's when couples fell. Can
Speaker 1: you explain further why is why we're physical shipments so
Speaker 1: important as opposed to I mean you talk about okay,
Speaker 1: you had improved the digitization of the banking system during
Speaker 1: your tenure. Why are physical dollars such an important aspect
Speaker 1: of bank management? And also do you have any idea
Speaker 1: who who actually made that call to say Okay, no, no,
Speaker 1: no dollars shipments this weekend? I do, I'd rather not
Speaker 1: say just to not cause any UM looks say political
Speaker 1: issue use on either end. UM, but I think that
Speaker 1: the reason that they're so vital again is because we're
Speaker 1: importing economy and so we get all of this coming
Speaker 1: in through UM. We have a large current up deficits,
Speaker 1: so we need cash going out and UM A significant
Speaker 1: portion of that was cash based transaction. It wasn't all
Speaker 1: based on digital payments or providing for LC's to another
Speaker 1: country UM, and I think that was something that we
Speaker 1: began to develop, but we were still reliant on the
Speaker 1: physical fund as well. So given that the Taliban remains
Speaker 1: on international sanctions lists. It seems very, very unlikely that
Speaker 1: the I m F is going to resume those dollar shipments.
Speaker 1: And I think most people are talking about a scenario
Speaker 1: where Afghanistan is basically cut off from dollar funding or
Speaker 1: placed on additional sanctions lists, things like that, And I
Speaker 1: guess I'm curious, how do you feel about economic tools
Speaker 1: such as sanctions being used against the regime. I mean,
Speaker 1: the classic criticism of sanctions is that they end up
Speaker 1: hurting the wider population while not necessarily doing very much
Speaker 1: to actually impact the ruling class or elite, who are
Speaker 1: still able to extort money in various ways. So do
Speaker 1: you think sanctions or withholding the reserves is going to
Speaker 1: be effective against the Taliban? And are they ethical in
Speaker 1: the current situation. It's a tough question either way. I
Speaker 1: think both are correct. In the one hand, they do
Speaker 1: limit the resources to a government. On the other hand,
Speaker 1: they do hurt so I think both are right. On
Speaker 1: the one hand, you know, there's nine billion dollars in
Speaker 1: international reserves and I outlined where they are, and you
Speaker 1: know in treasuries and gold and other assets that you
Speaker 1: would have spect And I think I think given the
Speaker 1: current environment where I think the US has expressed many
Speaker 1: times that they would have preferred to negotiated, negotiated settlement,
Speaker 1: and um, they're worried about women's rights and free me
Speaker 1: and a number of other aspects of governance from the Taliban.
Speaker 1: I think it would be tough for, for example, the
Speaker 1: Treasury to say, you know, here's nine billion dollars. And
Speaker 1: I think that would just raise a lot of questions
Speaker 1: from Congress, from DA from human rights groups, so that
Speaker 1: there would be they replaced in a difficult situation, I
Speaker 1: would expect. I'm not in that side, but that would
Speaker 1: be my reading of the situation. But yes, on the
Speaker 1: other hand, not providing dollars will cause significant economic partnership. Um,
Speaker 1: and we've seen that in other countries where sanctions have
Speaker 1: been applicked. You one of your tweets, you know again,
Speaker 1: it sort of had this, Uh, some of your tweets
Speaker 1: have a very dry humor about them. But you said
Speaker 1: that certain Taliban members have been asking about the location
Speaker 1: of the reserves, and your comment was they need to
Speaker 1: hire an economist. And so which does raise the question
Speaker 1: of what options do they does the does the Taliban
Speaker 1: have and what would an economist tell them? And you know, okay,
Speaker 1: presuming as you surmise, there's not going to be that
Speaker 1: nine billion dollars unlocked. I think you said maybe they
Speaker 1: only have actual access to maybe point one or point
Speaker 1: two percent of the total reserve, so virtually none. What
Speaker 1: do you expect to happen and what would be I
Speaker 1: guess sound economic management under the under those extreme conditions,
Speaker 1: I think the impact if access isn't received, it's going
Speaker 1: from you know, reserves of a country which has nine
Speaker 1: billion dollars in reserves and sixteen months in port ratio
Speaker 1: to a situation where they have a few million dollars
Speaker 1: and two days or converagration. And so that's obviously a
Speaker 1: very different situation. The dollars can't be supplied, the banks
Speaker 1: can provide receipts to their customers and asks. Obviously the
Speaker 1: flow of apps is going to increase, the bid or
Speaker 1: demanders is going to increase, and so we're likely going
Speaker 1: to see the depreciation of the currency over a time period,
Speaker 1: probably a spike and then a continued depreciation. Again, because
Speaker 1: Afghanistan has very large current account deficit, the inflation passed
Speaker 1: through is quite high, so you're gonna see that knock
Speaker 1: on effect on on all goods, the price of all
Speaker 1: goods going being increased, and I think physics, I think
Speaker 1: we started this on Saturday, we introduce some limits on
Speaker 1: the monet withdrawals, but I think they're going to have
Speaker 1: to bring those limits significantly lower um and so again
Speaker 1: that's going to cause the situation where you were already
Speaker 1: facing a triple shock, You're you're gonna you're gonna create
Speaker 1: much more economic hardships. Remember Afghanistan, Most countries around the world,
Speaker 1: they're facing a challenging to deal with COVID, but Afghanistan,
Speaker 1: we had a regional drought that wasn't very much talked about,
Speaker 1: but that's significantly impact. And we had internally displaced people
Speaker 1: just because of the drought. Then we had the conflict
Speaker 1: and the fighting, and now add on top of it,
Speaker 1: what what what potentially could be a economic type of crisis.
