Odd Lots - Afghanistan’s Former Central Bank Chief on the Dire State of the Country’s Economy

Episode Date: January 13, 2022

The Afghanistan economy was already in bad shape, with heavy reliance on foreign dollars, prior to the collapse of the government and the takeover by the Taliban. Since the fall, things have gotten even worse, with inflation accelerating and GDP plunging. There are multiple factors at work, though the main one is the cutting off of outside sources of dollars. On this episode we speak with Ajmal Ahmady, the former head of Afghanistan's central bank, on the difficult situation, and how the economy might operate going forward.See omnystudio.com/listener for privacy information.

Thanks for listening to Odd Lots. Follow the show on Amazon Music for more future episodes or just ask, Alexa, play the Odd Lots podcast on Amazon Music. And welcome to another episode of the Odd Lots podcast. I'm Tracy Alloway. And I'm Joe Wisenthal. You know, Joe, it's obviously the start of a new year. And I'm just thinking back to 2021. And there were so many things that happened. It's kind of crazy when you think back. I mean, just think back this time last. year, GameStop hadn't even really begun to take off. And then it suddenly became such a big thing. But it feels like that happened, I mean, absolutely ages ago. Yeah, it really does. I feel like there were some really big themes, obviously. We don't need to go over them that happened in 2021. But there were also just a bunch of smaller, remarkable stories.

Yeah. And you mentioned remarkable stories. So one of the very big things that happened last year was the fall of Afghanistan. And we had those dramatic scenes out of Kabul as people scrambled at the airport to try to get out of the country. And it's one of those things, you know, at the time, people were talking about how those pictures were going to go down in history. It was all over the news. The news cycle focused on it a lot. And we did an Oddlots episode on it at the time. but it's sort of fallen off the front pages since then. And in the meantime, Afghanistan has really been struggling under Taliban rule. You see these news reports now. Again, they're not on the front page, but somewhere in the back of the newspaper talking about mass starvation, inflation,

inflation, absolute economic collapse. And I think it's important that we do a follow-up on what is actually going on in the Afghanistan economy right now. Right. So Afghanistan was in the news for about two weeks near the end of, I think it was around the end of summer. And obviously one aspect of it was just the withdrawal after basically two decades of the U.S. forces being there. But then the other aspect was simply the dramatic pictures at the airport and around the airport. And people, there was an evacuation. And then of course, the camera is left and you don't see much Afghanistan in the news. But to your point, everyone anticipated that there would be extreme economic fragility and likely

inflation due to the balance of payments, issues and the loss of aid that would come along with a rule by the Taliban. And now he seemed to be seeing exactly that, that an economy that was already in bad shape is an extremely bad shape right now. Yeah, exactly right. And there's clearly an informational challenge here, right, which is that there aren't a lot of journalist operating in Afghanistan at the moment for obvious reasons. There isn't a lot of clear financial data necessarily coming out of the country. And so that can be difficult or make it

difficult to actually report on the situation there. We are going to try our best in this episode. We are going to be speaking once more with Ashmaul Ahmadi. He's the former governor of Afghanistan's Central Bank, now a senior fellow at Harvard University. So Ashma, thank you so much for coming back on the show. Thank you very much for having. It's a pleasure to be here. So maybe just to begin, could you give us your impression of the situation on the ground in Afghanistan since we last spoke to you back in August? You know, I mentioned some of the things that we've seen reports of starvation, double-digit inflation, currency volatility. I think there was one day in December where apparently the Afghani fell something like 11 percent.

in one day. That's obviously been challenging for people on the ground. But what are you hearing from your contacts in the country? I think it's in line with what you're hearing as well. The economic situation continue to deteriorate. The situation is getting worse. So, you know, back in August when we first spoke, I've mentioned a few things, one, that you'd likely see a large GDP contraction, which is what we're seeing now. You're likely to see a FX depreciation, which we'll pass on through to inflation, which we're also seeing, and we're likely to see an increase in refugee flows. So I think all of that is in line. And so the people I speak with are seeing the same things, unfortunately. So when we last talked, we talked about, I mean,

you basically anticipated this. You know, we talked about the difficulty that Afghanistan would have importing dollars. We talked about the current account and what would happen with the loss of aid. But, you know, just sort of talked about what's changed from a sort of like external perspectives. Where were, where was Afghanistan getting its money prior to the change in rule? How is it financing itself? And what do sort of domestic operations look like now? So originally, let's say in 2020, the current account deficit or the trade deficit, I'm sorry, it was approximately $7 billion, which was being financed by international aid flows. And so obviously the aid flows have stopped.

