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IMF Urges Afghans To Seek Kabul Bank Assets, Impunity Like US

By Matthew Russell Lee

UNITED NATIONS, May 21 -- With Afghanistan in transition, the International Monetary Fund today issued a report that "several reforms have been delayed."

  On banks, the IMF's Article IV review says

“Directors concurred that continued efforts are needed to strengthen the banking system and promote financial deepening. They encouraged the central bank to monitor the banking system closely and enforce prudential regulations decisively. They looked forward to the rapid implementation of the strategic plan for strengthening financial sector supervision and recommended the prompt passage and implementation of the new banking law, amendments to the central bank law, and provisions to assure adequate legal protection of central bank supervisory staff. They encouraged stronger efforts to recover Kabul Bank assets and finalize the privatization of New Kabul Bank.”

  Last week John Sopko, the US special inspector general for Afghanistan reconstruction (SIGAR), said that the 2010 collapse of Kabul Bank was triggered by $935 million skimmed and stolen, 92% of it by a mere 19 people. He said, “it shows how the patronage system and the failure to prosecute people guilty of gross fraud and abuse is undermining the Afghan economy.”

   Then again, there have been few prosecutions for even larger, predatory lending triggered bank failures in the United States.

   While Ukraine and Greece were the subjects of the first six questions taken at the International Monetary Fund's May 8 embargoed briefing, the IMF impacts countries all over the world.  On May 8 and again on May 13, we covered Ghana.

  On Ghana, Inner City Press asked: the Secretary-General of the Trades Union Congress Kofi Asamoah spoke out on May Day against the government seeking an IMF program. What does the IMF make of it, and would the IMF consult with such opponents if a program were requested?

  On May 8, spokesperson Gerry Rice answered:

I have a couple of questions. And I'll take some of them and get back on other ones off-line. On Ghana, the Secretary General of the Trade Union Congress spoke out on May Day against the government seeking an IMF program. What does the IMF make of it and would the IMF consult with such opponents if a program were requested?

Just to remind, the Ghanaian authorities have not requested a new program from the IMF. The Board, our Board discussed the Article IV review on Ghana on May the 5th, and we will have a press release on that in due course.

Let me just add, as usual, the IMF consults with a wide range of stakeholders, and in particular the Ghana team has had meetings with the Trade Union during its visits to Accra to exchange views on the country's outlook and challenges.

  Now the press release is out, stating among other things that

In light of current imbalances, Directors recommended a more ambitious medium-term consolidation path to stabilize public debt and debt service at sustainable levels. While the risk of debt distress remains moderate, Directors expressed concerns about the high debt service-to-revenue ratio. A stronger medium-term adjustment could set off a virtuous cycle of lower fiscal deficits and falling interest rates, creating space for social and infrastructure spending and crowding-in of private sector activity.

   We'll have more on this "virtuous cycle" and "crowing in of private sector activity." On May 8, Inner City Press also asked:

  In Pakistan, PTI Information Secretary KPK and MNA Ayesha Gulalai has said, “it is very unfortunate that Pakistan's budget is being prepared by the IMF in Dubai.. instead of taxing the 4 million wealthy identified by the FBR, burden is being passed on to the already burdened masses.” What is the IMF's response?

  On Madagascar, when George Tsibouris on May 6 said the government agreed to "address the issue of fuel price subsidies over time," can you be more specific on how much time the IMF envisions? Also, can the IMF be more specific about what is referred to by "creating a level playing field for the private sector"?

  While the Managing Director is in Morocco, can you answer if Western Sahara is included by the IMF in Morocco's data, and what impact the IMF believes the Western Sahara issue has on Morocco's economy and economic prospects?

This last one, Inner City Press also asked two weeks ago, and again more recently on connection with the IMF's Ukraine program. It was not answered, during or since Managing Director Lagarde's trip to Morocco. Watch this site.


 

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