Contacts: In Kabul: Abdul Raouf Zia (93) 702 80800 Azia@worldbank.org In Washington: Erik Nora (202) 458 4735 enora@worldbank.org
WASHINGTON, June 04, 2009 — Ensuring the effectiveness of sound national programs that deliver services equitably and pooling donor resources are vital to improve the effectiveness with which aid is utilized in Afghanistan, says the World Bank’s new assistance strategy for Afghanistan. The Interim Strategy Note (ISN) for Afghanistan — discussed today by the World Bank’s Board of Executive Directors — says building an Afghan state that can effectively ensure the delivery of services and security to its people is critical to sustain and accelerate the progress made so far. "We are working with the government to support their efforts, and let me emphasize that, their efforts," said Nicholas Krafft, World Bank Country Director for Afghanistan. "This includes getting the roles right for everyone. Government's role is overseeing, regulating and ensuring that citizens get their fair share of services provided through the public sector, NGOs, community groups or private providers depending on the circumstance. Where donors rally behind national leadership and a clear strategy, which indeed exists in Afghanistan for some important programs, our coordinated efforts work best." However, said Krafft around two-thirds of international aid to Afghanistan is channeled to the country outside of the government budget, limiting its authority, distorting the distribution of its resources and, ultimately, its ownership of the development agenda. "Public financial management in Afghanistan has progressively improved in recent years and funds channeled through the budget are subject to adequate processes and safeguards which mitigate risks of corruption. Reforms, including on governance remain a challenge, and improvements are certainly needed to ensure accountability to citizens, but we are seeing progress." The ISN, which details the Bank Group’s approach to helping Afghanistan achieve its development goals, covers the period 2009 - 2011 and envisages a grant program of around US$600 million. The Bank will continue to bolster core government systems as the basis for credible state building, through efforts to strengthen public financial management, fiscal sustainability, and improved transparency and accountability. Key to the Bank’s approach in the country is enhancing partnerships with other donors to ensure aid is used effectively. Currently, around 60 international donors are active in Afghanistan, and aid is often fragmented and focused in select provinces, pulling resources away from national programs and undermining the legitimacy of the state. The ISN cites the Afghanistan Reconstruction Trust Fund (ARTF) as a good example of a more harmonized approach. ARTF pools funds from 30 countries and international organizations and channels them entirely through the government budget under strict fiduciary controls. The strategy is presented at a time of considerable political uncertainty and mounting security challenges. Presidential and provincial council elections are scheduled for August 2009 with parliamentary elections to follow in 2010. Despite deteriorating security conditions, Afghanistan’s economy has grown strongly over the past six years, at around 12 percent per annum. Average per-capita GDP nearly doubled since 2002, albeit starting from a very low base. Afghanistan has made progress in many areas, including health, education, microfinance, irrigation and rural livelihoods, as well as in sound macroeconomic management and progressive improvements in public financial management. The results achieved to date reflect the massive support of the international community to help rebuild Afghanistan, the efforts of many enterprising Afghans who continue to deliver services in challenging circumstances, and the impact of strong leadership in key areas. “Resources channeled to successful national programs such as the National Solidarity Program, education, health, irrigation, rural access roads, and microfinance have had a remarkably strong impact, reaching across the country and improving the day-to-day life of millions of Afghans,” said Mariam Sherman, World Bank Country Manager for Afghanistan. Given the enormous needs and the overall importance of the rural economy for growth and poverty reduction support to the rural economy and livelihoods will remain a strong priority for the Bank. Rural programs also serve as important entry points for shifting economic incentives away from opium and toward alternative, legal high-value agricultural products. The Bank will also continue supporting growth of the formal private sector through lending and advisory work as well as identify and address specific measures that catalyze business growth. It will also invest directly in local companies, including banks, to help them expand business. In addition, the International Financial Corporation (IFC), the private sector arm of the World Bank Group is working with a number of local companies including local banks, and continues to provide technical assistance in the financial sector. IFC’s investments in Afghanistan have increased from US$7 million in FY05 to US$62 million in FY08. The World Bank Group’s Multilateral Investment Guarantee Agency (MIGA) is closely working with the Afghanistan Investment Guarantee Facility to encourage foreign direct investment in Afghanistan. To date, a total of six guarantees have been underwritten with the Afghanistan Investment Guarantee Facility (AIGF) for five beneficiaries covering the agricultural, financial, pharmaceutical, construction, and telecommunication sectors. In conjunction with the ISN discussion, the World Bank’s Board also approved a Development Policy Grant (DPG) of US$35 million for Afghanistan. The DPG supports the government to consolidate previous achievements under the ongoing public financial management and public administration reform agenda. This will help maintain reforms in areas with a proven track record, but in an increasingly uncertain environment. The focus will be to sustain and deepen reforms in the realm of the Ministry of Finance and support its role as a government-wide reform champion. Total World Bank commitments to Afghanistan since re-engagement in 2002 have reached US$1.87 billion, comprising US$1.43 billion in IDA grants and US$436.4 million in IDA credits For more information on World Bank activities in Afghanistan, please visit: http://www.worldbank.org.af For more project information for Development Policy Grant, please visit: http://go.worldbank.org/BJ94YIX9C0 For more information on ARTF, please visit: www.worldbank.org/artf |
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