Watchdog Warns Afghanistan’s Banking System Might Collapse

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Afghanistan’s banking system is at a breaking point because of a lack of cash and the economic consequences would likely be disastrous, the secretary general of the Norwegian Refugee Council (NRC), Jan Egeland, said on Monday.

Egeland is on a visit in Afghanistan at the moment.

“Afghanistan’s economy is spiralling out of control. The formal banking system could collapse any day now because of a lack of cash. I’ve spoken to families who tell me they are surviving on tea and small scraps of old bread,” Egeland said in a statement.

The Afghan economic collapse is fraught with an even more deteriorating humanitarian situation where even the most basic services will no longer function, the humanitarian official said.

“Dealing with the liquidity crisis is critical as aid organisations seek to scale up to meet urgent humanitarian needs,” Egeland added.

He called on UN member states to “urgently broker a multilateral agreement” to stabilize the economic situation in Afghanistan, fund appropriate public services and address the liquidity crisis.

The Afghan economy has been facing collapse since the Taliban seized power last month, as the takeover prompted international organizations and donor countries to suspend aid and funding of humanitarian projects. The International Monetary Fund, among other financial institutions, blocked an automatic payout of $460 million and suspended the country’s special drawing rights in August.

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