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Afghanistan: Banks running out of dollars, help sought from Taliban

The cash squeeze threatens to upend the country’s already battered economy, largely dependent on hundreds of millions of dollars shipped by the US
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.
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.
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Reuters   |   Mumbai   |   Published 16.09.21, 12:53 AM

Afghanistan’s banks are running out of dollars, and may have to close their doors to customers unless the Taliban government releases funds soon, three people with direct knowledge of the matter said.

The cash squeeze threatens to upend the country’s already battered economy, largely dependent on hundreds of millions of dollars shipped by the US to the central bank in Kabul that make their way to Afghans through banks.

One month since the Taliban captured the capital of Kabul, bankers fear fewer dollars could inflate the cost of food or electricity and make it harder to afford imports, spelling further misery for Afghans.

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.

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.  The hobbling of the central bank, whose foreign reserves were frozen after the Taliban took charge, could also hamper efforts of the international community to support Afghans. Commercial banks have appealed to the central bank in recent days to free up the supply of US dollars.

But they have yet to get an answer to their requests and are concerned that the government's vaults, in the presidential palace and headquarters of the central bank, are so empty that it may be in little position to help.

“We are left with liquidity for a few days’ payments only,” said one of the people with direct knowledge of the matter. “If the government does not react to the situation , there will be demonstrations and violence.”

In a statement on its website on Wednesday, the central bank’s acting governor said banks were stable. “The banks are completely secure,” he said, adding that commercial banks usually kept 10 per cent of their capital as cash.

 



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