Editor in Chief: Moh. Reza Huwaida Monday, June 25th, 2018

Recover of Money Spent for the Bailout of KB

One of the most critical issues in the economic sphere in the country has been the scandal in Kabul Bank, the largest commercial lender bank in the country. When the reports hit the headlines, previously, of popular international News Agencies and then domestic ones, people rushed to all branches and started withdrawing their deposited cash.

The origin of the problem referred to large amounts of money withdrawn from Bank by highly influential people without engaging themselves to bank's legal procedure. The result was leaving Bank without enough cash reserve to deal with depositors.

The problem actually doubled when depositors came to understand about the problem of the bank and all rushed into and furiously started withdrawing their money out of it. The process further brought its cash reserve under strain and, therefore, strengthened the possibility of collapse.

Since the salary of public employees was paid through this bank, government had to hold measure to prevent the collapse, which if happened would have large financial and economic repercussions.

Meanwhile, there were also international pressures to solve the problem of the bank and persecute concerned individuals guilty for the crisis. Many international institutions, particularly, IMF clearly sent the message to Afghan government that without solving the Kabul Bank Crisis, it would delay or even stop its financial support.

According to information at disposal, due to the scandal of Kabul Bank, Afghan government has already lost millions of dollars as part of international support for development.

The government had no choice ahead except to bail it out. It has spent more than 800 million dollars to help it stand back on its foot. And presently it wants to recover its bailed funds. The new head of Da Afghanistan Bank, Afghan central Bank, Mr. Noorullah Delawari, who headed Central Bank from 2004-7 has said that around 80 percent of funds spent for the bailout of Kabul would be recovered through selling properties.

There is also accurate information about the intention of government that it wants to sell the Kabul Bank as it has already scaled down its linkage with. It is highly possible, that salaries of government employees would be paid through other banks, but not exclusively through one.

Anyhow, the bail out of the bank by the government, though criticized for paying public money for the sake of private commercial bank, could prevent bigger loses.