Afghan Finance Minister Slams IMF on Bank Crisis

Posted June 20th, 2011 at 11:20 am (UTC-5)
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Afghanistan's finance minister is accusing the International Monetary Fund of “playing games” when it comes to resolving the crisis surrounding the country's largest private lender – Kabul Bank.

Tens of millions of dollars in aid from foreign donor nations has been withheld from Afghanistan, since the IMF decided not to renew its support program after reports of the crisis first surfaced.

Kabul Bank nearly collapsed last year when allegations of mismanagement, cronyism and questionable lending became public in September. The bank's executives and shareholders are accused of helping themselves to nearly one billion dollars in fraudulent loans.

Omar Zakhilwal told reporters in Kabul Monday that the Afghan government has fulfilled almost all of the IMF's conditions to resolve the crisis, but that the IMF keeps making new demands. The finance minister hinted that the government may pull out of negotiations.

Last week, Western and Afghan officials said the IMF had rejected the governments proposals to reform Kabul Bank and that $70 million in foreign reconstruction aid would be withheld.

In April, the Afghan government announced plans to divide Kabul bank in two, with a receivership office to isolate hundreds of millions of dollars in “bad” loans and a successor bank to take over the “good” loans and assets.

Afghanistan relies on foreign aid for about 40 percent of its operating budget.