Ministry of Finance Donor Financial Review

Transcription

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3 Islamic Republic of Afghanistan Ministry of Finance Donor Financial Review Reort 1388 November, 2009

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5 ACKNOWLEDGEMENT On behalf of the citizens of the Islamic Republic of Afghanistan, it is a pleasure to present the report of 1388 Donor Financial Review (DFR). The 1388 DFR report represents tangible evidence of the strong partnership between Afghanistan and our development partners in reconstruction and development of Afghanistan which is based on the principals of the Paris Declaration on Aid Effectiveness. It also provides a vital tool for the Government of Afghanistan and our development partners on the measurement of the effectiveness of development assistance, national budget planning process and the implementation of the Afghanistan National Development Strategy. Experience has shown that increased information sharing serves the interest of the entire international community not only Afghanistan. Development assistance is effective when we work together on the basis of the five principals of Paris Declaration on Aid Effectiveness: Ownership; Alignment; Harmonization; Managing for Results; and Mutual Accountability. During the past seven years, development assistance equaling to USD 35 billion has been provided to Afghanistan. The DFR report is part of the Afghan Government s longterm commitment to its citizens and to the international community to increase and improve public awareness in both Afghanistan and in our development partners homelands of the results of development assistance. It is also a critical tool for both the Government and our development partners to accurately assess and forecast levels of official development assistance; successfully implement the ANDS; and, it provides crucial data for the Medium Term Fiscal Framework (MTFF), a tool developed by the Government of Afghanistan to provide a medium term rolling forecast of the interaction between government spending and revenues and the wider economy. Therefore, provision of information to government through DFR is very necessary for the implementation of ANDS and update of MTFF. In closing, the Government of the Islamic Republic of Afghanistan wishes to take this moment to express its continued appreciation to the international community working in Afghanistan for the strong and consistent support that has been provided for the reconstruction and development of Afghanistan. We are also thankful to UNDP for its technical and financial support for this DFR report. We look forward to continuing our collaborative work with our distinguished development partners in the international community, and we welcome the comments and discussion that this important document will allow. Sincerely, Dr. Omar Zakhailwal Minister of Finance & Senior Economic Advisor to President DONOR FINANCIAL REVIEW I

6 CONTENTS ACKNOWLEDGEMENT ACRONYMS EXECUTIVE SUMMARY 1 INTRODUCTION 3 DONOR FINANCIAL REVIEW (DFR) Objectives of Donor Financial Review Online Development Assistance Database (DAD)... 6 OVERVIEW OF OFFICIAL DEVELOPMENT ASSISTANCE TO AFGHANISTAN ( ) Pledges, Commitments & Disbursements Rate of Aid Disbursement Aid Investment in Afghanistan: Identified Trends Geographic Distribution Aid Investment by Sector AID DELIVERY CHANNELS AND MODALITIES Delivery Channels Delivery through Military Channels Delivery through Non-Military Channels Aid Delivery Modalities Budget Implementation Directly Managed by Donors Afghan Government Managed Budget and Implementation Trust Funds Analysis of the Effectiveness of Existing Modalities Directly Donor Managed Afghan Government Managed Trust Funds OVERVIEW OF OFFICIAL DEVELOPMENT ASSISTANCE IN 1387 AND Commitments and Disbursements Donor Investments by Sector Investment by Channels and Modalities of Delivery Highlighting Achievements PERSPECTIVES ON DONOR ASSISTANCE IN AFGHANISTAN Commitments and Disbursements ANDS Financing Gap I V II DONOR FINANCIAL REVIEW

7 RECOMMENDATIONS Information sharing Disbursement channel ANDS financing mechanism PEER REVIEW Corruption Capacity Building in the Operationalization of ANDS Specificity of information in the security sector ANNEXES DONOR FINANCIAL REVIEW III

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9 ACRONYMS ANDS ADB AFMIS AMD ARTF ANSF ANA ANP CERP CNTF CSTC-A DFR DAD DAC DFID EC EU FCO FY GIS IDB IFI LOTFA MTFF MoF NATO ODA OECD PFM PIU PRT SIGAR SY USAID UN UNAMA UK UAE USA UNDP WB Afghanistan National Development Strategy Asian Development Bank Afghanistan Financial Management Information System Aid Management Directorate Afghanistan Reconstruction Trust Fund Afghanistan National Security Forces Afghanistan National Army Afghan National Police Commanders Emergency Response Program Counter Narcotics Trust Fund Combined Security Transitional Command Afghanistan Donor Financial Review Development Assistance Database Development Assistance Committee Department for International Development European Commission European Union Foreign Commonwealth Office Fiscal Year Geographic Information System Islamic Development Bank International Financial Institution Law and Order Trust Fund for Afghanistan Medium Term Fiscal Framework Ministry of Finance North Atlantic Treaty Organization Official Development Assistance Organization for Economic Cooperation and Development Public Finance Management Project Implementation Unit Provincial Reconstruction Team Special Inspector General for Afghanistan Reconstruction Solar Year United States Agency for International Development United Nations United Nation Assistance Mission for Afghanistan United Kingdom United Arab Emirates United States of America United Nation Development Program World Bank DONOR FINANCIAL REVIEW V

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11 EXECUTIVE SUMMARY The international community has provided USD 1241 per Afghan citizen in assistance since the year The people of Afghanistan are grateful to the international community for what has been achieved since 2001 which would not have been possible without this generous international assistance. The assistance provided to date has been given to help turn the 30-year war torn Afghanistan into a peaceful country with a strengthened national army and police force, governed by a democratically led government with a legally based, market driven economy. Since 2001 the international community has pledged to provide USD 62 billion in assistance (grants and loans) to Afghanistan. Fifty-five percent of this amount was announced in the international conferences on Afghanistan (Tokyo, Berlin, London, Rome and Paris). At the time of this Donor Financial Review (DFR), the Ministry of Finance has determined that USD 46 billion (75.8% of USD 60.7 billion) has been allocated to specific projects and activities, while the amount actually spent is closer to USD 36 billion. To achieve a balanced growth in all areas, sectors have been identified where the assistance is to be prioritized. The Government of Afghanistan s first priority, the security sector, has been the largest recipient of assistance. USD 19 billion, or more than 50% of the total assistance disbursed, has been spent to strengthen the Afghan National Army and Police Forces. The Ministry has included this spending in this DFR report knowing that there is currently insufficient data about how this assistance is specifically spent to determine what portion of this assistance can be classified as ODA according to the Organization for Economic Cooperation and Development (OECD) standard. Following Security, Infrastructure and Agriculture & Rural Development sectors have been the largest recipient of assistance. The method and channel used to deliver the assistance are as important as the volume and prioritization of the assistance as these affect the final and intended impact. Based on available information, 77% (USD 29 billion) of the USD 36 billion has been disbursed on projects and programs designed and implemented by the donors themselves with little or no input by the Government of Afghanistan. The remaining development assistance (USD 8.7 billion) has been delivered directly through the treasury of the Government of Afghanistan using the national budget, but of this amount, only USD 770 million has been placed fully at the discretion of the DONOR FINANCIAL REVIEW 1

