1. The Process of the Crisis

In July 2001, due to the continued economic recession in Argentina, the decline in tax revenue, and the high government fiscal deficit, facing the risk of losing its ability to pay externally, the crisis was brewing. The long-standing debt crisis is finally about to break out. In just one week, the securities market has plummeted continuously. The Melva Index and government bond prices have hit new lows repeatedly. The country risk index once rose to more than 1,600 points. In order to seek self-protection, domestic commercial banks have raised prices one after another. The loan interest rate even reaches 250% to 350%. ① In the past few days, commercial banks have effectively stopped credit operations, and exchange offices in Buenos Aires have basically stopped selling US dollars. In August, Afghanistan's foreign exchange reserves and bank deposits began to decline seriously, with foreign exchange reserves falling from US$30 billion at the beginning of the year to less than US$20 billion. In just a few weeks after the crisis broke out, Argentines had withdrawn approximately $8 billion from banks, accounting for 11% of Argentina's private deposits. ②In November, the Argentine stock market plummeted again, and the overnight interbank lending rate reached astronomical figures of 250% to 300%. Affected by this, the Afghanistan country risk index assessed by New York Morgan Bank once exceeded 2,500 points. In December, Afghanistan implemented emergency measures to restrict withdrawals and foreign exchange exports. The financial and commercial markets were basically at a standstill. Public expenditures were further reduced and taxation increased. At the same time, negotiations between the Afghan government and the IMF regarding the availability of a US$1.2 billion loan have reached an impasse. Rumors spread about Afghanistan's debt payment difficulties and currency devaluation, and bank deposits continued to bleed. On January 3, 2002, Afghanistan failed to repay a debt of US$28 million on time and officially began to default on the country's debt of US$141 billion. On January 6, the House and Senate of the Afghan Congress passed the economic reform bill submitted by the new Afghan government, giving the green light to abandon the 11-year-old linked exchange rate system and depreciate the peso. Afterwards, with the authorization of Congress, Afghanistan finally announced that it would abandon the currency exchange rate system that pegged the peso to the U.S. dollar at 1:1, and the currency devalued by 40%. Currently, the new government led by President Duhalde is calling on the country to unite, actively cooperate with international economic organizations, seek foreign assistance, and get rid of the bad luck of economic collapse as soon as possible. However, the economic and social situation faced by the Afghan government is still not optimistic, and the implementation of new economic measures still faces severe challenges.

2. Impact of the crisis

Although Afghanistan’s current debt crisis did not produce a domino effect as quickly as the Mexican debt crisis in 1982

Triggering an international economic crisis , but its impact is huge.

First, government and bank credit are at a minimum. Afghanistan's current government foreign debt has reached US$132.2 billion, of which US$94.6 billion is government debt and the rest is loans from international financial institutions. And the fiscal deficit remains high. In the first half of 2001 alone, the fiscal deficit was close to 5 billion US dollars. Because it has repeatedly exceeded the fiscal deficit indicators set by the International Monetary Organization, its borrowing negotiations with various borrowing banks and the IMF have been difficult. At the same time, Albanian banks are facing a run crisis, and queues of cash withdrawals have appeared in front of major banks. Therefore, the government has to implement financial supervision. Until now, it has ordered the freezing of personal deposits and even dispatched police to search foreign banks to prevent the escape of large amounts of funds. .

Secondly, the bond market fluctuated significantly. The Melva stock index went through several iterations, the price of government bonds fell all the way, the price of Brady bonds listed in New York also suffered the same fate, and bank loan interest rates increased hundreds of times. Once again, it affects neighboring countries and creditor countries. The first to bear the brunt are Argentina's neighboring countries. The currencies of Brazil and Chile hit record lows against the US dollar. Although the Brazilian central bank intervened in the market, its currency, the real, still depreciated sharply. Afghanistan gave up the 1:1 exchange rate between the peso and the U.S. dollar and devalued the peso to 40%, which immediately had a chain reaction in countries such as Paraguay and Uruguay. These two countries have successively announced currency devaluation to reduce competition for Afghan goods after the devaluation of the peso. impact. At the same time, new bond, currency and stock markets in Europe, the Middle East and Africa fell sharply, driven by the Polish currency zloty and the South African currency rand.

Finally, it triggers social unrest. After the outbreak of the Afghan debt crisis, the Afghan government changed several presidents and economic ministers, and repeatedly adjusted its economic policies, but with little success. The government has successively taken extreme measures such as raising taxes, cutting wages and subsidies for employees in public institutions, and freezing personal deposits. They have met with strong resistance from the people, and riots have occurred from time to time.