Without access to these crucial funds, the government cannot even pay import taxes on food containers from Pakistan, according to the country’s Chamber of Commerce and Industry’s vice chairman, Yonus Momand.Īccording to a report sent to aid agencies by senior international officials overseeing the Afghan economy, the outlook remains bleak, and the economy could shrink by a third if this banking crisis is mishandled.
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Already, the World Bank (WB), the International Monetary Fund (IMF) and the European Union (EU) have suspended their funding facilities for Afghanistan-based projects, while the US has frozen $7 billion in Afghan foreign reserves held in New York. “I believe that some small banks such as Maiwand Bank, Afghan United Bank, Ghazanfar Bank and others will become bankrupt very soon.” The capital adequacy of those lenders had already been under scrutiny for some time, and they are now reportedly failing to comply with the asset-quality requirements, management-performance conditions, earning principles and liquidity requirements set forth by the central bank.Ĭoncerns also continue to mount over the Afghan banking sector’s foreign-reserves capacity, especially in US dollars, should the Western Powers insist on keeping them frozen and cut ties with Afghan lenders and businesses. Therefore, cash withdrawal is the only thing banks are busy with now in the country,” a lawyer in Kabul noted on September 21 when filing a report with non-profit, online legal news service JURIST. There are no new customers to banks, and the people who line up behind banks are only there to withdraw money. “When it comes to banking and finance, the ex-government has put some measures to obtain public’s trust on banking sector, which is damaged these days. Some are even stating that no single bank has enough money to serve its customers. “Banks have already pared back services and imposed weekly $200 payout limits amid a run on savings, with long queues outside branches as people try to get hold of dollars.” Afghanistan’s central bank, Da Afghanistan Bank (DAB), is also limiting withdrawals by private companies and entrepreneurs to $25,000 once a month from their bank accounts, local news media reported in recent weeks. “Although the cash crunch has lasted weeks, the country’s banks have in recent days repeatedly underlined their concerns to the new government and central bank, two of the people said,” Reuters reported on September 15.
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And according to Ajmal Ahmadi, the previous central bank governor who fled the country, virtually all of the central bank’s roughly $10 billion is held abroad.Īs such, Afghanistan’s banking sector is quickly running out of dollars, meaning that a number of local lenders may soon have to close their doors to customers, especially if the new Taliban regime does not release additional funds. Indeed, the sheer speed of the Taliban’s victory, which it managed to secure in just a matter of days as its forces easily overpowered the US-trained Afghan security forces and captured all major Afghan cities, severely compromised the chances of a smooth transition for the country’s banking system. Reports strongly suggest that much of Afghanistan’s banking sector was taken by surprise when it was revealed that the central bank ran short of dollar reserves following the government’s fall to the Taliban in mid-August, just two weeks before the United States was due to completely withdraw its troops and end its 20-year presence.
WHO FINANCES THE TALIBAN FULL
“Only withdrawals are happening, most of the banks are not functioning, and not providing full services.”
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“There are huge withdrawals happening at the moment,” Al-Falahi told the BBC (British Broadcasting Corporation). In late September, the chief executive officer of the Islamic Bank of Afghanistan, Syed Moosa Kaleem Al-Falahi, warned of an imminent collapse in Afghanistan’s banking system.