12 Government of Afghanistan to determine where it will be allocated and spent During the years 1387 and 1388 donors have officially committed USD billion of which USD 7.41 (69%) billion has already been disbursed. Of the billion, the spending of USD 8.5 billion or 79% has been controlled and managed directly by donors, while the national treasury of the Government of Afghanistan received only USD 2.25 billion or 21 percent. DFR continues to provide the Government and the international community with an important tool to understand the current and future levels of assistance coming to Afghanistan. After the Afghan National Development Strategy (ANDS) was finalized and presented to the international community at the Paris Conference, the international community reaffirmed its commitment to assist the Government of Afghanistan to implement the ANDS. Being heavily dependent on foreign assistance for the implementation of ANDS, it is crucial that the Government of Afghanistan be able to predict the level of upcoming assistance to Afghanistan despite the difficulty of this task. The influx of assistance is hoped to continue. However, the Government of Afghanistan is concerned that the levels of assistance spent outside the government system remain large because it limits government ownership. Development aid is only effective when there is close consultation between donors and the recipient government, and there is a strong focus on strengthening development capacity of the government to build its internal institutional capacity to manage and implement its development. The Government looks forward to continuing to enhance its partnership with the international community in the coming months. 2 DONOR FINANCIAL REVIEW

13 INTRODUCTION The people of the Islamic Republic of Afghanistan are grateful to the international community for its generous assistance for the reconstruction and development of Afghanistan. The unwavering support of Afghanistan s international development partners has been and continues to be a vital support as Afghanistan rises from the ashes of thirty-years of conflict. During the past seven years the international community has generously committed to provide Afghanistan a total of USD 46 billion in assistance of which more than USD 35 billion was delivered by first quarter of Solar Year 1388 which includes support for development and empowerment of the Afghan National Security Forces of different kinds such as grants, loan and in kind. As Afghanistan reflects on the past seven years there are many positive achievements; for the first time in thirty-years Afghanistan had the opportunity to elect their President and Members of Parliament, there has been tremendous improvements in infrastructure sector; about 4000 kilometers of road have been rehabilitated or newly paved, telecommunication has boosted and today more than 73% of population have access to telecommunication services; and thousands of new and refurbished schools and health facilities have been constructed and approximately six million children have access to primary education. Similarly, other sectors have also benefited from development assistance in the past seven years. Given the Government s limited domestic revenue during this period, these achievements would have not been accomplished without the generous assistance and strong partnership of our development partners. Our development partners have played and continue to play a vital role in the reconstruction and development of Afghanistan. Understanding its geographical significance in the international community s effort to prevent global terrorism, Afghanistan is committed to establishing a secure and stable nation and it understands that it faces unique challenges toward its successful development including issues related to security and narcotics. And, despite significant progress, Afghanistan continues to be a country highly dependent on foreign aid. Currently the Government is only able to finance around 64% of its operating expenditures from domestic revenue (1388 mid year budget review). For development expenditures, it is completely dependent on the support of its international development partners. The Government understands that it will require the long-term assistance of its development partners to become a secure and economically vibrant participant in the international community. DONOR FINANCIAL REVIEW 3

14 It is noteworthy that when compared to the per capita aid in other postconflict countries, Afghanistan has received less assistance than other postconflict nations such as Iraq and Bosnia. It is the Government s belief that the level of assistance, particularly the development assistance, be increased to a level greater or similar to other post conflict countries. Chart 1: Per Capita Aid in first five years of post-conflict November 2009 $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $- $1,528 $585 $292 Iraq Bosnia Afghanistan Country However, it is not enough to increase the levels of external assistance. The effectiveness of the assistance must also be dramatically increased. The first priority of Afghanistan in the area of aid effectiveness is the alignment of external assistance with the country s national priorities as defined in the Afghan National Development Strategy (ANDS). While perhaps beneficial to Afghanistan, about 80% of assistance (based on commitment) to Afghanistan in the past seven years has bypassed the Government of Afghanistan and has been invested in activities that were not or are not very aligned with national priorities. Afghanistan and its international development partners share the same objective - high results from use of development assistance. In order to achieve this common objective Afghanistan and its development partners need to focus on aid effectiveness and use the modalities for the delivery of assistance that are both cost effective and produce sustainable results. Mutual accountability and transparency are the major principles of aid effectiveness and must be respected by both the providers and the recipients of development assistance. 4 DONOR FINANCIAL REVIEW

15 Donor Financial Review (DFR) 2.1. Objectives of Donor Financial Review Initiated in 1385, the DFR is a semi-annual exercise that helps the people and Government of Afghanistan and the international community in Afghanistan to have a comprehensive picture of the development assistance that flows to the country. The DFR is also an important input for the formulation of the Afghan national budget and the implementation of ANDS. Specifically, the DFR is a tool to: 1. Build strong cooperative ties between GoA & its development partners; 2. Enhance mutual accountability and transparency; 3. Assist the Government in defining its spending priorities. The first round of the 1388 DFR started with one-on-one meetings with 34 development partners and was completed by June 15, Three major items were discussed during these meetings: 1. Updated disbursement for the SY1387 and SY Updated commitment for SY 1388 and planned commitment for SY Predictability of assistance over the medium to long-term During the one-on-one meetings, the discussion was limited to the three items listed above, and a general discussion of the requirements for data and relevant formats. We have agreed on the end of June as a deadline for submission of data. However, most of the development partners were unable to provide their data by the agreed deadline, the deadline was extended until August 5. It is important to acknowledge that there is an increasing trend of compliance with the DFR in this round compared to SY1387. The analysis in this report is based on the information provided to Ministry of Finance as of August, 2009 from our development partners. The conclusions drawn in this report are based on those submissions. DONOR FINANCIAL REVIEW 5

16 Table 1: Status of Donors Reporting for 1388 DFR November 2009 No. Complete Data Submitted* No. Data Partially Submitted** No. Poor/no data Submitted*** 1 EU/EC 16 USA 30 UAE 2 World Bank 17 Japan 31 Finland 3 ADB 18 UK 32 China 4 Norway 19 Iran 33 Lithuania 5 France 20 IDB 34 Republic of Korea 6 India 21 Turkey 7 Germany 22 Spain 8 Canada 23 Czech Republic 9 Sweden 24 Estonia 10 Netherlands 25 Hungary 11 Poland 26 Belgium 12 UN Agencies 27 Australia 13 AKDN 28 Italy 14 Switzerland 29 New-Zealand 15 Denmark * All requested data provided: project wise disbursement & commitment and estimates of future assistant ** At least one item of the requested data is not provided *** No data is submitted or very poor data is submitted 2.2. Online Development Assistance Database (DAD) With support from UNDP, DAD was initially developed in 2002 to track the flow of international assistance to Afghanistan. The system has been modified several times to match the requirements of Government of Afghanistan in the areas of aid coordination and effectiveness, particularly the needs of national budget. In the year 1388 DAD was upgraded to a secure web-based database and several applications such as project tracking, grant and loan management system and reports were enhanced. The current system which is GIS enabled is accessed through: One of the major reasons for a secure, web-enabled DAD was to enhance accessibility and to transfer the responsibility of data entry from government to donors. It is a major step toward improving the quality of information, particularly of those donors who do not have permanent offices in Afghanistan and/or maintain their projects data in their home countries. 6 DONOR FINANCIAL REVIEW

