Background to ARTF

The Afghanistan Reconstruction Trust Fund was established in May 2002 to serve as a coordinated financing mechanism for the Government’s recurrent budget and priority reconstruction programs and projects. Since its commencement of operation, the ARTF has successfully mobilized US$ 2.3 billion in grant contributions from 27 bilateral donors.

ARTF is the primary instrument for financing the civilian operating budget. As of February 2008, US$ 1.4 billion had been disbursed to fund civil servants salaries and the Government’s operations and maintenance expenditures. Increasingly the ARTF is becoming a key source of predictable and pooled resources for the government’s investment or development, budget. As of February 2008, US$600 million have been committed to 18 investment projects, of which US$ 500 million had been disbursed.

As the Bank’s Articles preclude the Bank from funding police activities, a special provision was made to allow for the pass through of funds to the UNDP managed Law and Order Trust Fund for the support of a civil police force. This arrangement reduced transactions as donors could make one contribution and ensured that this important need, outside of the Bank’s mandate, could be supported as donors could make one contribution and the funds were subsequently divided.

The ARTF is governed by a Management Committee, consisting of representatives of the Asian Development Bank (ADB), Islamic Development Bank, UNDP and World Bank, with day-to-day administration of the fund performed by the World Bank. A Monitoring Agent has been appointed by the World Bank to ensure proper fiduciary management. A Donor Committee is regularly convened to discuss the management and administration of ARTF and provides policy guidance.

A recent external evaluation of the ARTF rated its operation highly satisfactory. To enhance the strategic use of the ARTF resources, the Government is preparing a National Development Strategy which will include a medium term fiscal and expenditure framework to underpin resource allocations for priority programs. The evaluation also noted the value of such a coordinated approach: “the ARTF Recurrent Window has been a response to the Government’s strong, systematic and continuous request to the donor community to put its resources together into the ARTF. GOA has wanted a single, predictable, accountable source of funding that would ensure mobilization of sufficient funds for the recurrent budget. It needed to provide key public services on a continuous basis in those areas where the population can see and benefit from them, such as basic health, education and infrastructure. These are largely recurrent cost intensive and thus require continued and large-scale untied funding. The ART has been able to deliver this….”