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Afghan lawmakers OK funds for Kabul Bank bailout
Kabul Bank nearly collapsed in 2010 because of mismanagement and hundreds of millions of dollars in questionable loans.
Kabul: Afghan lawmakers agreed on Saturday to reimburse the government for bailing out the Kabul Bank, which nearly collapsed last year because of mismanagement and hundreds of millions of dollars in questionable loans.
The lower house passed a bill to provide up to $825 million over the next eight years to recapitalise Afghanistan`s central bank — a move that smoothes the way for the International Monetary Fund to extend Afghanistan a new line of credit. Afghanistan has been without IMF backing for more than a year, threatening to choke off billions in aid to the country.
The Kabul Bank debacle has become a symbol of the country`s deep-rooted corruption. The case is being closely followed by Afghans and international donors because it is a barometer of government officials` pledge to root out patronage, graft and show accountability to world financial institutions, such as the IMF. A parliamentary decision to provide money to shore up the central bank was a key step requested by the IMF in meetings earlier this month, the Afghan Finance Ministry said in a statement.
"Completing the last requirement to enter a new IMF program is an extremely significant milestone in transition to increased Afghan responsibility for security and development," Finance Minister Omar Zakhilwal said in the statement.
He said it would encourage those working to restructure the bank, recover assets and investigate criminal activity and gives the international community assurances it sought to fulfil its commitment to deliver 50 percent of all international assistance through government coffers. He said work would begin on implementing reforms for the nation`s financial sector. According to Zakhilwal, of the more than USD 800 million in fraudulent loans issued by Kabul Bank, more than USD 70 million had been recovered, USD 350 million in loans had been restructured for repayment and USD 110 million in assets associated with the loans have been seized and transferred to the government.
Whatever money is recovered will offset the amount that the government will spend to recapitalise the central bank.
Criminal investigations against the bank`s top two executives, several bank officials and others are under way. The two bank executives are Sherkhan Farnood, the former chairman of Kabul Bank and a world-class poker player, and Khalilullah Ferozi, the former chief executive officer.
Bureau Report
The lower house passed a bill to provide up to $825 million over the next eight years to recapitalise Afghanistan`s central bank — a move that smoothes the way for the International Monetary Fund to extend Afghanistan a new line of credit. Afghanistan has been without IMF backing for more than a year, threatening to choke off billions in aid to the country.
The Kabul Bank debacle has become a symbol of the country`s deep-rooted corruption. The case is being closely followed by Afghans and international donors because it is a barometer of government officials` pledge to root out patronage, graft and show accountability to world financial institutions, such as the IMF. A parliamentary decision to provide money to shore up the central bank was a key step requested by the IMF in meetings earlier this month, the Afghan Finance Ministry said in a statement.
"Completing the last requirement to enter a new IMF program is an extremely significant milestone in transition to increased Afghan responsibility for security and development," Finance Minister Omar Zakhilwal said in the statement.
He said it would encourage those working to restructure the bank, recover assets and investigate criminal activity and gives the international community assurances it sought to fulfil its commitment to deliver 50 percent of all international assistance through government coffers. He said work would begin on implementing reforms for the nation`s financial sector. According to Zakhilwal, of the more than USD 800 million in fraudulent loans issued by Kabul Bank, more than USD 70 million had been recovered, USD 350 million in loans had been restructured for repayment and USD 110 million in assets associated with the loans have been seized and transferred to the government.
Whatever money is recovered will offset the amount that the government will spend to recapitalise the central bank.
Criminal investigations against the bank`s top two executives, several bank officials and others are under way. The two bank executives are Sherkhan Farnood, the former chairman of Kabul Bank and a world-class poker player, and Khalilullah Ferozi, the former chief executive officer.
Bureau Report