17 For this round of DFR the donors were asked to introduce focal points, preferably local staff, to be trained to be responsible for data entry and updates of their portfolios in DAD. Donors identified their focal points and training was provided to all focal points in first week of June. Subsequently, refresher training sessions were conducted for small groups of focal points after the DFR meetings. Due to unavailability of focal points or not being able to participate in the training, some of our partners did not physically enter the data themselves and chose to submit their data directly to Aid Management Directorate (AMD). As an exception, the AMD agreed to receive that data in different formats, and fed them into the online DAD. However, future DFR s will require donors to enter their own data using the online secure DAD system. Training and technical assistance will be provided to our development partners to help them submit their data in a timely manner. November 2009 DONOR FINANCIAL REVIEW 7

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19 Overview of Official Development Assistance to Afghanistan ( ) Since 2002, Afghanistan has been provided with a remarkable amount of Official Development Assistance (ODA). The country has been pledged development assistance through a series of Pledging Conferences. The Tokyo Conference in 2002 was the first event where donors pledged to provide the country with USD 5.1 billion. It was followed by the Berlin Conference in 2004 and the London Conference in Finally, at the Paris Conference in 2008 the Government of Afghanistan presented its first five-year National Development Strategy (ANDS). The strategy drew the attention of the Afghanistan development partners and was warmly welcomed by all. As a result, a further aid assistance of USD 14 billion to achieve the ANDS targets was pledged Pledges, Commitments & Disbursements Pledged ODA refers to unwritten commitments that the donors announced in the pledging conferences and or at different occasions since Ministry of Finance s records show that the total pledges by conference as indicated in Table 1 stands at USD 33.4 billion. Apart from this, donors outside the pledging conferences have individually announced the sum of USD 28.6 billion as supplemental pledges for Afghanistan. This takes the total pledged ODA, for Afghanistan to USD 62 billion. Table 2: Overview of Official Development Assistance to Afghanistan ( ) in US$ Billion Tokyo (2002) Pledge by Conference Berlin (2004) London (2006) Rome (2007) Paris (2008) Total Pledge by Conference Total Supplemental Pledges Grand Total of Pledges Records of the Ministry of Finance indicate that the amount of committed ODA consisting of both Grants and Loans from 1381 (2002) to the present stands at USD 46 billion, of which USD 36 billion has been disbursed. Out of the total disbursed ODA, around USD 19 billion has been invested in 1 Disclaimer: the amount in the above table represents only new pledges at each conference, and does not include the amount that has been previously pledged. The numbers have been verified by Government of Afghanistan with each donor. DONOR FINANCIAL REVIEW 9

20 security sector to support reform, training and empowerment of the Afghan National Army (ANA) and Afghan National Police (ANP). This indicates that over 50% of the total committed ODA has been disbursed to ANA and ANP activities. [Note: The OECD DAC has agreed that certain Chart 2: Pledge ODA to Afghanistan ( ) November 2009 assistance related to conflict prevention, peace building and security expenditures meet the development criteria of ODA but to meet this definition requires a detailed cost breakdown of the assistance provided under security sector reform. From the data provided for this report, such analysis was not possible. Because security is one of the major pillars of the ANDS, however, security related assistance is broadly included in this DFR under ODA]. The remaining ODA supported development activities. Compared to the total amount of grant assistance that Afghanistan has received, the Loan Portfolio comprises a small proportion of the overall assistance with a total amount of USD 1.4 billion. Chart 3: Donors' Commitment for period ,000 27,389 25,000 Figures in US$ Million 20,000 15,000 10,000 5,000-2,249 2,247 1,803 1,448 1,378 1,236 1,206 1,044 5,455 Others Germany Canada India Japan ADB WB EU UK USA Source: Budget Department, AMD-MoF, Sep DONOR FINANCIAL REVIEW

21 Afghanistan has been receiving aid from about 47 donor countries and development agencies since As far as the amount of aid to Afghanistan is concerned, the United States of America remains by far the largest donor followed by the United Kingdom, European Union (EC), World Bank, Asian Development Bank, Japan, India, Canada, and Germany. Other donors commitments together build up to USD 3.4 billion Rate of Aid Disbursement The overall disbursement rate which stands at 78% in the past seven years has been satisfactory. However the disbursement rate has decreased since the last DFR where the disbursement rate was 82%. Based on government analysis, the decrease is mainly because of the availability of more information, particularly on security sector, which was not available last time; and the new commitments that have been recently made and have not been yet disbursed. The disbursement rate may increase by the close of the current fiscal year. The trend of disbursement is very different when it s analyzed individually by each funding source. The following chart shows the trend of Donors performance in terms of disbursement against commitment from 1381 to In terms of amount, the USA remains the largest provider of aid assistance for Afghanistan. However, when it comes to comparing the amount of aid disbursed against the amount committed, Sweden seems to have disbursed over 90% of the commitment it has made thus far. It is followed by UK 85%, USA 83%, and so on. November 2009 Chart 4: Ratio of Disbursement versus Commitment ( ) Un-Disb Disb 100% 80% 60% 40% 20% 0% SWED UK USA* EU/ EC NDL CAN WB JAP Others GER NOR IND ADB Source: Budget Department, AMD-MoF-Sep, 2009 DONOR FINANCIAL REVIEW 11

22 Note: This report recognizes that commitments may be for multiyear activities and a portion of the gap between commitments and disbursements is a result of planned disbursement in the out years. Also while using the ratio of disbursement to commitment it is important to note that this ratio is strongly influenced by the type of projects and the sector in which a donor is working. For donors engaged in infrastructure sector and other long term project investments in which disbursement will occur over several years, they make their commitments to the full cost of the project at project start which would result in a low ratio in the initial years of the project Aid Investment in Afghanistan: Identified Trends Geographic Distribution November 2009 As far as the geographical allocation of aid in Afghanistan is concerned, the government does not have a very clear picture due to lack of information. Although DAD provides the platform for tracking the geographical location of assistance, the quality of information in this regard is very poor. Based on this experience and the importance of information on geographical location of assistance, the DAD has been upgraded to a web-based version to track better information of aid assistance on a geographical level. Chart 5: Geographical Distribution of ODA Figures in US$ Million Nationwide 5252 Central Zone North-East North West South-West South East Zone The available information from DAD shows that around 66% of overall aid has been invested in activities with national impact. Examples are the support for Afghan National Army and Police, National Solidarity Program, National Rural Access Program, and Basic Package of Health Services. While the majority of overall aid assistance has had nationwide impact, the remaining has been allocated to fund various projects across difference sectors in all provinces of Afghanistan. The nationwide approach does not 12 DONOR FINANCIAL REVIEW

