Our previous submission on this issue conceived the gradual issuance of Islamic Dinars by DAB. We suggested that by June 2024 all currencies issued by DAB should be in the form of Islamic Dinars.
Currently all domestic currency in circulation in the economy is in the form of Afghanis. We recommend a gradual withdrawal of Afghanis from circulation and their replacement by the Islamic Dinars.
:This replacement may take place in the following way
a.All banks and financial institutions may be required to surrender a portion of their currency holdings of Afghanis and the DAB may convert them into Islamic Dinars and return them to the banks. Quarterly targets may be set for such replacement (say 10 percent of all bank held Afghanis may be required to be converted by March 2023, 20 percent by June 2023, 35 percent by September 2023 and so on).
b. Retailers and businesses should be encouraged to convert a rising proportion of their Afghanis into Islamic Dinars in their transactions with banks or directly with DAB branches. All tax receipts from business should be accepted only in Islamic Dinars. However, no mandatory targets should be set for business for conversion of Afghanis into Islamic Dinars. The process should be entirely voluntary.
c. A nationwide campaign should be launched through the Dawah Majlis and the national media to encourage the general public to surrender Afghanis for Islamic Dinars. Again Ministry may set non mandatory targets for evaluating the success of the scheme. Some modest monetary incentives for conversion of Afghanis into Islamic Dinars may be provided (e.g. for every 100 Afghanis surrendered for conversion into Islamic Dinars, 102 Islamic Dinars are given) but these incentives should be provided out (so as not to effect the general price level) and the main reliance must be on the activities of the Dawah Majlis moralization.
4. In effect WGAE proposes the operation of an open ended dual currency system (such a system was effectively operated in the USSR during the 1920s). If this scheme is adopted while all currency issued by DAB will be in the form of Islamic Dinars by June 2024. It cannot be said in certainty when Afghanis will be completely substituted by Islamic Dinars. This target may be achieved by June 2024 or much later.
5. However, the scheme will Insha Allah be successful if:
a. All currencies – both Afghanis and Islamic Dinars are issued on the basis of estimates of national physical production (of goods and services) and not on holdings of gold or foreign reserves.
b. It is ensured that no foreign currency (dollar, rupee, toman, currency issued by the Geneva Fund etc.) circulates in Afghanistan. All foreign currency inflow are surrendered to DAB.
c. A mass based dawah majlis is functional to ensure that contextualizes economic practices with the moral and spiritual life of the masses. The credibility of all economic policy (specially anti-inflationary monetary policy) depends crucially on the mass acceptance of the fact that ma’ash is only a means for the achievement of falah in ma’ad. The initiation of the activities of a mass based fully operational Dawah Majlis is of crucial importance to defeat the imperialist attempts to separate the Afghan masses from the revolutionary struggles through fostering terrorism in Afghanistan.
6. The success of this scheme also depends upon:
a. The nationalization of all banks and financial institutions in Afghanistan with a tamveeli structure. We think this is urgently necessary and could be very grateful if DAB informs us of the obstacles in the process. If this is done then we will try to develop suggestions for overcoming the obstacles.
b. The development of a framework for effective credit planning to ensure that no speculative or interest based money or capital market transaction are legalized in Afghanistan in the form of Islamic banking or foreign investment and trading contracts.
c. Attempts to coordinate investment and trade contracts with countries being thrown out of the international framework, patenting and trade system – Iran, North Korea, Venezuela, Belarus, Cuba and Russia. The Emirate islamia cannot submit to the regulatory regime of the international trade, finance and property system since it is riba and gharar based. Tentatively, slowly and partially we must seek to develop an alternative trade and financial regulatory transactional framework in cooperation with the other “excluded” countries. We therefore propose the holding of a conference in Kabul during 2023 to which private businesses and public sector institutions from Iran, Russia, North Korea etc. should be invited to formulate trade, investment and currency swap operations – cooperation with Iran is particularly important both for investigating the possibility of the formation of customs and currency union and for formulating a joint strategy for defeating American terrorism in the region. Such a cooperation can pave the way towards a recognition of the Islamic regime by these countries. Defense cooperation with Russia is also important to strengthen air defense against American drone attacks which are just about to begin given the November 2022 statement of the Pentagon.
Dr. Muhammad Tahir
Dr. Aamir Hussain Siddiqui
Muhamad Yunus Qadri
Javed Sheikh
Working Group on Afghan Economy