The assets have been frozen. And so, you know, what you're seeing is a contraction of the imports that are flowing into the country because they can no longer be paid for. No official numbers have come out, but I would expect that current account or trade deficit to significantly contract over the course of 2022. You know, to be honest, actually, the currency depreciation hasn't been as significant as I would have expected. So it's depreciated.

It's gone to about, I think the latest figure is roughly 110. It went higher than that, but came back. But that's about 30, 35 percent depreciation. Given the economic shock and stoppage of 80, of 80s. aid flows, I was expecting even a larger depreciation. But I think what you have is the transmission mechanism being instead of the currency being GDP. So you've had a larger GDP contraction than I would have expected. So something that we talked about a lot back in August, and you just mentioned it then, was the fate of this $9 billion in dollar reserves that Afghanistan actually owned,

but was held by the U.S. So my understanding is the U.S. still doesn't want to hand it over because they don't want to give money directly to the Taliban. But can you maybe walk us through the situation around those deposits right now and what the likelihood is that Afghanistan actually gets them at some point? Yeah, so the currency reserves are still frozen. And the situation has become even more complicated since the last time we saw. spoke. So the New York Times has reported on this a few times. On September 13th, there was a writ of execution that was provided to the legal department or the court system saying essentially that the plaintiffs of the September 11th attacks would like to have access or gain access to the

reserves. If you recall, you know, perhaps 20 years ago, there was a court case against al-Qaeda and Taliban, and a court found that the defendants, in this case, Al-Qaeda and Taliban, liable by default in order to them pay damages of $7 billion. Now, that court case was, you know, on paper. There's no way to actually collect on that. So what happened is these victims, approximately 150 of them gathered together, and then on September 13th provided this writ of execution. What happens now is a little bit unclear. are my understanding is the court system seeks to have the opinion of the U.S. government in such cases, and originally the U.S. government and the Biden administration were to provide their opinion back in December, but now that's been delayed until the end of August. So all this to say

is that you have these reserves. Of course, the Taliban would like access to them. At the same time, it's being held up through the U.S. court system where the defendants or the victims of 700 11th would like access to them. And it's my understanding that at some time this year in 2022, perhaps January or February, there will be a decision made as to the status of those. Within that, you know, the Times pointed out that perhaps a portion of it could be used to pay the victims of September 11th and a portion could be freed up to provide humanitarian assistance for the people of Afghanistan. So that's the question. That's the current situation, as I understand it.

So just to be clear, who would make that choice? It would have to be a court ruling, and would that be a final ruling, or if there were a court ruling, would that just go to potentially another appeal? It's a good question. I guess I'm not clear if it would be a final ruling, but it's my understanding that the court system would have to decide on this case. And there might be negotiations between the Justice Department and the plaintiffs to see what the final outcome would be. but I'm unsure if whether it would be able to go to an appeals court. But just thinking out loud, probably wouldn't because in this case, the Taliban or al-Qaeda is not going to represent themselves in court.

So I don't know who would actually appeal to that judgment. The other thing that's happened since we last spoke is, I guess you've got a replacement at the central bank. Mohamed Idris is the new Afghanistan-Sin. central bank governor. As far as I know, there aren't a lot of details available about his previous experience in economics or monetary policy. But what do you know about him? And what's your impression of how he's been running the central bank or how the central bank has been running in general so far? So he is the new central bank governor. He was previously on the Taliban Economic