Speaker 1: So it's a really challenging situation. We were trying to
Speaker 1: manage three shocks, and now I think they're gonna have
Speaker 1: to do with the fourth, which is challenging. So what
Speaker 1: could they potentially do in that scenario. I think the
Speaker 1: the response is, you know, just taking a typical macro
Speaker 1: response is one. The revenues have significantly declined, um so,
Speaker 1: so again it's the stuff that's come down, but also
Speaker 1: the flows, right, the donor influence with significant decline, and
Speaker 1: so you're gonna have to scale back you're spending significantly,
Speaker 1: so donor programs or social spending or those three thousand
Speaker 1: military that were there, teachers that were there, That civil
Speaker 1: service is going to have to come down, and of
Speaker 1: course again that's going to cause hardship in such a climate.
Speaker 1: I think secondly, uh, they're gonna have to put some
Speaker 1: level of capital controls or limits on on withdrawals from
Speaker 1: the banking sector. They're gonna have to find additional revenue
Speaker 1: sources or wherever that maybe they'll probably try to go
Speaker 1: out to other countries to replace the US and maybe China,
Speaker 1: Pakistan or other regional countries to find some sources of finance.
Speaker 1: But it's a tough situation. If people think that getting
Speaker 1: everyone out of the airport is going to resolve this,
Speaker 1: I think the economic impact and human impact is going
Speaker 1: to continue for a long time. So Joe actually touched
Speaker 1: on this when he mentioned your tweet where you said
Speaker 1: maybe the Taliban needs to get an economist. But what's
Speaker 1: your impression of their understanding or views of finance and
Speaker 1: how the economy works and what role something like a
Speaker 1: central bank should play in it, and do their views
Speaker 1: differ from I guess traditional conceptions of monetary policy. Well,
Speaker 1: you know, I think that's one of the things that
Speaker 1: was never um pushed by anyone, which is they simply
Speaker 1: always had one response, which is we want Islamic formal governance.
Speaker 1: But they never once talked about what their their social
Speaker 1: policy will be, what their economic policy, their macroeconomic stances,
Speaker 1: those types of questions were never asked and never considered,
Speaker 1: and so it's really difficult to know what their response
Speaker 1: will be. UM. I can say that in the provinces
Speaker 1: where they took over, as they were taking over certain provinces,
Speaker 1: that they went to some banks and said, you know,
Speaker 1: stop paying interest, stop lending or obtaining interests. So I
Speaker 1: think that portion would be probably implemented, probably one aspect
Speaker 1: financial policy. But beyond that, I'm I've never heard of,
Speaker 1: you know, many economists on their team. I'm sure they
Speaker 1: can identify it, or they have foreign backers, and I'm
Speaker 1: sure they will introduce them to some but anyone you
Speaker 1: put in that position is going to be facing circumstances.
Speaker 1: Could you see yourself ever going back to Afghanistan? There
Speaker 1: is the president who fled, had said and he's reported
Speaker 1: to be in the U a E. Or I think
Speaker 1: he said he's in the UA that he would like
Speaker 1: to return at some point. Could you see yourself if
Speaker 1: you were to return going back? Or are you done?
