The United Nations warned that Afghanistan’s banking system could collapse within months if urgent action is not taken to fix it.
According to a report by the United Nations Development Program, the collapse of the banking system and the resulting negative social impact will lead to a huge economic cost.
The UNDP report stressed that the problem must be resolved “quickly to improve Afghanistan’s limited productive capacity and prevent the banking system from collapsing.”
Abdullah Dardari, head of the United Nations Development Program in Afghanistan, said: “We need to find a way to make sure that if we support the banking sector, we are not supporting the Taliban.”
He added: “We are in such a painful situation that we need to think about all possible options and we have to think outside the box, what was unthinkable three months ago must become thinkable now.”
In an effort to salvage the banking system, the United Nations Development Program proposed a deposit insurance scheme, steps to ensure adequate liquidity for short and medium-term needs as well as credit guarantees and loan deferral options, and that it should “coordinate with international financial institutions that have extensive experience in the Afghan financial system Because it will be critical to this process.”