Afghanistan central bank governor: ‘I think the economic situation will deteriorate’

The governor of the Afghanistan central bank has warned that the country’s economy is likely to be plunged into despair after the Taliban took control of Kabul.

Speaking to the BBC, Ajmal Ahmady said: “I think the economic situation will deteriorate. I would expect donor flows [of aid] to significantly decline over the next couple of months, and that’s going to cause… the currency to depreciate.”

There were initial concerns that the Taliban could seize control of the central bank’s $10bn of reserves, which include $1.3bn in gold reserves.

However, a large proportion of the reserves are hold at the Federal Reserve Bank of New York, while the majority of the Afghan central bank’s £6.1bn of investment are hold in US Treasury bonds and bills.

Ahmady highlighted that inflation could soon spiral out of control in the country as a result of severe currency depreciation.