Afghan Bank’s Losses Could Put Afghanistan Into Financial Frenzy
January 31, 2011
(ChattahBox World News)—Kabul Bank, the largest bank in Afghanistan, faces up to $900 million in losses after being mired by fraud and mismanagement, the New York Times reports. Analysts fear the bank could collapse, which may prompt financial panic in a country already struggling financially.
Afghan investigators suspect that a large part of the $900 million was siphoned into the pockets of specific privileged Afghans, which has made a full analysis of the bank’s wrongdoing difficult, the Times notes. Afghan officials, however, counter that much of the money was invested in a real estate market that ended up crashing, and that additional funds were invested in projects that didn’t pan out or were donated to politicians.
Afghanistan’s money problems are so serious that the IMF has not yet renewed its assistance program to the country, which expired last September, the Times reports. Other, “donor” countries, which might typically help Afghanistan, are restricted from giving money to countries that are not in good standing with the IMF.