23 give a clear indication of how much aid assistance has gone to which province. It is still a problem for the government to solve with the assistance of donors and development agencies to identify the exact location of every project that is reported to the Ministry of Finance. In addition, the Provincial Reconstruction Teams (PRTs) have allocated about USD 2 billion (this includes the assistance through Commanders Emergency Response Program CERP) in various provinces to fund smallscale and quick impact development projects. Most of the projects that the PRTs implement are planned and discussed at the grass roots level with community elders, and do not involve views of the central government. Although the PRTs have actively participated in the reconstruction of Afghanistan and implemented development and humanitarian projects in some of the most difficult and remote areas, there is a perception among Afghan people that most of the projects were not aligned with the government priorities and plans, and have not delivered sustainable results. The recent SIGAR report (July 2009) also indicates that the military agencies providing development assistance in Afghanistan does not have the capability to ensure that their assistance is used effectively. November Aid Investment by Sector This section provides information about expenditure of donors funding across ANDS sectors since the year The analysis of data shows that over 45% of aid assistance has been committed for security sector. Infrastructure has received 15% of donors funding, and both Agriculture & Rural Development and Governance have received 9% of the resources. Other sectors such as Education, Health, Economic Governance, and Social Protection have jointly received around 22% of aid assistance. The unclassified proportion represents the amount of aid spent on cross cutting programs such as gender, counter narcotics, environment protection, and anti corruption. This indicates that due to large spending in security sector, less attention has been given to other priority sectors of the ANDS. Looking only at pure development assistance in the past seven years, excluding assistance for security sector, a different picture emerges. A major part of the total development assistance was invested in infrastructure and agriculture and rural development sectors. The Governance and Rule of Law sectors have received 12% of the total assistance followed by Economic Governance and Social Protection with 10% each. Health and Education, the two important sectors, have received the minimum assistance DONOR FINANCIAL REVIEW 13

24 Chart 6: Breakdown of ODA Excluding Security ( ) November % 9% 18% 12% 6% 12% 9% 24% Governance & Rule of Law Infrastructure & Natural Resources Education & Culture Health Agricluture & Rural Development Social Protection Economic Governance Unclassified Note: a major part of the 12% unclassified expenditure represents donors assistance to government operating budget. 14 DONOR FINANCIAL REVIEW

25 Aid delivery channels and modalities 4.1. Delivery Channels In the past seven years the donors have primarily chosen to manage the delivery of their assistance to Afghanistan directly. Due to presence of International Security Forces in Afghanistan, the country has received development assistance from two major sources namely non-military and military sources: Delivery through Military Channels With 41 countries having military presence under NATO or coalition forces, the amount of assistance provided through military channels in Afghanistan is large. Currently there are 26 PRTs in different provinces, most of which are engaged in development activities. In addition to PRTs, a huge amount of assistance has been channeled through Combined Security Transitional Command for Afghanistan (CSTC-A) and Commanders Emergency Response Program (CERP). Available data shows that 40% or USD 18.3 billion of the total development aid commitment has been made by military agencies. Of this amount the USD 17.9 billion provided by the US Department of Defense. Out of total assistance through military sources, only about 9% or USD 1.7 billion has been invested in several small scaled development activities while the remaining 91% has been invested in the security sector reform. So far the government of Afghanistan does not have a clear picture of the assistance provided by military sources. The information in this report has been taken from SIGAR report of July This is challenging from the transparency perspective. Moreover, the assistance from military channels has been provided through direct channels and has bypassed government agencies responsible for coordination and management of foreign assistance. Strengthening of the security sector is indeed one of the top priorities in Afghanistan and requires great attention. However, this should not be provided at the cost of development assistance and should be provided in close consultation with the government agencies responsible for coordination and management of foreign assistance Delivery through Non-Military Channels Since 2001 development agencies including multilateral and bilateral have committed about USD 27.8 billion for reconstruction and development of Afghanistan. Compared to military sources, development agencies have DONOR FINANCIAL REVIEW 15

26 better capability to provide effective assistance. The development agencies are the traditional providers of assistance and therefore have the capacity and resources to manage their funds more effectively. Table 3: Assistance through Military and Non Military Channel ( ) in USD Million Funding Channel Commitment %age Disbursement %age Development 27,816 60% 21,516 58% Military 18,388 40% 15,401 42% Grand Total 46, % 36, % November 2009 Disclaimer: This amount is greater from the amount mentioned in previous pages because the disbursement to trust funds have considered as the first delivery point which is from donor s account to trust funds account Aid Delivery Modalities The development assistance provided to Afghanistan in the past seven years is either managed directly by the donors or provided through the Government of Afghanistan. Three major modalities have been used: Budget Implementation Directly Managed by Donors Available information shows that a majority of assistance provided in the past seven years was directly managed by donors. About 80% of the total assistance delivered to Afghanistan has been committed and implemented directly by donors. The remaining 20% or USD 7.7 billion that has been disbursed through government includes assistance channeled through trust funds and assistance for the recurrent expenditures of Government of Afghanistan. About USD 4.1 billion (including USD 2.6 billion for operating expenditures) have been channeled through trust funds (assistance through trust funds eventually flows through government systems) Afghan Government Managed Budget and Implementation During the past seven years, about USD 3.6 billion was given directly to the Government of Afghanistan of which only 23% or USD 826 million was discretionary or un-earmarked assistance. In other words, the Government of Afghanistan had the control of only USD 826 million, a major part of which was loan, to use for its priorities and the remaining priorities have been set by donors. The IFIs such as the World Bank and Asian Development Bank were the main providers of discretionary resources. Bilateral donors such as Japan and US Department of Agriculture are 16 DONOR FINANCIAL REVIEW

27 providing diesel and Soya bean oil from monetization of which the Government also receives some discretionary funds Trust Funds The Trust Funds namely the Afghanistan Reconstruction Trust Fund (ARTF), Law and Order Trust Fund (LOTFA), and Counter Narcotics Trust Fund (CNTF) remain a significant pooled funding mechanism for the Government of Afghanistan to finance its priority programs and to achieve the results of its development strategy. While a remarkable amount of Trust Fund resources are utilized to finance a portion of the Government s recurrent costs, a sizable amount of it is utilized to finance the development projects across different sectors. The following Trust Funds are used to pool the resources from the donors: Afghanistan Reconstruction Trust Funds (ARTF) The ARTF which is by far the largest recipient of donor funding, on behalf of the Government of Afghanistan, has managed a sizable amount of Official Development Assistance channeled through the core budget of the Government. All ARTF funding is on-budget, which means that it uses the public financial management of the government. 79% of the total assistance through the Trust Funds has been provided through ARTF. Administered by the World Bank, the ARTF was established in 2002 to support the shortfall of government recurrent expenditures. With the increase in the size of donors assistance to ARTF the investment window has expanded significantly in recent years, enabling pooled financing for scaling up government programs, mainly national programs. The ARTF funds are managed by a Management Committee which consists of the World Bank (the administrator), Islamic Development Bank, the Asian Development Bank, UNAMA, and UNDP. Ministry of Finance plays the role of observer in this committee. As of September 2009, a total of USD 3.3 billion has been made available to ARTF and USD 3.1 billion has been disbursed. November 2009 Law and Order Trust Fund for Afghanistan (LOTFA) Administered by UNDP, LOTFA was established in 2002 to mobilize resources for the support of Afghanistan National Police (ANP). This trust fund is a very useful source of financing the recurrent expenditures of ANP as well as of some ANP infrastructure projects. As of July 2009, around USD 920 million has been committed by donors and USD 868 million has been paid to LOTFA. DONOR FINANCIAL REVIEW 17