Speaker 1: I have now spent um eight years working for the
Speaker 1: government of Afghanistan, seven years in this term, and I
Speaker 1: worked in Ministry of Finance back in two thousand four
Speaker 1: and five. Oh I was the Economic Advisor, I was
Speaker 1: Ministry of Industry and Commerce and now Central Bank governor.
Speaker 1: And I think in any scenario, m eight years of
Speaker 1: government services a long time. Given this change, I can't
Speaker 1: see myself, not only for the Taliban themselves, but you know,
Speaker 1: when you implement reforms in a number of these places
Speaker 1: we talked about Saraf or other people. I made a
Speaker 1: lot of enemies, and to be honest, during a transition phase,
Speaker 1: one fears what is the Taliban's view going to be
Speaker 1: of me? The other fear is uh, you know, during
Speaker 1: a chaotic transition period, someone just says, hey, this person
Speaker 1: did X, Y and Z and you know, who's gonna
Speaker 1: who's gonna follow up and see if it's true. At
Speaker 1: that stage, they'll just take a decision, and so um
Speaker 1: I think not. I'll tell you it's heartbreaking, not only
Speaker 1: for me, but for so many people. In two thousand fifteen,
Speaker 1: when we came there's a new government. There were so
Speaker 1: many people, young people who were coming back to Afghanistan,
Speaker 1: who were implementing reforms, who were spending days and nights
Speaker 1: as you would expect civil servants anywhere, and people who
Speaker 1: were giving their heart to to implement reforms. And what
Speaker 1: we're all heartbroken. I mean, that's it's the human impact.
Speaker 1: It's just you know, I have women employees that worked
Speaker 1: for me and now they're just saying, you know, what
Speaker 1: what are we doing? You know, because they were going
Speaker 1: to school, they were they were working. Uh, the environment
Speaker 1: is you know, quite normal. And then in a span
Speaker 1: of a few days, and you can't imagine how quickly
Speaker 1: this this transpired. I mean, it was that quick. I
Speaker 1: was fortunate to make it, but most were not. And
Speaker 1: so now they're they're living in this environment where there's
Speaker 1: a lot of here. Again, right now the world's attention
Speaker 1: is on Afghanistan. Again, but in two months, it probably
Speaker 1: won't be what's going to happen and whether it bre
Speaker 1: be repercussions for actions they take at that time. And
Speaker 1: I don't think anyone's convinced. So this is something that
Speaker 1: I actually wanted to ask you. So the Taliban has
Speaker 1: been on something of a pr offensive and they're suggesting
Speaker 1: that they've changed or evolved over the years. What's your
Speaker 1: impression of that strategy, and more importantly, should the international
Speaker 1: community believe them? I always say I view people's actions,
Speaker 1: not their words. And the Taliban have been involved in
Speaker 1: a negotiation process which excluded the government of Afghan and
Speaker 1: I think most people that you will talk to have
Speaker 1: are very upset at the Afghan government, but also the
Speaker 1: US government in particular how Isa who negotiated this flawed deal.
Speaker 1: And under that flawed deal, it was clearly stipulated that
Speaker 1: the Taliban had to make subsessions. One was an interrafting
Speaker 1: process where they would negotiate. One was disengaging from al Qaida,
Speaker 1: and I think most intelligence analysts were reports. I think
Speaker 1: the UN even came out with the report that said, no,
Speaker 1: they hadn't disassociated themselves with al Qaida. They didn't go
Speaker 1: through a negotiation process. It was a complete force. So
Speaker 1: they you know, they put on a good show in Doha,
Speaker 1: and that gave them international legitimacy where they could hold
Speaker 1: press confidences and go on foreign trips. But they fought
Speaker 1: to take over. And so they say one thing there
Speaker 1: and they do another thing here, and everyone knew that.
Speaker 1: And I think I would love it if they held
Speaker 1: onto their commitments and there was no reprisal attacks, and
Speaker 1: they allowed women to go to school, and all of
Speaker 1: these things that they're saying now are upheld. Do I
Speaker 1: believe it right now? Absolutely not? Are you? I mean,
Speaker 1: I'm sure you know, just going back to you know,
Speaker 1: what your life was like two weeks ago or even
Speaker 1: a week a half, a week and a half ago. Now,
Speaker 1: like I'm sure you were having conversations with the I, M,
Speaker 1: f U, S, Treasury, etcetera. Are you still engaged with
Speaker 1: them in any capacity. Is this still a conversation that
Speaker 1: you're having or is that those connections basically gone. They
Speaker 1: reach out for me, both both on a personal and
Speaker 1: professional level, personal level just to ask how I'm doing.
