The United Nations called for support to the banks of Afghanistan. As reported Reuters citing a UN report, the country’s banking system was on the verge of collapse.
The organization noted an increase in the number of people unable to pay off loans, outflow of deposits and a lack of cash liquidity. The combination of these factors puts the financial system in danger of collapse within a few months. The UN predicts colossal negative consequences from the collapse of Afghan banks. According to forecasts, such a development of events will increase the number of refugees in the world and lead to a migration crisis.
The banks in Afghanistan were affected by the abrupt end of most foreign support after the Taliban (a terrorist organization banned in Russia) seized power in the country on August 15. As a result, the country’s economy was shaken, billions of dollars of Afghan assets were frozen overseas, and banks had to set weekly limits for citizens to withdraw funds from their accounts.
Aid to Afghanistan is complicated by sanctions against Taliban leaders. “We need to find a way to make sure that if we support the banking sector, we do not support the Taliban,” said the head of the United Nations Development Program in Afghanistan, Abdullah al-Dardari. “We’re in such a dire situation that we need to think about all the options and think outside the box.”
Since the Taliban came to power, the UN has repeatedly warned that the Afghan economy is on the verge of collapse, and it will take decades to recover. The International Monetary Fund also predicted that the country would face a drop in imports, a depreciation of the Afghan (national currency) and accelerating inflation. Afghanistan’s situation is complicated by the drought and the coronavirus pandemic.
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