28 Counter Narcotics Trust Fund (CNTF) Also administered by UNDP, CNTF was established in 2005 to mobilize resources needed by the Government of Afghanistan to implement the National Drug Control Strategy. Although CNTF was ended in December 2008, it has been extended for another year to support counter narcotics in Afghanistan. By July 2009, donors paid a total of USD 65 million to CNTF to finance major projects designed to achieve the National Drug Control Strategy. Chart 7: How Aid Assistance Has Been Channeled November % Donors Managed Assistance Government Managed Assistance 77% Disclaimer: The percentages are based on the donors actual disbursement where the disbursement for trust funds is considered based on first point of delivery Analysis of the Effectiveness of Existing Modalities Directly Donor Managed Assistance directly managed by donors is effective only when it is aligned with the priorities of recipient country and does not undermine its ownership. This could be achieved only if there is sufficient consultation with the recipient country and also if the donors demonstrate flexibility in the allocation of their resources. This modality is very effective for quickresponse or emergency activities where immediate response is very important or because of bureaucracy, channeling of assistance through government would not be suitable. In order to align the donors managed assistance with government priorities, it is necessary that consultation should take place with the recipient country prior to allocation of resources. In Afghanistan, some donors do involve the government in allocation of their resources and 18 DONOR FINANCIAL REVIEW

29 many other donors bypass the government. In general, the government does not see much flexibility in the allocation of such resources and in many cases is not able to secure assistance for its priorities through donors managed assistance. Therefore, it is difficult to say that donors managed assistance has been aligned with government priorities. For such assistance to be effective it is very necessary that the government be actively involved in the allocation of resources and donors demonstrate flexibility in considering the government priorities while committing their assistance to specific activities Afghan Government Managed In order for development assistance to be effective, it should be provided according to the principles of Paris Declaration on Aid Effectiveness, which was endorsed and signed by all traditional (OECD DAC) donors in One of the Paris Declaration Principles on Aid Effectiveness calls for the ownership of the resources and planning to be vested in the hands of the recipient countries. Alignment which is another principle of Paris Declaration calls upon donors to align their assistance with the national priorities of the recipient countries and to use local systems such as national budget, procurement and reporting systems. It clearly indicates that the assistance channeled though systems of recipient countries is more effective. However, donors that are unable to fund through Government, still should align their projects/programs with the Government priorities to make aid effective in terms of development delivery and impact. The effectiveness and development impact from the assistance outside the Government systems has been reduced where donors have failed to consult with Government and have funded non priority activities. This has been a significant problem over the past seven years. November 2009 The two major challenges in all post conflict countries or countries in conflict, including Afghanistan, are the government s capacity, and corruption which results in donors being reluctant to deliver their assistance through the systems of recipient countries. These problems are the major and common results of long conflicts. The problem of low capacity can be addressed with the support of donors. According to OECD Principles for Good International Engagement in Fragile States and Situation (April 2007), international actors should understand the specific context in each country and should recognize the different constraints of capacity and should mix and sequence their aid instruments according to context, and avoid blue-print approaches (Principle 1). DONOR FINANCIAL REVIEW 19

30 The Principles also call upon the international community to focus its assistance on state-building as the central objective (Principle 3). Hence, the principles call upon the international community to focus its assistance on supporting the legitimacy of government by enabling the government institutions to deliver key functions and services to its citizens. Working through the government will increase the legitimacy of government and the trust between government and its citizens. Building capacity in post conflict countries requires time and resources. According to Principle 9, it requires at least ten years to build the capacity of core governmental institutions. November 2009 In the case of Afghanistan, the three decades of conflict has caused high turnover in the capacity of government. There have also been concerns of capacity in non-governmental or international institutions, particularly in the international military agencies providing development assistance in Afghanistan. The recent report of Special Inspector General for Afghanistan Reconstruction (SIGAR) clearly indicates that the military agencies providing development assistance in Afghanistan and accounting for 40% of the total commitment do not have the capability and mechanism to manage their funds effectively. However, since 2001 both Afghan government and its development partners paid a great attention and invested billions of dollars to build the capacity of government machinery. There is extensive evidence of improved capacity in the Government institutions which is as a result of joint efforts by government and its international development partners. Having said that, it does not mean that everything is perfect and there is no room for improvement. There are still several areas where there is need for improvement and capacity building. The Government will need the support of its development partners to improve in those areas. However, despite these new capacities in which billions of dollars have been invested, most of our development partners unfortunately have been reluctant to test or use these capacities and have used other instruments for the implementation of their aid programs in Afghanistan. The Government of Afghanistan has been by-passed in 80% of the assistance and a huge amount of assistance has been invested in transaction cost for the delivery of assistance. Avoiding government does not help provide better assistance and also does not help the government to further build its capacity. Unless our development partners work in partnership with the Government, the Government of Afghanistan may not be able to build its capacity up to the level satisfactory to our development partners. 20 DONOR FINANCIAL REVIEW

31 More than half of all reconstruction dollars have been allocated to build the Afghan National Security Forces (ANSF). SIGAR s audit examining the ability of the Combined Security Transition Command - Afghanistan (CSTC-A) to monitor contractor performance found that CSTC-A, which is responsible for the training program, did not have the mechanisms in place to ensure funds were managed effectively and spent wisely SIGAR report July 2009 Another major challenge that the Government faces is the retention of current capacity. With the meager resources available to the Government of Afghanistan, it is difficult to retain the capacity because of the higher turnovers of the local staff, particularly of the contracted staff. The local staff working with the Government is attracted to the international agencies, private companies or the Project Implementation Units (PIUs) which pay higher salaries than those paid by the Government. This means that the newly built government capacity is depleted by the international agencies or private companies. A common indicator of measuring the government capacity is the absorption capacity or budget execution rate. It is true that the national budget execution rate has been lower than the execution rate of donors managed budgets. One of the major reasons for slow disbursement of government funds is the control system. The government has to follow the fiduciary disciplines which require more time than other non-governmental procedures. However, this situation is distorted by security spending (which is channeled entirely through donor managed funds) if this spending is removed, the execution rates of Government and donor managed funds are very similar. Thus the execution rate is a problem for both Government and development partners. November 2009 Chart 8: Budget Execution Rate 120% 100% 80% 60% 40% 20% 0% Through GoA Directly Managed by Donor Note: Budget execution through government is inclusive of operating budget. DONOR FINANCIAL REVIEW 21

