Pakistan mulls options to keep Afghan banking system afloat

KARACHI: Pakistan’s economic affairs ministry said on Wednesday the country was weighing different options to help the central bank in Afghanistan deal with the economic challenges in the war-battered country and keep its financial system afloat.
Afghanistan has been facing a significant financial crisis since the Taliban takeover in August as the United States and other western powers froze its international funds.
Pakistan, which has urged the world community to continue its engagements with Afghanistan, has tried to support the neighboring state to prevent its complete economic meltdown.
In a recent meeting chaired by the economic affairs minister, Omar Ayub, Pakistani officials deliberated ways to strengthen the banking system in Afghanistan.
“Reza Baqir, Governor State Bank of Pakistan, presented various options to support Da Afghanistan Bank [DAB] to ensure its smooth functioning and achieve price stability and help manage economic fluctuations,” the economic affairs ministry said in its statement.
According to some estimates, the international community has frozen about $10 billion of funds for Afghanistan.
The war-torn country has also lost its contact with the global financial system, intensifying its economic crisis and creating fears of a humanitarian disaster.
It was not clear what kind of immediate support Pakistan’s central bank could provide to Afghanistan since the relevant Afghan and Pakistani officials did not respond to Arab News queries.
However, people familiar with the development say Pakistan plans to offer technical assistance to the neighboring country.
“They intend to offer technical training to the employees of Afghanistan’s central bank,” Dr. Vaqar Ahmed, joint executive director at the Sustainable Development Policy Institute, told Arab News. “DAB is currently facing a shortage of staff and will hire new people. Pakistan wants to train them in banking operations and surveillance.”
Ahmed said that Pakistan had also offered to train Afghan bankers to comply with the requirements of the Financial Action Task Force.
“Apart from that, the country is willing to train the commercial banks and help them with their operations,” he continued.
Wednesday’s meeting at the economic affairs ministry also emphasized the importance of bilateral economic assistance for Afghanistan in the ongoing context.
“We are keen to support the people of Afghanistan so they can address their socioeconomic challenges,” Omar Ayub told the participants.
The meeting further discussed how to save the lives and livelihood of Afghan nationals by providing immediate technical and financial support to the neighboring country.
The minister noted that Pakistan had already implemented 20 projects costing $148.35 million in various sectors, including education, health and infrastructure, while nine other projects costing $221.83 million were being executed in Afghanistan.