Speaker 1: And you know what one person from a certain international
Speaker 1: agency was was very helpful to me. You know, I
Speaker 1: remember at that airport I was texting him and saying, well,
Speaker 1: what should i'd be doing? Right? Can you putting me
Speaker 1: in contact with someone? As you're hearing about on other
Speaker 1: media outlets people are doing it. That was me trying
Speaker 1: to contact. So it's on a personal level, some people
Speaker 1: were very supportive and helpful, and I'm always thankful for that.
Speaker 1: On a professional level, I try to provide information and
Speaker 1: feedback and context where if the question comes up, um,
Speaker 1: but put in a formal capacity are I mean, we've
Speaker 1: been talking about how quickly the situation seemed to change
Speaker 1: from one week to the next. Really and despite the
Speaker 1: very fast takeover by the Taliban there there are some
Speaker 1: signs of resistance brewing. So I'd be curious to get
Speaker 1: your views on what exactly are the chances that the
Speaker 1: Northern Alliance will be able to effectively counter the Taliban. Well,
Speaker 1: there are reports that the vice President Sale did not
Speaker 1: leave the country and ease in count These were massoud Son.
Speaker 1: They're both there, um, and they've made various statements to
Speaker 1: that effect. They were there until you know, I think
Speaker 1: most people know the story of how my sup was
Speaker 1: killed on September nine, two eleven, and kept eleventh happened,
Speaker 1: So you know they've they've been resisting the Taliban from
Speaker 1: prior to the one invasions, so it is likely to continue. Um,
Speaker 1: it will be a tough struggle if they do decide
Speaker 1: to take that route. I mean your comment about the
Speaker 1: women who are working previously under you at the Central
Speaker 1: Bank and then now obviously they have no idea what's
Speaker 1: going to happen. How difficult I guess I would say
Speaker 1: national administration of I think there have been reports of
Speaker 1: the Taliban telling civil servants please come back to work.
Speaker 1: We're going to try and keep keep things going. But obviously,
Speaker 1: you know, continuation of any sort of normal operations would
Speaker 1: seem to be extraordinarily difficult. How hard will that be?
Speaker 1: And it's sort of a cliche, and I say, there's
Speaker 1: only you know as someone who um very ill informed
Speaker 1: Western observer, but there's this sort of like cliche about
Speaker 1: you know, this sort of how difficult it is to
Speaker 1: form a concept of nationhood in Afghanistan. So you know,
Speaker 1: prior to the two thousand one invasion, the Taliban had
Speaker 1: only been in power I think for five years. How
Speaker 1: hard will it be for them to run something that
Speaker 1: resembles an operating government. I think it's going to be challenging,
Speaker 1: and many people have made that commented until now. They
Speaker 1: even in during that five year rule prior to two
Speaker 1: thousand one and now, um, you know what we would
Speaker 1: think of as typical governance or central think policy making,
Speaker 1: social support or services provision, I don't think we saw
Speaker 1: much of that or not a high level. And so
Speaker 1: they're gonna face because face challenges because Afghanistan has changed significantly,
Speaker 1: especially in urban areas. I think you know, the percentage
Speaker 1: living in urban areas is now about it's been twenty
Speaker 1: years people have gone the university, so that there I
Speaker 1: think they will fail leges when there's already been one
Speaker 1: or two protests starting in Jalelabad and another in Cobble
Speaker 1: on Flag Day where they try to repress people from
Speaker 1: not putting up the Afghan flags. And so you know
Speaker 1: it's going to depend on how they decide to repress
Speaker 1: or enforce their own beliefs on people who it's as
Speaker 1: alien to them as it would be to you. And
Speaker 1: so how do they manage that? Do they allow do
Speaker 1: they do they enforce their interpretation as they did prior
Speaker 1: to two thousand one. Are they more lenient. They're making
Speaker 1: comments to that effect, but will they implement it and
Speaker 1: will that be sustained? And then the second part is
Speaker 1: on that the economic side. So until now they're living
Speaker 1: in this environment where you know, for multiple years they've
Speaker 1: been fighting and now they've taken over. Well, now that
Speaker 1: you've taken over, listen, your reserves have been frozen, donors
Speaker 1: have frozen U out, What is your physical policy, what
Speaker 1: is your monetary policy? How will you be providing services?