Commission. And my understanding is that he doesn't have a strong background in economics or finance issues. And as such, he's dependent on senior staff that remain there to run the operations day-to-day and run the policies. I think he's kept some members of the staff that were there when I was governor and some others have been fired or relieved from working at the central bank. The policies that he's implementing are roughly in line with what I would have expected. So I mentioned in our previous call that one of my last actions was to limit the withdrawals that people could take out, given the shortage of dollars. And so I think that's continued. And so they've placed a limit, which has slowly increased over time. So I think people can, I think it was 200 originally,

and I think it might have increased to 300 or 400 over time. So I think that that's the right approach. I've also read that the Taliban are collecting approximately $3 million per day in revenues, so roughly a billion dollars per year in revenue. So that's given them some flexibility, I think, to provide currency to the business community and the financial sector. So overall, I think, again, it's a tough situation. He probably doesn't have the background or experience, but again, anyone, even with experience in this situation,

would find it tough to run a central bank under sanctions. Canadian women are looking for more. More out of themselves, their businesses, their elected leaders, and the world are out of them. And that's why we're thrilled to introduce the Honest Talk podcast. I'm Jennifer Stewart. And I'm Catherine Clark. And in this podcast, we interview Canada's most inspiring women. Entrepreneurs, artists, athletes, politicians, and newsmakers, all at different stages of their journey.

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Like how do you get cash out to provinces that are further away from the capital? How do you get cash to places where it's safe and unlikely to be stolen or unlikely to be under the control of the Taliban? Obviously, the whole country's under the control of the Taliban to some extent. What's your impression of that aspect of how the central bank is working in terms of like just the mechanics of cash distribution? It's a good question. I don't have that much insight or into how they've changed their operations. you know, I would expect it to be along the same lines of what we manage just with much fewer dollars. So we had, you know, an FX auction system where banks and currency traders came in and bid electronically for dollars to be auctioned off.

And, you know, on average, you know, we have a certain amount that we would auction off three times a week. So I'd imagine they have the same system going, but at a much lower dollar auction rate. The one thing that has changed is, I believe, the UN now is providing some dollars to the central bank. I believe not for them to auction themselves, but they're now providing it to a private bank, AIB bank, which is the largest bank in Afghanistan, so that they could provide dollars to the market. And this, this, you know, brings in the larger question of how to provide dollars in this economy, because the central bank is as such a sanctioned entity, so dollars can't be brought. in and provide it to them. But some people are proposing that instead of providing to the central

bank, it's provided to a private bank who then conducts the functions of the central bank. Yeah, this is something that I wanted to ask you about. So there, I mean, we can get into the sanctions issue in a little bit. But one of the ideas floating around is that you could maybe give money directly to people or to certain groups and bypass the Taliban completely. But I imagine in order to do that, you need to have a functioning banking system. And as we discussed the last time, you were on, so much of the Afghanistan financial sector is informal. There are these informal money lenders called, I want to say seraphas.

Is that right? Hawales, that's right. And so I guess my question. is like what is the current state of Afghanistan's banking system and would it be able to handle those kind of direct payments or would you inevitably expect to see more and more financial activity taken up by informal money lenders or the black market? Again, you know, the informal Hawala dealers, you know, already provide financial services to the majority of Afghans. There's only 15% banked market. But again, the banking sector, you know, if it's even only 15%, the banking sector

provides the financial services for the hollas or provides dollars for the hollas who then provided to the rest of the population. So it is difficult to move forward without a functional financial sector. And so the broad question, I think, that some people in the international community are thinking about is, you know, how do we either deal with the central sector? And so the broad question, bank as a sanctioned entity or be how do we create a financial sector without the central bank? And so under the second option, what some people have proposed is simply to say, look, the central bank is sanctioned. We can't provide dollars through it. So why don't we have a private bank perform the functions of the central bank? And so I think that's something people are taking

a look at. And on a trial basis, it's my understanding that the UNDP, for example, has provided some money for AIB to distribute it to the business community. So that could be potentially one option moving forward. One question I have about the Taliban's cash management needs is who is supporting it right now? And there's the U.S. and the sanctions, which we'll talk about shortly. But is it getting cash and support? And do you have any sense of what scale from any allies right now? they are not, to my knowledge, getting any dollars from directly from any donors or from any

international organizations. Their only source funding right now is, for example, through taxes and customs. So, you know, as I mentioned before, approximately $3 million a day, so approximately a billion a year. How long can this situation go on for? Like, what is the ultimate end game here? I think, broadly speaking, you know, one of the goals, we had in the government was to build state institutions that could take on more and more responsibility from the international community. So for example, there were some services that the UN agencies or NGOs were providing that over time we wanted the government to take on. And I think in some sense you're seeing a reversal of that. What's happening now is there's

