Afghanistan’s financial system on the verge of collapse, lender warns

  • The Afghan financial system is in an “existential crisis,” said the head of one of its major lenders.
  • He told the BBC people were just withdrawing money and “most banks don’t work.”
  • The United States froze nearly $ 10 billion in Afghan central bank reserves after the Taliban took control.

Afghanistan’s banking system is on the verge of collapse, said the head of one of the country’s largest lenders.

Syed Moosa Kaleem Al-Falahi, Managing Director of the Islamic Bank of Afghanistan, told the BBC that the Afghan financial industry was facing an “existential crisis”. He said clients were panicking after the Taliban took control of the country last month and Western countries and agencies froze the country’s funds in response.

“There are huge withdrawals right now,” he said.

“Only withdrawals take place, most banks do not operate and do not provide full services.”

United States last month frozen nearly $ 9.5 billion in assets owned by the Afghan central bank. Most of this money is held by the

Federal Reserve

Bank of New York.

And the International Monetary Fund said last month that Afghanistan could no longer access its resources. The World Bank has also announced that it is suspending funding for projects in the country.

The un said earlier this month that the frozen assets of Afghanistan should be released to avoid “a serious economic downturn”.

Al-Falahi said the freezing of funds by Western countries and agencies meant Afghanistan was looking to China and Russia for help.

“It seems that sooner or later they will succeed in having a dialogue,” he said. China has already sent aid to the Taliban-ruled country and pledged tens of millions of dollars.

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Don F. Davis