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UN warns of ‘colossal’ collapse of Afghan banking system
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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Afghan official slams Shehbaz Sharif’s ‘shameful’ claims on Islamic unity
Khubaib Ghufran, spokesperson for Afghanistan’s Ministry of Information and Culture, sharply criticized Pakistani Prime Minister Shehbaz Sharif over his recent claims about Islamic unity in relation to the war in Iran, calling them “shameful.”
On his X account, Ghaffran wrote: “You praised Trump as a hero of the Gaza peace plan, yet today you claim Islamic unity regarding Iran in a war that the same criminal (Trump) and his allies initiated?”
He added that while Afghanistan is governed under an Islamic system, Shehbaz Sharif has shown no compassion even toward the most vulnerable groups—from children to women and drug addicts—and that this cruelty persisted even during the holy month of Ramadan.
Ghaffran described Sharif’s stance as a “grave shame” and a stark example of “historical hypocrisy.”
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Airstrike on Kabul drug rehabilitation centre sparks legal concerns
Amnesty International’s Deputy Regional Director for Research, Isabelle Lassee, said the scale of casualties suggests the presence of a significant civilian population at the site.
An airstrike on a drug rehabilitation facility in Kabul has drawn sharp criticism from Amnesty International, raising serious questions about compliance with international humanitarian law.
The strike, carried out on 16 March, targeted a site at Camp Phoenix, a former military base that has functioned largely as a rehabilitation centre since 2016. Pakistani officials have claimed the attack was aimed at an ammunition depot allegedly located within the compound.
Responding to those claims, Amnesty International’s Deputy Regional Director for Research, Isabelle Lassee, said the scale of casualties suggests the presence of a significant civilian population at the site.
“While the total number of casualties has yet to be independently verified, it is clear that the attack caused extensive civilian harm, with reports indicating hundreds killed or injured,” she said.
Lassee emphasized that the facility was widely known to house civilians undergoing treatment, and warned that any military action should have taken this into account. “Pakistan’s military should have taken all feasible precautions to avoid harming civilians and civilian infrastructure,” she added.
She further noted that even if a military target had been present within the compound, international law requires that any strike be proportionate, ensuring that civilian harm is not excessive in relation to the anticipated military advantage.
“The scale of destruction raises serious concerns about whether an adequate proportionality assessment was conducted and whether sufficient steps were taken to verify the target and minimize civilian casualties,” Lassee said.
Amnesty International has called on Pakistani authorities to disclose the intelligence behind the strike and to launch an independent, impartial, and transparent investigation into the incident. The organization stressed that findings should be made public to ensure accountability.
The group also urged all parties involved in the conflict to adhere strictly to international humanitarian law and to protect civilian infrastructure, including medical and rehabilitation facilities.
The airstrike formed part of Pakistan’s “Operation Ghazab Lil Haq,” which included strikes in both Kabul and Nangarhar Province. The targeted rehabilitation centre, known as Omid, reportedly had the capacity to accommodate around 2,000 individuals.
Casualty figures remain contested. Islamic Emirate officials claim more than 400 civilians were killed and over 200 injured, though these numbers have not been independently verified. The United Nations has so far confirmed 143 deaths.
The strike comes amid escalating tensions between Afghanistan and Pakistan. According to the United Nations Assistance Mission in Afghanistan, at least 76 civilian casualties had already been recorded since the conflict intensified in February.
Pakistani officials, meanwhile, reported civilian casualties on their side of the border, including four deaths in Bajaur district on 15 March and the killing of a child in North Waziristan earlier in the month, allegedly due to cross-border fire from Afghanistan.
The latest developments underscore growing concerns about civilian safety as hostilities between the two countries continue to intensify.
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