Afghanistan’s management of its banking system has improved enough that the International Monetary Fund is ready to renew its credit program with the country. The fund suspended its program more than 13 months ago in large part because of both fraud at Kabul Bank, the nation’s largest private bank, which had caused losses that initially exceeded $900 million, and an overall lack of oversight of the banking system. The new bank has been financed by Afghanistan’s Central Bank. The Afghan Finance Ministry has issued a promissory note guaranteeing that it will pay back the Central Bank the full amount of the loan to the new Kabul bank, about $800 million, with a combination of recovered assets and tax revenues, according to people close to the bank. The monetary fund had been concerned that the Central Bank’s reserves would be depleted, but the repayment arrangement appears to have satisfied it. Also, participation in the program has acted as a bill of health for other donors, including the United States, Britain and the European Union, assuring them that the country is safe to invest in. The monetary fund’s agreement with Afghanistan has been approved at the staff level, but must pass muster with the fund’s executive board.
Afghanistan is on track to possibly improving their decimated economy and quality of life with this announcement. Not only is this good news for Afghanistan but for other big economies such as the US and Britain who have a lot already invested in the country. Additional aid coming into the country will help to curb violence by putting Afghanis to work rebuilding the country and restoring the economy.
No comments:
Post a Comment