Speaker 1: And very quickly they're going to have to face these realities,
Speaker 1: which I'm not sure they are have considered or are helpful.
Speaker 1: I have I have one more sort of e con
Speaker 1: related question and sort of the one. The one other
Speaker 1: factor that we haven't discussed but there's been a lot
Speaker 1: of discussion about it is the potential relationship between China
Speaker 1: and the Taliban. And of course it's well known that
Speaker 1: there's sort of an extraordinary amount of UH minerals and
Speaker 1: other natural resources in Afghanistan, including lithium, which is going
Speaker 1: to be increasingly important. How do you see that relationship
Speaker 1: going forward, the China Taliban relationship. Will they be able
Speaker 1: to find some sort of potentially mutually agreeable relationship. Perhaps
Speaker 1: the benefits China from a trade or a material standpoint,
Speaker 1: Perhaps that solved some of the Taliban's cash problems. What
Speaker 1: are you watching for there? So China has a very
Speaker 1: close um they call it an all weather relationship with Pakistan,
Speaker 1: and obviously Pakistan supports the Taliban, so in that sense
Speaker 1: they have in you for building an engagement with them.
Speaker 1: But China's foreign policy tends to be very conservative, especially
Speaker 1: in a place like Afghanistan, and They've made many overtures
Speaker 1: and started some processes for investment in Afghanistan, but I've
Speaker 1: never really followed through or short a willingness to execute on.
Speaker 1: So one example is the Ana copper mind the contract
Speaker 1: of which I can believe was signed in two thousand eight.
Speaker 1: There's a um An oil contract or investment in northern Afghanistan.
Speaker 1: Um there's an oil based in northern which was by
Speaker 1: CNPC number of years ago. Both of those have lacked,
Speaker 1: and I think there were problems in Afghanistan. But I
Speaker 1: think it's a carrot that's always shown, but I'm not
Speaker 1: exactly sure if it's it'll actually be utilized. So this
Speaker 1: carrot of potential investments in Afghanistan. You know, I just
Speaker 1: given the environment, it might be on the agenda over
Speaker 1: fifty year horizon, not in a one to five year horizon.
Speaker 1: They're going to wait and see. That's that would be
Speaker 1: my expectation. And then secondly, in terms of foreign aid,
Speaker 1: also that's typically not a component of China's foreign policy,
Speaker 1: so you don't see them providing such as USA does
Speaker 1: in countries around the world, and so I wouldn't expect
Speaker 1: them to see that. They always wanted a low footprint
Speaker 1: of their staff and visibility of their interests, so I
Speaker 1: wouldn't expect that to also be um something that they
Speaker 1: engage in. I think they will be held out as
Speaker 1: a potential opportunity, but not for the exit you did.
Speaker 1: And so I think in that sense, notwithstanding this close
Speaker 1: friendship or engagement between all the parties involved, I wouldn't
Speaker 1: expect anyone to be able to replace the financial contributions
Speaker 1: of you know, the US, EU, I, m F, World Bank.
Speaker 1: If that doesn't get solved, then you can't replace it
Speaker 1: with a China or another country. Is there anything that
Speaker 1: you would like to say to the international community, so
Speaker 1: you know, all thoughts, we know that we do have
Speaker 1: some policymakers who occasionally listen. I imagine there's going to
Speaker 1: be a lot of interest in this episode. Is there
Speaker 1: a particular message that you would like to get out
Speaker 1: to people like them and the broader world. I would
Speaker 1: say Afghans are very disappointed right now. And let me
Speaker 1: say in two areas. One is again, this deal without
Speaker 1: the Afghan government, which created the frameworks for them to
Speaker 1: be legitimized and come back, was the wrong approach. It
Speaker 1: would have been better for the US to simply have
Speaker 1: left and said we are no longer here and we
Speaker 1: are removing our troops. But instead there was an agreement
Speaker 1: that was pursued and signed in which they discredited the
Speaker 1: Afghan government, which they came and forced the Afghan government
Speaker 1: to release five thousand prisoners, some of which who were talibans,
Speaker 1: some of which were murders, some of who of which
Speaker 1: were major drug dealers. And when m HM the administration
Speaker 1: in Afghanistan refused, it was said, we would draw one
Speaker 1: billion in aid to Afghanistan. So imagine a government trying
Speaker 1: to defend itself and an international international partners coming to
Speaker 1: you and saying released five thousand prisoners from Washington, d C. Prisons,
Speaker 1: their murders, their drug dealers, removed them, and then we're
Speaker 1: going to sign a treat with the people who are
Speaker 1: backing them. It would have been better simply for the
Speaker 1: US to have left. So I think that part is
Speaker 1: an aspect which I would ask people to consider and say,
Speaker 1: you know, was that necessary? Could we have it would
Speaker 1: have been better to have left without it. That's you know,
Speaker 1: it even contributed to the loss of moral and most
Speaker 1: the dices because everyone believed that there was a secret
Speaker 1: deal for to bring the talent and back in power,
Speaker 1: and so that VI would you fight? I think that's
Speaker 1: one aspect of it. And secondly, more immediately is to
Speaker 1: again consider the humanity you know, of people in Afghanistan.