fewer and fewer functions that will be taken up by the government and more and more responsibilities will fall on the UN and NGOs to provide. So, you know, some examples of that is, you know, this financial services or money transfer system instead of going to the central bank, may I go, may go to a private bank to conduct central bank activities. Another example is education and health services will likely be provided through NGOs or through the UN. Some of those functions people argue should be retained by the state. So, for example, the education sector instead of the UN hiring 100,000 teachers, we have already in the civil service a lot of teachers.

Why don't we go ahead and just pay them? And under the new carve-outs of the sanctions regimes, the new exemptions of the U.S. Treasury has provided, my understanding is that the UN is able to pay for teacher's salary. So in sum, the flow will be now a donor, whether it's the U.S. or European Union or another country, will provide aid to the U.N. and the U.N. can then pay for teachers directly without paying them through the Ministry of Education, which might be a sanction entity. or the donor will give money to an NGO who will provide health services and therefore won't touch the Taliban government.

So you have a number of these workarounds, which in some ways is a hollowing out of the central government, but it's a way to deal with the situation as it stands. What are the dollar amounts we're talking about with these alternative arrangements relative to the gross level of A that was going in previously, previously through the government. So previously we had, what was it, around two and a half billion going to the central government and another three billion for the military. So let's call it roughly $5 billion of international aid and $2.5 billion from domestic revenues. So seven and a half total.

That's a large figure. You have to take into account that now a significant portion of that is no longer required. A significant portion of our budget was for military salaries and police salaries. And given that now the conflict or the level of conflict has significantly reduced, those amounts should be much less. And likely you can pay or they'll be forced to pay the police and military, the Taliban military, less. So that's one way I think you'll see a contraction of what's required. The second is the amount that the UN has thus far stated they want to collect for 2022. If I remember, they said they want to raise approximately $4 billion for humanitarian purposes for 2022

and another perhaps $4 billion for other programs. And I think that's probably over-optimistic, probably even the original $4 billion, maybe two optimistics. but that gives you an indication roughly, right? So 7.5 billion total government budget, a lot of that can be, it can be much less. And so therefore, you have, you know, perhaps if the UN is successful, 4 billion being raised and provided for humanitarian purposes, as well as teacher and teacher salaries and health care delivery. So I get that maybe you could work all of that out from a budget perspective, but I guess my question is, is that a valid way of state building for the Taliban, this idea that, you know, they only take on very limited government functions

and basically outsource things like health care and education to NGOs or non-government entities who have the money and are able to do this? I mean, it's probably not the best possible outcome, but, I think it's the best possible outcome given the situation, right? So thus far, no country in the world has recognized the Taliban, and so therefore no money is going to float to them. I think the Biden administration has made it relatively clear that they won't be any recognition anytime soon, but on the other hand, you have the humanitarian needs of the population. So, you know, it's not the best case where you're building up the state capability, but it's a mechanism by which

humanitarian assistance can be provided without the money reaching Taliban hands. I guess what I was trying to get at was would the Taliban be satisfied with this arrangement or at some point would it be seen as undermining their authority in the country or do they not really care about that? No, no, of course, they care very much about it. On November 17th, the acting Taliban Foreign Affairs Minister released a public letter to the United States Congress, stating that the funds must be released. There have been many comments and some demonstrations, I think just a few days ago in Kabul, demanding the release of the funds and demanding additional aid and for the aid to be directed through the government. But I think at this stage, the international

community just is not listening. And to that point, after that Taliban statement was released on November 19th, the U.S. Special Representative for Afghanistan tweeted that the U.S. has already provided 500 million, and U.S. officials made it clear the Taliban that if they pursued a military takeover rather than a negotiated settlement, that they would not be recognized. So you do have a situation where the Taliban are unhappy with the situation, but it doesn't look like the international community thus far as budging. I want to go back to something you talked about a little bit in the beginning. And you talked about the central bankers reliant to some extent on existing staff and some of the staff who probably worked close with you at the central bank.