32 November 2009 Similarly corruption is one of the key challenges in post conflict countries with large aid flows, given the limited institutional capacity and the size of the interventions. It is an issue for both Government and externally funded donor supported development activities. It is a problem in Afghanistan and the Government is trying to address it. The Government has established an international standard Public Finance System, budgetary processes and transparency have been strengthened through the implementation of the Public Finance and Expenditure Management (PFEM) Law in 2005 and its regulation in Combined with procedures and controls the computerized financial management systems provide a very sound fiduciary control framework. Procurement activities continue to be supported by a central agency (Afghanistan Reconstruction and Development Services) for large contracts. The legal and institutional framework has been developed with the Procurement Law (2005) and the creation of Procurement Policy Unit in MoF in In January 2009, amendments to the law were approved (Procurement Law with Amendments 2008). Vulnerability to Corruption assessments have been undertaken in several government agencies, and have been useful assisting key departments in identifying areas with high corruption risk and take measures to mitigate such risks. As said earlier, corruption is a common problem for both Government and externally funded donor supported activities and requires joint efforts to be tackled. It is very important both for government and its development partners to take measures to curb corruption. Avoiding Government and using external mechanism to deliver assistance will not solve the problem Trust Funds Multi-donor Trust Funds are very effective alternative aid instruments in countries where capacity is an issue with the government institutions. Donors that have concerns on the capacity of government but would like to support government priorities usually use the multi-donor trust funds. In Afghanistan three major trust funds have been established namely the Afghanistan Reconstruction Trust Fund (ARTF), Law and Order Trust Fund for Afghanistan (LOTFA) and Counter Narcotics Trust Fund (CNTF). A huge amount of assistance has been provided to support the priorities of Afghan government. An emerging interest has been observed among donors in providing more assistance through trust funds. The assistance through trust funds eventually flows through government systems and government has an active role in allocation of assistance from trust funds. However, in recent years, donors have tended to provide funds with increasing 22 DONOR FINANCIAL REVIEW

33 preference. This has been a particular concern in the ARTF where donor preferences risk undermining the value of the budget as the main policy tool. Discussions led by the Government are underway between ARTF donors and the ARTF Management to develop an ARTF Financing & Investment Strategy that would establish a framework for multi-year allocation of resources by sector. This would increase predictability for improved planning and would anchor referencing within a multi-lateral and government led framework. November 2009 DONOR FINANCIAL REVIEW 23

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35 Overview of Official Development Assistance in 1387 and Commitments and Disbursements One of the major focuses of this DFR is to review the assistance of the current fiscal year (1388), as well as the year preceding (1387). As per the information received from our development partners, a total of USD billion was committed during this period of which USD 7.41 billion or 69 percent has been disbursed so far. The liquidation may increase as the end of the fiscal year approaches. From the total commitment during this period, 79 percent has been directly managed by donors and only 21 percent of the total assistance (USD 2.33 billion) has been committed to be provided through government, of which around 50 percent ( USD 1168 million) is for operating expenditures Donor Investments by Sector Available information shows that security sector has received the largest portion (USD 5.28 billion or 49 percent) of the total commitment throughout It is followed by Good Governance and Rule of Law sectors with USD 1.2 billion (11%) and Infrastructure and Natural Resources sectors with USD 991 million or 9 percent. Chart 9: Sector-wise donor assistance for the period of 1387 and 1388 Commitment % 5% 8% 5% 4% 3% 46% Security Governance & Rule of Law Infrastructure & Natural Resources Economic Governance 11% 13% Agricluture & Rural Development Health DONOR FINANCIAL REVIEW 25

36 The United States provided 67 percent or USD 7.14 billion of the total commitment during this period. World Bank with USD million (or 7 percent) commitment and EC with USD million (or 4.7 percent) remained the 2nd and 3rd major contributors. November 2009 The level of disbursement against commitment varies from donor to donor in this period. As the largest provider of aid, the United States has disbursed the largest amount of assistance (USD 4.5 billion); it is followed by the World Bank with USD 221 million and UK with USD million. However, if we look at the disbursement rate of each donor in this period, we have a different picture. The USA only disbursed 64 percent of its committed amount followed by the UK with 42 percent, and the WB with 28 percent Investment by Channels and Modalities of Delivery Trust funds remained one of the main funding sources for government expenditures during this period. Donors have committed a total of USD1.2 billion for ARTF of which USD 861 million has been paid. Following ARTF, the Law and Order Trust Fund for Afghanistan (LOTFA) was the main financier of Afghan National Police. Donors have pledged USD 457 million for LOTFA and paid a total of USD 405 million by July Donors contribution to LOTFA during this period was very stable and remained almost the same in both years Highlighting Achievements It is very important to see the results of the investment of development assistance during this period. Because of a lack of information on the results of donors managed assistance, it is very difficult to present major achievements during this period. Based on the information provided by line ministries, following are some of the major achievements during this period; Electricity supply was expanded to 630 Megawatt from 485 Megawatt in The transmission line connecting Afghanistan with Uzbekistan was completed in this period and a total of 100 megawatt electricity imported from which 70 Megawatt provided to Kabul city. More than 3 million new fixed and mobile subscribers added during this period. With this new achievement, the total number of subscribers of fixed and mobile telephone has approached 9.5 million. 26 DONOR FINANCIAL REVIEW

37 The implementation of fiber optic project has been improved and about 80% of work has been completed by this period. After completion of this project in 1388, Afghanistan will be connected for the first time with Tajikistan, Iran and Uzbekistan through fiber optic. A major portion of regional and connecting roads were constructed during this period. During the first six months of 1388 approximately 1842 kilometers of regional roads and 1119 kilometers of connecting rods were constructed. A remarkable increase was noticed in the domestic revenues during this period. The revenue in 1387 was increased by 23% while in the first half of 1388 it increased about 58% from the first half of Several health facilities were constructed during this period and the Basic Package of Health Services was provided to 85% of the population. About 90% work of 107 health facilities was completed during this period. In addition to this, the 350 bed Jamhoryat Hospital was constructed and equipped in Kabul. One blood bank in Kabul and four other regional blood banks were opened during this period. Nationwide 1709 general education schools were newly constructed and at the same time the construction work began on 1189 schools. During the first six months of 1388 approximately 6.2 million children enrolled in schools and the number of schools was increased to November 2009 Similarly in other sectors there many other achievements. But due to lack of proper information we have not been able to reflect all major achievements here. We hope in future reports we would be able to list all major achievements. DONOR FINANCIAL REVIEW 27

