Currency transition proceeding despite problems

One place the Afghan public can keep warm in during the chilly winter weather in Kabul right now is behind the ministry of finance building. Every day workers unload lorryloads of the old Afghan currency and burn the notes in huge brick furnaces. The country's transition to its new money has been going on since October. The change from old to new is proceeding well despite logistical problems, Isa Turab, deputy governor of the Central Bank of Afghanistan, told IRIN while sitting on a huge pile of 12 billion in old notes awaiting destruction. "We only have two helicopters to deliver new money to the north - this is not enough," he said. Afghanistan is banking on the introduction of the new currency to help stabilise its weak economy and attract desperately needed foreign investment. According to Turab, the bank has printed 27 billion new afghanis, and will take out of circulation about 15 trillion's worth of old ones. Not all the new notes would be put into circulation immediately, because some would be held as stock, he said. Afghanistan's central bank has no clear idea of how many old afghanis were in circulation after unrestrained printing under Taliban rule and during wars and occupation before it. Around 2,000 mt of old notes will destroyed, according to estimates. Also called the afghani, one new note is equivalent to 1,000 of the old ones, which were due to have been phased out by 4 December. But because of the huge practical problems associated with delivering new notes to Afghanistan's remote towns and villages and disposing of the bulky worthless old currency, this date has been put back to early January. "We are looking at 6 January now, that's when the old notes will be illegal," Turab said. The launch of the new currency coincided with the anniversary of the 7 October 2001 start of the US-led bombing campaign that brought about the fall of the Taliban. Two planeloads of the notes, printed in Germany and Britain, were distributed to money changers for a two-week period, with the general public gaining access shortly afterwards. Dirk Bruggemann is an international monitor with the Louis Berger group, which is organising the transition along with the government and USAID. While overseeing the daily burning of about 66 billion old afghanis in Kabul, he told IRIN that the difficulty in northern Afghanistan had been getting the new cash into remote areas while at the same time disposing of the old. "You have to do both at exactly the same time, otherwise there is chaos," he said. "Otherwise the predicted security and political problems associated with this process have not materialised."

Ten billion in old currency goes up in smoke

The new banknotes have been proving popular with the money changers, who attract huge crowds in Kabul's central market district. "Before it was a joke, I had to bring cartloads of notes to work. Now with this [the new notes] life is much easier," Asef, a heavily bearded Tajik in a smart leather jacket, told IRIN between transactions. The new currency is one of the preconditions for economic growth in this impoverished Central Asian state, international financial organisations say. "The IMF here in Afghanistan is strongly supporting this operation. A national currency in which there is confidence is one of the cornerstones of economic policy that is sustainable," Bruno de Schaetzen, the IMF Resident Representative in Kabul, told IRIN. Despite initial reluctance to deal in the new money, shopkeepers in Kabul have now adopted the currency wholeheartedly. "The old money - there were at least six different types, and it was so bulky and easy to forge. The new stuff feels like proper, modern cash," a grocer on Chicken Street - the hub of Kabul's emerging retail economy - told IRIN.