Afghanistan can crash any time due to collapsed banking system, warns Red Cross

Geneva/Kabul: – The volunteer organisation Red Cross has issued a severe warning that the economy of Afghanistan is on the brink of collapse within just six months of the takeover by the Taliban. The banking system in Afghanistan has already collapsed completely and illegal means like ‘Hawala’ are being used for money transactions. Afghanistan has disconnected from the international banking systems under Taliban rule and the Red Cross warning clarifies that the country is facing dire consequences.

The United States has frozen Afghan funds worth nearly $9.5 billion. At the same time, European Union, World Bank, International Monetary Fund and other institutions have stopped the aid provided to Afghanistan. This has brought Afghanistan to a bankrupt state and there is a tremendous shortage of essential commodities and food grain. It is believed that the country is functioning on the aid made available in various forms by countries like India and China through voluntary organisations.

There is a cash crunch in Afghanistan and industries, including banks, have started shutting shop. The organisations receiving foreign funding also have been severely hit and the Red Cross warning seems to be a part of the same. Red Cross Director Robert Mardini warned, ‘More than 500,000 employees have not received their wages since the last so many months. We are forced to use means like Hawala to reach salaries to our employees. The banking system has completely collapsed in Afghanistan. The central bank is also not operational.’

He also warned ‘A country cannot function using means like Hawala. A solution should be worked out through diplomatic negotiations.’ Mardini said that Red Cross had raised a fund of $160 million for Afghanistan and appeals have been made to donors for $50 million.

By June this year, the United Nations Development Program warned that 97% of the Afghan population would sink below poverty. In contrast, the Food and Agricultural Organisation had claimed that more than 20 million Afghan citizens are in dire need of humanitarian aid.