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39 Perspectives on Donor Assistance in Afghanistan 6.1. Commitments and Disbursements Predictability of assistance is one of the key principles of Aid Effectiveness and is very necessary for countries that are highly dependent on external assistance. Afghanistan is a country highly dependent on aid where 100 percent of its development expenditures and 36% of its operating expenditure are financed by external assistance. When it comes to predictability of aid in Afghanistan, many donors have failed to provide information on their future aid program. There has also been inconsistency in the information that has been provided to Government. This inconsistency can be seen by comparing the estimates in the two DFRs from January and November of 2009: Estimated Funds for in January DFR less Less Funds committed in 1387 Estimated funds for in November DFR Discrepancy USD 20.8 billion USD 6.7 billion USD 10.2 billion USD 3.9 billion This appears to indicate a reduction in donor funding for the period of USD 3.9 billion when comparing the two DFRs. No notification of intent to reduce funds committed has been received from any donor. It therefore must be concluded that over a period of only eight months there has been a significant shift in the predictability of aid flows resulting from inconsistencies in the way the funding is counted. There appear to particular problems arising from the lack of information from major donors such as United States, Japan, Netherlands, Spain and Turkey. Thus, the Government of Afghanistan does not have a clear picture of assistance in future years and is unable to plan for the medium term. Since Afghanistan is highly dependent on external assistance, the formulation of the national budget is also dependent on the predictability of the assistance; therefore, the information on the predictability of assistance is highly important for the Government. The inconsistency has hampered the efforts of the Government to plan for the medium term, and to implement its development programs without any hesitation of financing. DONOR FINANCIAL REVIEW 29

40 Chart 10: Comparison of aid predictability by two DFRs November 2009 In Million US$ 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1, DFR 1388 DFR The available information shows that from the total USD 10.2 billion that may be provided in the coming four years, donors will continue to spend a large amount of their assistance outside of government systems and a very small portion of their assistance will be channeled through Government. It is predicated that a total of USD 7 billion will be managed by donors and only about USD 3 billion will be channeled through Government which includes the assistance through trust funds.. Chart 11: Predictability of funding modality ( ) 30% Through Government 70% Managed by donors Note: the percentage is not very reliable given that large donors that do not channel funds through government have not reported for this DFR. This percentage will drop largely if more information will be available. 30 DONOR FINANCIAL REVIEW

41 6.2. ANDS Financing Gap Based on donors estimates of their future assistance, a total of USD 10.2 billion will be provided to Afghanistan in the coming four years. Considering the needs of the ANDS which is estimated at USD 50.1 billion, the donors assistance falls short. The ANDS was presented by the Government of Afghanistan in the Paris conference in 2008, and was endorsed by its developing partners. In order to finance the ANDS, the Government requested around USD 43 billion from its development partners while it remained committed to secure USD 6.8 billion from its domestic revenues. In SY1387 Government revenue was Afs 41.4 billion or USD 828 million and about USD 5.3 billion ODA was disbursed by donors. Considering the amount spent in 1387 and the donors estimates in coming four years, there is a shortfall of USD 27.8 Billion for the implementation of ANDS. Table 4: ANDS Financing GAP A. ANDS Funding Requirement 50.1 Billion USD B. ODA Disbursed in Billion USD C. Domestic Revenues in SY Billion USD D. Donors Estimates for Coming Four years 10.2 billion USD E. Estimated Domestic Revenues 1388 to Billion USD Funding shortfall = (B+C+D+E) - A 27.8 Billion USD November 2009 Though this conclusion is a little sweeping because of lack of clear information on future volume of assistance it is very important for the Government to inform its development partners of the concern over the implementation of ANDS given the available information. Given that Afghanistan is highly dependent on foreign aid, it is very important for the country to be aware of assistance flow at least for the medium term. It is also very important to note that provision of information on the predictability of assistance is very necessary for such assessments. DONOR FINANCIAL REVIEW 31

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43 Recommendations 7.1. INFORMATION SHARING COMMENT: Afghanistan is financially dependent upon international assistance and accurate and precise information about the available assistance is a vital to its budget preparations. It is crucial that the Government have as exact information as possible not only on the current activities but also on long and mid-term predictability of anticipated ODA. In Accra, donors recognized the importance of this information sharing as a condition for making aid more effective, the donors committed at the Accra Agenda for Action in 2008 to: publicly disclose regular, detailed and timely information on volume, allocation and when, available, results of development expenditure to enable more accurate budget, accounting and audit by developing countries, support information systems for managing aid ; and provide full and timely information on annual commitments and actual disbursements. Through this information, the Government will be able to develop both a long and a mid-term perspective of assistance and further enhance its Medium Term Fiscal Framework (MTFF). RECOMMENDATION: Further increase information sharing on development assistance between the Government of Afghanistan and the donors in order to assist the Government of Afghanistan to improve its budget process thereby increasing transparency and accountability on both sides DISBURSEMENT CHANNEL COMMENT: The Paris Declaration on Aid Effectiveness requires that donor funding be channeled to build government capacity, ensure alignment with national priorities and increase national ownership. RECOMMENDATION: Increase the level of development assistance provided directly to the national treasury. DONOR FINANCIAL REVIEW 33

44 7.3. ANDS FINANCING MECHANISM COMMENT: The ANDS Financing Mechanism which was recently developed jointly by government and its development partners is an essential component in increasing national and government ownership of the development of Afghanistan, and assists in aligning development assistance with ANDS priorities. RECOMMENDATION: Both government and its development partners to take immediate steps to finalize and implement the ANDS Financing Mechanism based on the proposed action plan by Government. November PEER REVIEW COMMENT: Peer Review has already been piloted in two ministries and has proved an effective tool to positively enhance coordination between the Government and the international community on donors managed programs/projects. RECOMMENDATION: Both government and its development partners to further develop and strengthen the use of the Peer Review Mechanism for projects implemented and managed directly by donors CORRUPTION COMMENT: The Government is committed to enhancing its ability to address corruption and asks its development partners to continue to support it in tackling this serious and global issue. RECOMMENDATION: Donors to continue to support the Government to enhance its ability to address corruption at all levels Capacity Building in the Operationalization of ANDS COMMENT: Any development strategy which is not changed into actionable plan remains on paper. The ANDS is a five-year strategy that paves the ground toward a sustainable development in Afghanistan. Unless it is changed into actionable programs, it will be difficult to implement it with the expected results. In order to achieve the expected results, the Government needs institutional capacity to design practical programs aligned with the ANDS. 34 DONOR FINANCIAL REVIEW

45 November 2009 RECOMMENDATION: Donors to strengthen and prioritize the Government s institutional capacity to implement the policy and priorities of the ANDS into actionable activities Specificity of information in the security sector COMMENT: Without specific activity level information about security sector spending, it is difficult to determine what security sector assistance can be officially classified as ODA. RECOMMENDATION: Donors to Increase the specificity of the information provided regarding assistance to the security sector. DONOR FINANCIAL REVIEW 35

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47 Annexes Contents 1. Donors Official Development Assistance to Afghanistan: i. Pledges: ii. Commitments: iii. Disbursements: Official Development Assistance to Afghanistan classified by source of funding: i. Commitments and Disbursements: Donors' Commitment to Government Operating Budget 4. Modalities of the Assistance ( ) 5. Predictability of ODA for Afghanistan ( ) 6. Breakdown of Commitment and Disbursements by Donor 7. Core and External Support to ANDS Sectors ( ) DONOR FINANCIAL REVIEW 37