One of the big questions that people wondered about is what would happen to the sort of like civil servants who had worked in government under a certain expectation of how the government would be run and then rapid change. How many staffers have they kept in place? And what has changed for the people who are essentially doing the work of running the government? and I guess based on the people you speak to and your sense of the professionals basically running things. Well, I think the first thing that comes to mind is female staff have been told to stay at home. So, you know, I had a few directors who were female and they've essentially said, stay at home. And in other words, you know, they're not working there.

So I think that's a big loss and continues to be. We can talk about the education and the fact that they're not opening up schools as well. So that's a very important aspect that needs to be discussed. Secondly, I think that I think they're hiring or valuing people who they know and people who they trust. So there's a number of people that I brought on professionals that have been released over the past year. And I think that's unfortunate for the central bank and for the country. And so they're forced to find other opportunities. The people who remained are in some cases, people who have been there for 30 years.

So I think I mentioned the last time even we spoke that, you know, I had one of my directors who has worked at the central bank since the 1990s, since the Taliban were there previously. And so he's someone that they kept on because there was some level of trust, I think. So it's a mix. Some people left and went into hiding because they were afraid of what the reaction. might be. Some people that were able to leave the country. And so it's a mix for all the people who were previously there. Can I ask a potentially sensitive question? So Ashraf Ghani, the former president, he infamously, I guess at this point, fled Kabul, you know, apparently right when the U.S. and the Taliban

were negotiating some sort of handover. And he gave an interview a few days ago where he basically defended his decision and said that he'd done the best thing and that he'd saved Cabell by leaving. And, you know, I'm aware that obviously you left quite quickly as well, but after the president, or after it had become clear that the president had already left, what do you think of that, of like Ghani's explanation for why he left? I probably haven't changed my view from when we first spoke, which is he was placed in a very difficult situation, you know, some might say impossible. And so I recognize that, but at the same time, the decision on the last day for him to depart was his to take. And, you know, there should have been

some planning or some recognition. You know, people debate whether, you know, if he should have stayed or left, but I think the key part is he should have known that things were deteriorating to such an extent that some planning had to take place. And I think the decision to leave on that last day, leaving me, leaving a lot of people to fend for themselves is where I fall in. Are there still people evacuations happening or not formal evacuations,

but are there still people who are finding their way out of the country at this point? Or to what degree has that become impossible? There are still some people. receiving approvals for SIV status or P1 or P2 status, the issue then becomes they have to travel to a third country

in order to apply and move the process forward and that becomes really challenging for some people. So there's still efforts, but I think the flow has significantly declined. So there's just one more thing on the economy that I wanted to ask you about and this is the idea

of somehow retooling the existing Afghanistan economy in order to generate more revenue that the Taliban could actually be in charge of. And I think there was an official from the Taliban administration that talked about maybe boosting exports in order to get that money and avert economic collapse. And I guess my question is, how viable is that given that Afghanistan has always been, you know, imports have always heavily, heavily outweighed its exports. which you talked about a little bit at the beginning of this discussion.

Yeah, I think it's challenging, right? So previously before I was central bank governor, I was Minister of Commerce, and we tried to push exports up to a billion for the first time. But our imports were $7 billion, right? So you can very easily see the huge gap we have on our trade balance. So, you know, even if they're successful, let's say they push up exports to, you know, $1.2 billion, 1.5 billion, right? you're still going to have this very large trade deficit that you're going to have to finance through some means. So, you know, if it's possible, if they're able to get some mining projects

going and increase exports, that would help on the margin. But I think the larger question still remains, you know, the international community. Without the support of the international community, it becomes a very challenging situation. You know, back in August, there are these theories that China would come in or, you know, large mining projects potentially could come in and support the Taliban government. And I was skeptical then. And I think that's, you know, played out the way that I projected in the sense that those kind of flows might be marginally supportive, but the fundamental issue probably won't be resolved until there's some, yes, until the international community finds out how to support them. And so, you know, part of the

solution is what we talked about just a few minutes ago, which is, you know, if international community does provide, let's say, $4 billion to the UN to spend in Afghanistan, and there has to be some oversight of the UN, but let's say that 90% of that gets spent in Afghanistan, well, that's already providing a significant portion of funding for the trade deficit. Canadian women are looking for more. More out of themselves, their businesses, their elected leaders, and the world are out of them. And that's why we're thrilled to introduce the Honest Talk podcast. I'm Jennifer Stewart.

