Billions in cash flees Afghanistan, economy threatened

KABUL, (Reuters) – Wealthy Afghans are carrying about $8 billion — almost double the state budget — in suitcases out of the country each year, an amount likely to rise as the exit of foreign troops nears and threatening to ruin the fragile economy, a senior official said. In an interview with Reuters, deputy central bank governor Khan Afzal Hadawal said confidence in the economy had eroded to such a degree over more than a decade of war that cash was pouring out of Afghanistan in suitcases and carry-on bags, taken to safe havens in Dubai and elsewhere. Sitting in his office in the run-down Kabul central bank building, Hadawal put little faith in a  the government’s recently imposed $20,000 limit on cash being taken out.

“The measures will not stop the money from going out,” he said. “We definitely prefer them to invest inside the country. Everything depends on security. If it doesn’t improve, nobody will invest their money where there is no security.”

U.S. plans to wind down the war make officials like Hadawal nervous. The Americans want to replace large combat formations with advisers, and perhaps special forces, as foreign combat troops prepare to withdraw at the end of 2014.

It will then be up to ill-equipped Afghan forces to take control of security.