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UN warns of ‘colossal’ collapse of Afghan banking system

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The United Nations on Monday pushed for urgent action to prop up Afghanistan’s banks, warning that a spike in people unable to repay loans, lower deposits and a cash liquidity crunch could cause the financial system to collapse within months.

In a three-page report on Afghanistan’s banking and financial system seen by Reuters, the U.N. Development Programme (UNDP) said the economic cost of a banking system collapse – and consequent negative social impact – “would be colossal.”

An abrupt withdrawal of most foreign development support after the Islamic Emirate of Afghanistan (IEA) seized power on August 15 from Afghanistan’s Western-backed government has sent the economy into freefall, putting a severe strain on the banking system which set weekly withdrawal limits to stop a run on deposits.

“Afghanistan’s financial and bank payment systems are in disarray. The bank-run problem must be resolved quickly to improve Afghanistan’s limited production capacity and prevent the banking system from collapsing,” the UNDP report said.

Finding a way to avert a collapse is complicated by international and unilateral sanctions on IEA leaders, Reuters reported.

“We need to find a way to make sure that if we support the banking sector, we are not supporting Taliban (IEA),” Abdallah al Dardari, head of UNDP in Afghanistan, told Reuters.

“We are in such a dire situation that we need to think of all possible options and we have to think outside the box,” he said. “What used to be three months ago unthinkable has to become thinkable now.”

Afghanistan’s banking system was already vulnerable before the IEA came to power. But since then development aid has dried up, billions of dollars in Afghan assets have been frozen abroad, and the United Nations and aid groups are now struggling to get enough cash into the country.

The UNDP’s proposals to save the banking system include a deposit insurance scheme, measures to ensure adequate liquidity for short- and medium-term needs, as well as credit guarantees and loan repayment delay options.

“Coordination with the International Financial Institutions, with their extensive experience of the Afghan financial system, would be critical to this process,” UNDP said in its report, referring to the World Bank and International Monetary Fund.

The United Nations has repeatedly warned since the IEA took over that Afghanistan’s economy is on the brink of a collapse that would likely further fuel a refugee crisis. UNDP said that if the banking system fails, it could take decades to rebuild.

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UN rights experts call on Pakistan to stop removal process of Afghan refugees

The experts urged Islamabad to immediately stop mass internal relocations, deportations, arrests, evictions, intimidation and other pressures on Afghans

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UN human rights experts have called on the Pakistan government to stop their plans to forcibly remove Afghans from the cities of Islamabad and Rawalpindi, nor to deport them to Afghanistan.

According to a statement issued on Friday, the UN experts (as listed below) called on Pakistan to continue its important role as a neighboring country with a long history of hosting Afghan refugees.

The deadline for their voluntary departure was set for 31 March, but Islamabad moved the deadline by a few days to take Eid-ul-Fitr into account.

“Millions of Afghans in Pakistan are at risk of being pushed back to Afghanistan without regard for their genuine protection concerns – including gender-based violence and the systematic dismantling of the rights of women and girls – in violation of international human rights law and refugee law, and disregarding UNHCR’s non-return advisory,” the experts said.

“We urge Pakistan to immediately stop mass internal relocations, deportations, arrests, evictions, intimidation and other pressures on Afghans to cross the border into Afghanistan, and to uphold the absolute and non-derogable principle of non-refoulement,” they said.

The experts expressed particular concern about the gendered and intersectional impact.

The UN experts have repeatedly spoken out against Pakistan’s Illegal Foreigners’ Repatriation Plan of September 2023, which has already pressured hundreds of thousands of Afghans to uproot their lives and return to Afghanistan.

Ahead of the 31 March deadline, the UN documented a worrying increase in arrests of Afghans. Many desperate Afghans have contacted the experts, fearing persecution by the Taliban in Afghanistan if they are forced to return.

“The most vulnerable are Afghan women, girls, LGBTI persons, ethnic and religious minorities, former government officials and security personnel, human rights defenders, and media workers,” the experts said.