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Get the reporting and the context from Bloomberg's 3,000 journalists and analysts we're all over the world. Listen to the latest from Bloomberg News Now on Apple, Spotify, or anywhere you listen. You know, it was interesting. I was reading through some of the Inspector General reports, and I hadn't read through them before until the fall, basically about various aid and development initiatives that had taken place over the last 20 years to build up greater domestic industry and things like textiles and crafts and other services. And it was sort of like, it was a depressing read because it read like, you know, all of these

endeavors were a large string of failures and these programs that were designed to create jobs. They largely didn't or numerous ones didn't. And they would say after five years, this created four jobs after spending $80 million or whatever it is. Do you have a sense in your view like, what is it about that approach to development that didn't work? Because obviously, lots of money was poured in with the hope of creating some sort of sustainable industry, creating export, not a lot of successes. Why didn't it work? And is there a better, Is there a better model or was there a potential superior model? That's an important question.

I think there is a better model and there's a lot of flaws with the existing model. What you have is, you know, and I remember back working in the Ministry of Finance back in 2003 when these aid flows were picking up, what happens is you have a lot of people coming in from various embassies. So, you know, you have USAID, you have UK aid. You have these various development agencies, and they're looking for projects. So they're saying, hey, from D.C. or London, we just received X million dollars or billion dollars that we need to spend in Afghanistan. And then, like you have the military aid contracting sector.

So in the U.S., there's a big three famous U.S. aid contractors, Kamonix, DAI, and I think one other, who put together these projects. and then they also subcontract to local NGOs. And what happens is without a lack of focus, a lot of aid agencies, NGOs come with projects that are, you know, in some ways you could say important, but perhaps not useful for state development or helpful in the long run, right? So you have, you know, someone saying, we need to provide bicycles for the handicap.

We need, I think there's a Washington Post article recently that said, that cited a project where they imported cashmere or goats from, I forget where, Nepal for Afghanistan, and at the end, at a very high cost, and at the end it didn't really support local industry. So you have a lot of these ad hoc projects going on that at the end don't add up. And so when you do that over a course of many, many years, you look back and you say, well, what was the impact of all that? And I think that's where the cigar reports come in. and it's, as you said, perhaps a disheartening read.

So some structural thinking needs to be had around how to provide better aid in these contexts, and especially now, right? So it's not something that's passed. And now that donors will provide funding to the UN and NGOs, a significant portion will go for humanitarian purposes. And so that's more clear cut. You're buying food or you're providing health services for the people. people, and it's not ad hoc projects. But a portion of that, you know, I think might go to such

projects. And so some oversight needs to be continued even in the current environment, or perhaps more so in the current environment. Yeah, sorry, I just, I started Googling for that goat story. Apparently, the U.S. spent $6 million on a project to import nine Italian goats to boost Afghanistan's cashmere market. And it didn't work. Interesting. So I guess my last question is, are there any catalysts on the horizon to improve the situation? It just feels like there's a very big, well, it feels like there's a very negative dynamic in the Afghanistan economy right now. And it feels like it's incredibly difficult to correct it. I mean, it was challenging before when you were central bank governor. And it seems even more challenging now,

given that the entire economy is so heavily dollarized, but now doesn't have any access to dollars. So is there any point that you see where things might get better or where the system might end up getting fixed? I think we're probably not going to end up with the optimal outcome. I think we're going to have to deal with a second best or third best type of situation that at its heart is not as stable as we would like. So, you know, you're going to have a situation where the Taliban are going to be in power for the foreseeable future. There might be some issues or inter-Taliban issues, but they're there right now. Money will not be flowing to them. It will be flowing through the UN and through NGOs to provide humanitarian assistance to the people.

