Pakistan's interior minister has appealed to the international community to unfreeze Afghan government's currency reserves, which would help the country's economic stability.

Speaking to journalists on Sunday, Interior Minister Sheikh Rashid Ahmed said that there was no wisdom in freezing the bank accounts of Afghanistan’s government.

Much of the Afghan central bank's $10 billion in assets are parked overseas, where they are considered a key instrument for the West to pressure the Taliban to respect women's rights and the rule of law.

This action has exacerbated the country's economic crisis as Afghanistan is currently facing a shortage of dollars.

Just this week, Afghanistan central bank's former chief said with the Taliban in control and foreign aid blocked, Afghanistan's economy is likely to contract sharply as it faces a shortage of cash.

"I don't want to say economic collapse, but I think it's going to be (an) extremely challenging or difficult economic situation," Ajmal Ahmady said, predicting GDP would shrink by 10 to 20 percent.

Former Afghan central bank chief warns of 'difficult economic situation'

Ahmady, who fled the country just after Kabul fell to the Taliban in mid-August, said international sanctions that block aid funding and restrict access to $9 billion in reserves also could create a shortage of domestic currency.

"Obviously, the access to dollars is going to be severely curtailed. But there's also the question of local currency afghanis" since the country has no local printing press, he said in a discussion hosted by The Atlantic Council.

Pak ambassador returns to Kabul

Afghanistan's assets

It has been reported earlier that the Biden administration has no plans to release billions in Afghan gold, investments and foreign currency reserves parked in the United States that it froze after the Taliban's takeover, despite pressure from humanitarian groups and others who say the cost may be the collapse of Afghanistan's economy.

US has no plans to release billions in Afghan assets, Treasury says

Any unfreezing of these assets may be months away, financial experts have said.

Officials from the US State Department, US Treasury, White House National Security Council and other agencies have been in regular discussions about Afghanistan's finances since the Taliban took over in mid-August, ahead of what the United Nations and others see as a looming humanitarian crisis.

Facilitators of peace

Meanwhile, Pakistan's interior minister added that, contrary to Indian media's claims, fencing at the Pak-Afghan border was "aimed at curbing terrorism".

"We [Pakistan] are the facilitators of peace,” added Rashid.