48 Table 5: Donors Official Development Assistance to Afghanistan Figures in US$ Million Rank Donor Pledge Commitment Disbursement 1 USA 38,000 28,366 23,417 2 UK 2,897 1,810 1,546 3 WB 2,800 1,883 1,364 4 ADB 2,200 1, Japan 1,900 1, EU/EC 2,037 1,973 1,576 7 Canada 1,679 1, India 1,200 1, Germany 1,188 1, Norway Iran Netherlands Denmark Saudi Arabia Italy Spain Australia UAE Pakistan Sweden United Nations Agha Khan China Turkey Finland France Russian Fed Switzerland Other Sources Belgium Korea (Rep of) Islamic Dev. Bank Kuwait Ireland New Zealand Taiwan Croatia Czech Republic Qatar Austria Greece Luxemburg Oman Poland DONOR FINANCIAL REVIEW

49 45 Hungary Malta Egypt Lithuania Portugal Slovakia Brazil Vietnam Estonia Singapore Brunel Kazakhstan Total 62,035 46,099 35,450 Disclaimer: Due to lack of accurate information from some donors for this DFR the actual commitment and disbursement numbers might be greater than what is reflected in this table. And also the information in this table is as of July 2009 and any commitment and disbursement made after this period is not reflected in this table. DONOR FINANCIAL REVIEW 39

50 Table 6: Development Assistance for Afghanistan ( ) Classification by source of Funding S.No. Funding Source Program/Project Support recorded in DAD Contribution to Trust Funds ARTF LOTFA CNTF Grand Total Com Disb Com Disb Com Disb Com Disb Com Disb 1 USA 27,691 22, ,366 23,417 2 United Kingdom ,810 1,546 3 EU/ EC 1, ,973 1,576 4 World Bank 1,883 1, ,883 1,364 5 ADB 1, , Japan 1, , India 1, , Canada , Germany , Netherlands Norway Sweden United Nations Italy Iran Denmark France Australia Other Sources Aga Khan Turkey Finland DONOR FINANCIAL REVIEW

51 23 Russia China Saudi Arabia Switzerland Spain IsDB Belgium Korea Ireland UAE Kuwait Poland New Zealand Luxembourg Czech Republic Austria Hungary Pakistan Brunei Lithuania Kazakhistan Portugal Greece Singapore Estonia Total 41,868 31,594 3,578 3, ,099 35,450 DONOR FINANCIAL REVIEW 41

52 Table 7: Donors Commitment to Government Operating Budget Funding Grand Source Total ARTF ,913 LOTFA USDoD Total ,104 Note: in 1388, the figure for LOTFA is donor commitment from which 17.8 million has been disbursed so far. Table 8: Modalities of the Assistance ( ) Figures in US$ Million Modality Disbursement %age Donors Managed Assistance 29, % a. Military Source 14, % b. Non-Military Source 14, % Government Managed Assistance 8, % a. General Budget Support 3, % 1. Discretionary Non Discretionary 2, b. Development Support through Trust Funds 1, % 1. ARTF 1, CNTF c. Support to the recurrent Budget 3, % 1. ARTF Recurrent window 1, LOTFA USDoD Grand Total 37, Note: The disbursement through trust funds is from donors' to trust fund administrator and that is why the total disbursement is greater than the disbursement by sector and also in %. 42 DONOR FINANCIAL REVIEW

53 Table 9: Predictability of ODA for Afghanistan ( ) Figures in US$ Million Annual Breakdown S.No. Description Grand Total Total funding envelope 6, , , , Sectoral Allocation of the above A Security 2, , B Governance & Public Administration Reform & Human Rights , C Justice and Rule of Law D Religious Affairs E Energy F Transport G Urban Development H Mining I Information & Communications Technology J Water K Education L Culture, Media & Youth M Health & Nutrition N Agriculture and Rural Development O Social Protection P Refugees, Returnees & IDPS Q Private Sector Development & Trade R Unclassified DONOR FINANCIAL REVIEW 43

54 3 Modality for Delivery of Assistance Of the above how much will flow through Total Core Budget 2, , ) Direct Core Budget 1, , ) Trust Funds , a- ARTF , b- LOTFA c- CNTF Total Off-budget (external budget) 4, , , DONOR FINANCIAL REVIEW

55 Table 10: Donor-wide Funding (Commitment & Disbursement Breakdown) for 1387 and 1388 including Trust Funds Funding Source Commit in DAD (USD) Disb (USD) Commit ARTF Disb ARTF 1387 Commit LOTFA Disb LOTFA Total Commitment in 1387 Total Disbursement in 1387 ADB Aga Khan Australia Austria Belgium Brazil Brunei Canada China Czech Republic Denmark EC Estonia Finland France Germany Greece Hungary IDB India Iran Ireland Iceland Italy Japan Korea Latvia Lithuania Luxembourg Netherlands New Zealand Norway Other Source Poland Russian Feder Red Cross Saudi Arabia Spain Sweden Switzerland Turkey UAE UK UN USA 3, , , , Unspecified WB Total 6, , , , Source: DAD (Aug, 2009), ARTF Report (Aug, 2009), and LOTFA Report (Jul, 2009). DONOR FINANCIAL REVIEW 45

56 Table 11: Donor-wide Funding (Commitment & Disbursement Breakdown) for 1387 and 1388 including Trust Funds Funding Source Commit in DAD (USD) Disb (USD) Commit ARTF Disb ARTF 1388 Commit LOTFA Disb LOTFA Total Commitment in 1388 Total Disbursement in 1388 ADB Aga Khan Australia Austria Belgium Brazil Brunei Canada China Czech Republic Denmark EC Estonia Finland France Germany Greece Hungary IDB India Iran Ireland Iceland Italy Japan Korea Latvia Lithuania Luxembourg Netherlands New Zealand Norway Other Source Poland Russian Federa Red Cross Saudi Arabia Spain Sweden Switzerland Turkey UAE UK UN USA 2, , , Unspecified WB Total 5, , , , Source: DAD (Aug, 2009), ARTF Report (Aug, 2009), and LOTFA Report (Jul, 2009). 46 DONOR FINANCIAL REVIEW

57 Table 12: Core & External support to ANDS Sectors ( ) Figures in million US$ Sector Total Com Disb Com Disb Com Disb Com Disb Com Disb Com Disb Com Disb Com Disb Com Disb Com Disb Security ,303 1,318 3,373 3,200 2,250 2,137 7,487 7,941 2,973 2,712 2, ,788 18,483 Governance & Rule of Law , ,229 2,132 Infrastructure & Natural Resources , , , ,718 4,229 Education & Culture ,542 1,636 Health ,712 1,103 Agriculture & Rural Development ,225 3,245 Social Protection ,025 1,705 Economic Governance ,352 1,748 Unclassified ,322 2,065 Total ,929 1,254 3,964 2,070 4,181 2,970 6,167 5,361 5,374 4,590 12,153 10,992 6,651 5,905 4,508 2,437 45,913 36,346 USA data source is SIGAR July 2009 report. DONOR FINANCIAL REVIEW 47

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