(AFP) – Oct 16, 2011
KABUL — Afghanistan's parliament approved a $51m payment to the central bank on Sunday as part of a planned compensation package over its multi-million-dollar bailout of the scandal-hit Kabul Bank.
The payment is part of a package of government measures agreed with the International Monetary Fund (IMF) to secure a new loan for Afghanistan. The IMF stalled renewal of its assistance programme in the wake of the scandal, which highlighted endemic corruption among Kabul's elite.
It comes as planned NATO troop withdrawals and waning donor support are expected to challenge economic growth in the heavily aid-dependent nation.
The central bank bailed out Kabul Bank, the war-torn country's biggest commercial lender, to the tune of $825 million last year, after it collapsed in a scandal which saw hundreds of millions of dollars stolen.
"The $51m approved by the parliament is from the national budget of Afghanistan, and it is transferred... to compensate the central bank asset," finance minister Omar Zakhilwal told a press conference.
The finance ministry in a statement said that the payment had been agreed by the lower house of parliament, and was passed with two dissenting votes cast.
"This will be strong encouragement to the teams working hard to restructure the new bank, recover the assets and investigate any criminal activity," said Zakhilwal in a statement.
Kabul Bank was put into receivership following the scandal and a new bank set up, but only $70 million of fraudulent loans it granted have so far been recovered, with criminal investigations ongoing.
The ministry's statement said that work would now begin on wide-ranging financial sector reform, to include improved banking regulation, reform and privatisation of New Kabul Bank, and the recovery of misappropriated assets.
Afghanistan has been without an IMF programme since the Kabul Bank failure in September 2010. A new three-year extended credit facility was held back pending a cleanup of the banking system.
But this month the IMF announced that it is moving ahead on a new $129 million loan in the wake of the government's reform promises, with a new programme expected to be submitted to the IMF executive board for approval in November.
Western officials say that while Afghanistan's gross domestic product (GDP) is around $16 billion a year, the country receives some $15 billion annually in security and civilian aid from the international community.
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