SIGAR

ECONOMIC AND SOCIAL DEVELOPMENT
and anti-subsidies. ATAR also supported the Ministries of Commerce and
Industry (MOCI), Agriculture, Irrigation, and Livestock (MAIL), and Public
Health (MOPH) in developing procedures and regulations to implement
trade laws that have already been enacted. In addition, ATAR is providing
technical support to parliament as it considers three WTO-required
intellectual-property-rights conventions—the Madrid Protocol, the Paris
Convention, and the Singapore Treaty. 615
While no specific progress in modernizing Afghanistan’s customs administration
was reported this quarter, ATAR facilitated Afghan industry access
to regional markets. It helped about 60 Afghan exporters participate in the
annual India International Trade Fair; helped promote high-end Afghan
products at an exhibition in the UAE; and worked to organize participation
of 10 Afghan marble producers at India Stone Mart 2017 in February. 616
BANKING AND FINANCE
The World Bank said Afghanistan’s financial sector is challenged by the
country’s security environment 617 and remains vulnerable with what the
IMF called “lingering governance concerns, deteriorating asset quality,
and weak profitability.” 618 The banking sector is dominated by 15 banks—
three state-owned, nine private-sector-owned, and three foreign-owned
branch banks. 619 However, public confidence has not been fully restored
in the wake of the 2010 Kabul Bank crisis. Use of bank financing remains
low with an average loan-to-deposit ratio of 19.2%. For Afghanistan’s
three state-owned banks, that ratio was only 4.6% at the end of 2015. 620
In comparison, Pakistan’s commercial loan-to-deposit ratio was 58.7%
and India’s was 78.7% (January 2016); the United States’ was 107.3%
(February 2016). 621
According to the IMF, state-owned banks remain strategically and operationally
deficient, contributing to significant fiscal risk. While the fiscal
positions of these banks are improving, IMF staff noted that Afghanistan
must urgently implement a public-policy framework for them, including
enhanced governance and regulatory enforcement. 622
In October 2016, the World Bank reported that the quality of commercial
and state-owned bank assets continued to deteriorate in the first half of
2016. Commercial-bank loans to the private sector were valued at $740 million
in June 2016, about 8.5% higher than in December 2015. Most loans
were U.S. dollar-denominated, largely due to the effect of afghani currency
depreciation that inflated the value of assets held by commercial banks.
Net profits of the banking sector increased by AFN 4 billion (about
$60 million in current dollars) from the same period last year, but were
derived primarily from customer banking fees. 623 The World Bank previously
attributed Afghanistan’s weak commercial lending to its overall
economic slowdown, low investor confidence, stricter implementations of
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SPECIAL INSPECTOR GENERAL I AFGHANISTAN RECONSTRUCTION