Afghanistan Faces Consequences of Financial Crisis: Fitrat

H.E. Abdul Qadeer Fitrat, Governor of the Central Bank of Afghanistan, presented his analysis of the current financial crisis during a guest lecture at AUAF

Speaking to an audience of students, professors, and individuals from the government and civil society, he explained how record economic growth over the past decade has led to correspondingly high demand for consumer goods and travel. Increased fuel prices pushed up costs of living, which particularly impact the poor who have little disposable income.

At the same time, banks in many developed countries relaxed their lending rules, allowing individuals to purchase property they cannot easily pay for. There are 50 million unpaid mortgages in the United States alone, he noted, with a value in the trillions of dollars. When interest rates on the loans were increased, the poor - who are also affected by fuel prices - were no longer able to repay their loans, leading to collapses in the banking sector.

Afghanistan, he said, is in a comparatively good position. Private banks in Afghanistan did not invest in foreign banks that are suffering as a result of the sub-prime mortgage crisis. However, Afghanistan will be affected by higher food prices as a result of drought in nations that produce excess food, as well as higher fuel prices.

H.E. Fitrat served as advisor to the Executive Director of the World Bank in Washington D.C. He also worked as a Consultant Economist in the Middle Eastern Department of the International Monetary Fund in Washington D.C. and held position as President of Bank Millie.