Cash troubles in Afghanistan…
I have a student in Afghanistan. He reports that capital flows are disrupting business there. He says that foreign and domestic money is leaving the country. The most important thing he tells me is that businesses are not paying wages. Many businesses have not paid wages in the past 3 months.
He says that many businesses are protecting their cash outside of the country and resist bringing it back in, even to pay wages.
Keep in mind this is a report from just one person. Exactly how widespread or long-term this liquidity problem is, I do not know.
Some how calling it a liquidity problem just doesn’t seem to capture what is going on here.
And, just how long do these business think this economy can go on like this? People will figure out a way to replace the currency so that some kind of economy for the masses will develop that allows life to go on with less risk…hopefully with less risk. Black markets are not necessarily friendly.
While listening to the BBC about Afghanistan this morning I heard these very same points. Their housing bubble is in the process of bursting. One gentleman, a high end housing contractor was disparately trying to sell his last build for $750,000.00 in order to get more to invest and, I’m assuming here, pay his workers. America’s withdrawal appears to be a financial hit also along with the opening for The Taliban. The investment money seems to have drifted to Dubai.