That amount will likely not be enough to grow the economy or raise living standards. or perhaps not even to sustain existing 11 standards. It's going to decline to a lower state over time. And so that's on the negative side. I guess on the positive side, what I'd say is the U.S. Treasury has released three new general licenses, which provides greater clarity to donors and NGOs and the UN that they can provide services. And so that I think should open up the flow of humanitarian assistance in Afghanistan to a greater

extent so that we likely won't see the worst outcome, which we've heard and read about over the past few months, which is, you know, as we move into the winter season, there's perhaps upwards of 20 million people who are food insecure. And so, you know, the risk to them of a severe negative outcome. And so I think we're likely to avoid that with these recent changes, but it's not going to create a situation that's going to improve. It's probably going to be a relatively, stable, but a situation where both parties are unhappy. Unfortunately, there's not better news, I don't think. Looking back at everything that's happened in the past few months, is there anything that you

think you would or should have done differently with the benefit of hindsight? Yeah. Yeah. It's a good question. I'll answer in two parts. I think, first, this was a state collapse on the grandest scale. and as such there's a lot of anger and I understand that anger and if there's a part that I contributed to that then I take my responsibility but what I will say is this was not a state collapse like it was in

Lebanon where the central bank was at the heart of the collapse this is not Venezuela or Syria where hyperinflation was taking place you know at the central bank inflation was at 4%. We had central bank reserves of 15 months import coverage that provided 15 months import coverage ratio. And we're implementing payment systems that I think few central banks in the world have done. If there's something that I should have done, it was, you know, to resign earlier and left and perhaps, you know, CMO was going on and recognize that I was not going to change a situation and leave. Well, Ajamal, thank you so much for coming back on the show and giving us an update on the

situation. I appreciate it. Thank you very much for having me. It's a pleasure. Thank you, Ajamal. So, Joe, I can't say that was a fun conversation. Obviously, it was a very depressing conversation to hear about an economy collapsing and people being at very real risk of dying of starvation and things like. that. But it was good to speak with Ashmole and get an update on the situation. And also, you know, as he mentioned, some of the accusations that have emerged since the fall of

couple. Yeah. I mean, it's obviously, I don't know if I would say it's an impossible situation, but certainly seems like a near impossible situation to have a sort of like robust, thriving economy in a situation which are cut off and which are not not getting significant amount of dollar aid at least nothing like it was before in which there isn't much of an export sector it's pretty minor yeah i mean it was already uh it's already difficult and it's interesting to hear that how much of it is uh how much of the leg down has been through is in aishmala surprised about it the shrinking GDP as opposed to sort of surging inflation, which I guess hasn't been as bad as he had expected.

Yeah, that was interesting. The other thing that struck me is this idea of all the workarounds of how to actually get aid to people without it flowing through the Taliban and this idea that I guess you're going to end up with the Taliban as a centralized government, but one that doesn't actually provide that many services other than, I guess, security and the army. and then everything else just ends up getting sort of outsourced to NGOs. Yeah, that's probably, and it's very easy to imagine that that's what it'll be like. They'll also be interesting.

This didn't come up in our discussion, but of course, people often talk about the difficulty that any centralized authority in Kabul would have in terms of the affairs of the state across the entire territory of Afghanistan. and it is somewhat easy to imagine that state of affairs, as you're describing, and as Asimala described, of, yeah, the NGOs delivering some of these services donors rerouting around the Taliban and that sort of being the status quo for some time. Yeah. All right. Well, shall we leave it there? Let's leave it there.

Okay. This has been another episode of the Odd Thoughts podcast. I'm Tracy Alloway. You can follow me on Twitter at Tracy Alloway. And I'm Joe Wisenthal. You can follow me on Twitter at The Stallwork. Follow our producer, Laura Carlson. She's at Laura M. Carlson. Follow the Bloomberg head of podcast, Francesca Levy, at Francesca Today. And check out all of our podcasts at Bloomberg. Under the handle at podcasts. Thanks for listening. I'm Francine Lacqua, an award-winning journalist. And I've got a new podcast, leaders with Francine Lacquhar from Bloomberg Podcasts. I've interviewed everyone from Heads of State to fashion icons, a award-winning journalist. And I've got a new podcast, leaders with Francine Lacquhar from Bloomberg Podcasts. I've interviewed everyone from. about the news of the moment, but I've always been curious, who are these people as leaders? I don't think there's one right way to be a leader.

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