“Children, especially unaccompanied, are at heightened risk of trafficking, child marriage and abuse, while persons with disabilities and older persons are also particularly vulnerable. They should all be individually assessed.”

The experts expressed concern about returns of Afghans to Afghanistan from other countries, potentially contravening international human rights and refugee law.

The experts also acknowledged security risks, including terrorist attacks in Afghanistan, as well as Pakistan.

The experts noted that many Afghans who had left for Pakistan, having been given reasonable expectations of being resettled in a third country, had their dreams of a secure future shattered by the sudden halt of resettlement programmes.

They stressed that funding cuts will reduce the ability of the de facto authorities in Afghanistan, together with humanitarian agencies, to support a large influx of people from neighboring countries.

“Abrupt and drastic funding cuts by donors are already having a severe impact on much-needed humanitarian assistance to Afghans,” the experts said.

“Given the deteriorating human rights situation in Afghanistan, durable solutions are needed for Afghans outside the country, with strong support from the broader international community.”

The experts are as follows:
Richard Bennett, Special Rapporteur on the human rights situation in Afghanistan; Siobhán Mullally, Special Rapporteur on trafficking in persons, especially women and children; Laura Nyirinkindi (Chair), Claudia Flores (Vice-Chair), Dorothy Estrada Tanck, Ivana Krstić, and Haina Lu, Working group on discrimination against women and girls; Ben Saul, Special Rapporteur on the promotion and protection of human rights and fundamental freedoms while countering terrorism; Reem Alsalem, Special Rapporteur on violence against women and girls, its causes and consequences; and Balakrishnan Rajagopal, Special Rapporteur on the right to adequate housing.

 

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Pakistan urges global community to block arms flow to militant groups in Afghanistan

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A Pakistani diplomat on Saturday called on the international community to block the flow of modern and sophisticated weapons to militant groups in Afghanistan.

“Terrorist armed groups are in possession of billions worth of illicit arms abandoned in Afghanistan,” Syed Atif Raza, a counsellor at the Pakistan Mission to the UN, told an Arria-Formua meeting of the UN Security Council, convened by Sierra Leone.

“We call upon our international partners to recover the vast stockpile of abandoned weapons, prevent their access to armed terrorist groups and take measures to close this thriving black market of illicit arms,” he said.

Pakistani officials have repeatedly claimed that attacks in the country are planned in Afghanistan and that militants use weapons left behind by foreign forces.

The Islamic Emirate, however, has denied the claim, saying Afghanistan is not responsible for Pakistan’s “security failure”.

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Gandapur says no Afghan refugee will be ‘forcefully’ expelled from Khyber Pakhtunkhwa

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Amid rising tensions over Pakistan’s repatriation plans for illegal Afghan nationals, Khyber Pakhtunkhwa Chief Minister Ali Amin Gandapour said on Friday that no refugees will be forcibly deported from the province.

“We will not allow any Afghan refugee to be expelled by force from Khyber Pakhtunkhwa. We stand firmly against such inhumane deportations,” Gandapur said at a press conference.

The remarks came as the Pakistani government ramps up efforts to repatriate undocumented Afghan refugees and Afghan Citizen Card (ACC) holders, following the expiration of the voluntary return deadline on March 31, 2025.

“The past situation, where Afghan refugees, including women and children, were stranded at the border, tarnished Pakistan’s image,” Gandapur said, reaffirming the provincial government’s commitment to a dignified repatriation process.

“We are setting up camps for voluntary repatriation, and anyone wishing to return will be helped. However, we will not forcibly expel any Afghan refugee,” he stated.

Afghans holding Afghan Citizen Cards (ACC) — issued by Pakistan authorities and held by 800,000 people, according to the United Nations — face deportation to Afghanistan after the deadline.

More than 1.3 million Afghans who hold Proof of Registration (PoR) cards from the UN refugee agency, UNHCR, are also to be moved outside the capital Islamabad and neighbouring city Rawalpindi.

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