Speaker 1: You know, it doesn't the two things can be separate.
Speaker 1: Whichever way you decide to leave or disengage from Afghanistan,
Speaker 1: you know, consider the humanity of the people who are there,
Speaker 1: who are have to face these circumstances. Is who have
Speaker 1: to face these economic challenges, the personal lives, the uncertainty.
Speaker 1: And I think perhaps what we're seeing on TV right now,
Speaker 1: what we're seeing on airport road is just an indication
Speaker 1: that perhaps this could have been done in a better way. Ash, well,
Speaker 1: I'm very conscious of the time and that you have
Speaker 1: a lot to be doing at the moment. So um,
Speaker 1: I think we'll leave it there, and thank you so
Speaker 1: much for coming on all thoughts Uh, we both really
Speaker 1: appreciate it. Thank you so much. Tas I appreciate it
Speaker 1: as well. Thank you for having me. Thank you. That
Speaker 1: was fantastic. So Joe, I can't possibly say that I
Speaker 1: enjoyed that conversation, although I did find it interesting, absolutely
Speaker 1: heartbreaking to consider the situation that Afghanistan now finds itself
Speaker 1: in One thing I will say is it was very
Speaker 1: interesting to compare and contrast the current situation with what
Speaker 1: Afghanistan looked like just a few months ago. From a
Speaker 1: monetary policy perspective, so Asmal mentioned that they had had
Speaker 1: success with the digitalization program. Inflation was relatively low in
Speaker 1: the single digits, the currency was relatively stable, a little
Speaker 1: bit of depreciation but nothing major. And again, all of
Speaker 1: that in the context of COVID and in many ways,
Speaker 1: I think a lot of people in the West are
Speaker 1: always going to view Afghanistan as something of a troubled country.
Speaker 1: But if you think over the past year, you know,
Speaker 1: in many ways there had been progress, efforts were being made,
Speaker 1: and now we're seeing many of them I've done. Yeah.
Speaker 1: I had the comment that he made about the women
Speaker 1: employees at the Central Bank reaching out to him and
Speaker 1: saying like what now or you know what, and that
Speaker 1: it like drives home like like this sort of like
Speaker 1: unimaginable speed and change of society. And so one day
Speaker 1: you're a sort of you're a professional working at a
Speaker 1: modern central bank, engaged in something that sort of is
Speaker 1: like recognizably modern finance throughout the world, and the next
Speaker 1: day you're like you don't even know like whether it's
Speaker 1: safe to go to work or whether you have a job.
Speaker 1: And what it's kind of it's the speed of change.
Speaker 1: I mean, it's thinking about it from the perspective of unemployee,
Speaker 1: that situation I think is basically unimaginable to us. Absolutely.
Speaker 1: All Right, well, um, I guess we should leave it there. Yeah,
Speaker 1: let's leave it there. Okay. This has been another episode
Speaker 1: of the All Thoughts podcast. I'm Tracy Alloway. You can
Speaker 1: follow me on Twitter at Tracy Alloway, and I'm Joey Isn't.
Speaker 1: You can follow me on Twitter at the Stalwart and
Speaker 1: our guest asmal Ahmadi. He's on Twitter. He's at a Ahmadi.
Speaker 1: Follow our producer Laura Carlson, She's at Laura M. Carlson.
Speaker 1: Followed the Bloomberg head of podcast Francesca Levi at Francesca Today.
Speaker 1: And check out all of our podcasts at Bloomberg onto
Speaker 1: the handle at podcasts. Thanks for listening.