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Zakhilwal: Ties with IMF severed

Zakhilwal: Ties with IMF severed

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On
Jun 20, 2011 - 19:41

KABULinfo-icon (PANinfo-icon): Finance Minister Hazrat Omar Zakhilwal on Monday said the Afghan government had severed its relations with the International Monetary Fund (IMF) for stopping a $70 million payment after the near collapse of nation's largest private bank.

Relations were cut off after the financial institution presented "politically motivated" conditions to resolve the bank problem, the minister told reporters in Kabul.

Trouble at Kabul Bank surfaced last year, as the public discovered that the bank made hundreds of millions of dollars in questionable loans to shareholders—including the elder brother of President Hamid Karzai. Some used the loans to buy luxurious mansions in Dubai, United Arab Emirates.

Others used the money to invest in risky prestige projects like an airline and shopping malls in Kabul. Manyof the loans were "undocumented," so there was no system to ensure they were paid back.

Zakhilwal said the IMF wanted to hand over the investigation of Kabul Bank’s dealings to a foreign institution. He said his ministry was making efforts to address the crisis as quickly as possible, and asked the fund not to apply further pressure.

He said the Afghan government would not let a foreign entity probe into the bank crisis.

Zakhilwal said the IMF focused on minor issues and was "not a willing partner" in resolving issues surrounding the Kabul Bank crisis. Even if Afghanistaninfo-icon met all the requirements, the IMF would find something else to criticise the nation about, he said.

The IMF has said that trust fund donors made the decision to stop the payment.

The Kabul Bank scandal has stalled a large chunk of donor funding to Afghanistan as allies wait until they are confident the government has fixed the financial crisis.

Earlier in the day, the head of the Office of Oversight for Anti-Corruption, Dr. Azizullah Ludin, urged the international community not to suspend aid in response to the ongoing scandal at the private sector bank. The crisis is close to being resolved, he said.

"The donors should not stop giving aid for this minor incident. They should instead help us get rid of the situation," Lodin said.

He said the investigating committee had sent its latest report to the President, and a list of the 207 borrowers had been referred to the Attorney General's office.

ma/at

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