- TOKYO - After 23 years of
war, the days look numbered for Afghanistan's tattered currency, the afghani.
Printed by rival warlords, often on a whim, the afghani -- or at least
the various versions now in circulation -- could be replaced by the US
dollar to help stabilise the Afghan economy, a senior Asian Development
Bank official said on Saturday.
"Various warlords can print money. It needs to be controlled,"
said Yoshihiro Iwasaki, Director General in the South Asia department at
the Manila-based multilateral institution that channels aid into Asia's
poorest countries.
Iwasaki was speaking ahead of a meeting in Tokyo where donors from nearly
60 countries and institutions including the ADB will pledge billions of
dollars to rebuild Afghanistan. Key to the reconstruction programme will
be the introduction of a viable currency. Even before US bombs started
to fall on Afghanistan, years of fighting had ravaged the currency, along
with the economy. Warlords in different parts of the rugged country have
been printing afghanis at will, forming a complex system where the currency
has different values in different parts of the country.
"The first step for the interim government will be to stop issuing
afghanis," Iwasaki told Reuters in an interview. "They have to
implement that," he said. The next step would be to introduce a currency,
such as the US dollar, that is convertible in world markets.
"There are now effectively four or five currencies," Iwasaki
said. "Maybe in the time being we have to introduce the US dollar
or some convertible currency. Let's assume the dollar will be opted by
the government."
Under this proposal, for the next three to four years, maybe less, authorities
would monitor the value of the afghani against the dollar in various parts
of the country as the government built up a central bank and formed macro-economic
policy. At this time, four or five afghani currencies would effectively
generate different exchange rates against the dollar. If that worked and
the economy stabilised, the central bank would then absorb the afghani
currencies, retire the US dollar as the base currency, and issue a new
Afghan currency. "It could take three to four years perhaps. It might
be quicker. It depends on how quickly the economy recovers."
In the street markets of Kabul, trading in the afghani has been turbulent
since September 11 when it jumped to nearly to 80,000 against the dollar.
It hit 11,000 after the Taliban abandoned Kabul, and traded around 30,000
currently.
Iwasaki said a trust fund would be a key tool for paying the running costs
of government. He said the ADB, World Bank, United Nations and Islamic
Development Bank would form an Implementation Group to distribute aid,
including the funds in the trust and money pledged by governments on a
bilateral basis. "This is the mechanism to ensure the coordination
of the funds," he said. "Most of the recurring costs of the government
will be funded through the trust fund."
The drought-devastated farms, desperate for irrigation, are seen as a key
area of development, while long-dormant natural gas fields in the north
will need to be overhauled. The task of rebuilding Afghanistan was so enormous
there has never been anything like it, he said. "I don't think there
is a single model that can be applied without any modification."
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- The News International, Pakistan http://jang.com.pk/thenews/jan2002-daily/20-01-2002/main/main6.htm
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