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Security deal impasse sparking capital flight

16 Dec 2013 - 15:58
16 Dec 2013 - 15:58

KABUL Banks Association (ABA) on Monday said the delay in signing the Bilateral Security Agreement (BSA) with the United States had caused capital flight from the country.

Khalil Sediq, the association chairman, told a meeting in Kabul that the prevailing uncertain situation in the country had worried banks’ authorities and created new challenges for them.

Declining investments and the deadlock over the BSA signing were prompting cause capital flight, an issue of grave concern for bankers, he said.

People were reluctant to expand their businesses because of uncertainty, Siddique said, revealing that banking services in Afghanistan had witnessed a 20 percent decrease in recent years, showing slow economic growth.

He urged Da Afghanistan Bank, the leading financial institution of the country, to convince the authorities into signing the agreement in the interest of the economy.

Last month, a consultative Loya Jirga advised President Hamid Karzai to sign the agreement before the end of the year. But the president has sought security and peace assurances from the US.

Moneychangers in Kabul say the afghani has been losing lost its value against the dollar during the BSA impasse.

But Khan Afzal Hadawal, the central bank deputy governor, says the delay in concluding the security pact would not harm the country’s economy. He insists the agreement must protect the interest of Afghanistan.

“We have vast resources which can be utilised to keep the afghani stable against the dollar. We assure the people the local currency will regain its lost value,” Hadawal added.

He claimed Da Afghanistan Bank had alternatives to keep the value of the afghani intact in case of a decline in foreign assistance.

The central bank has fixed the dollar exchange price at 56.50 afghanis, but moneychangers in Kabul put it 55 afghanis.


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