Flight of dollars

The American news agency Bloomberg’s report that millions of dollars are being smuggled daily from Pakistan to Afghanistan at a time when Pakistan is in desperate need of cash is shocking. But given that the local media has been covering this information often for several months, this is hardly breaking news. It was just confirmed on the American website. Due to this circumstance, Pakistan’s condition, which is already experiencing a severe economic crisis, is swiftly getting worse. The Exchange Companies Association of Pakistan estimates that dealers and smugglers cross the border with roughly $5 million per day, which is significantly more than the $17 million that the central bank of Afghanistan provides each week. Because of this unlawful flow of funds, the Taliban has avoided feeling the heat of Western sanctions imposed on Afghanistan following the American withdrawal in 2021. It should be noted that the US made a formal agreement with the Taliban leadership for the safe return of its forces from Afghanistan, after which the Taliban were able to establish control and an interim government in Kabul without opposition, but the American administration has refused to allow the funds to be transferred to Afghanistan. Almost $9 billion in Afghan funds were frozen rather than returned to the Afghan government, causing significant foreign exchange shortages in Afghanistan. Later, American sanctions caused a dollar shortage in Pakistan, as the country feeds Afghanistan. So, now that Pakistan’s foreign exchange reserves have plummeted and the country is on the verge of bankruptcy, it is critical to halt the unrestricted transfer of dollars to Afghanistan and for both countries to trade in local currencies. The government has been forced to close LCs due to a lack of funds, and as a result, no one has been exempted from the inflationary pressures, but since last June, the impact of the escalating cost of living on low- and middle-income people has been intolerable. The suffering of commoners, who have seen rising prices grind down their savings, is not adequately reflected by inflation indices.