Afghanistan’s finance minister has appealed for international aid to be channelled through the country’s public budget ahead of the donors’ meeting in Paris next month.
“If aid was transmitted through the national budget, we would be able to achieve much more,” finance minister Anwar ul-Haq Ahady told Emerging Markets this weekend.
He argued that sweeping changes are needed in international aid efforts, from donor-driven spending to government-directed aid.
“Only 15% of donor aid [that bypasses the national budget] is absorbed by the local economy.” The other 85% is “wasted” on consultant salaries, corporate profits and procurement costs, buying equipment that does not stay in the country.
A five-year National Development Strategy (NDS) plan will be finalized next month at the international donors’ meeting and the government is asking for $50 billion. A report issued in March by the Agency Coordinating Body for Afghan Relief, an alliance of international aid organizations, highlighted that since 2001 the international community has pledged $25 billion but delivered only $15 billion.
But Ahady, who left Afghanistan over 25 years ago to return in 2002 as the director of the country’s central bank, said: “We are happy with the level of aid and understand there is a natural gap between aid pledges, commitments and disbursements. The real issue is aid effectiveness.”
The government of president Hamid Karzai – which faces a Taliban military resurgence – relies on international donations for 90% of its spending with revenues amounting to $3 billion in 2007.
Ahady called on Western donors and multilaterals to recruit more local staff and resources. He is disappointed by the fact that over half of aid is tied to the procurement of donor-country goods and services.
Juan Miranda, director general of the ADB’s central and west Asia department, argued the institution seeks to capitalize on local resources where possible. “But unfortunately for big projects we need to issue international tenders to find the right expertise and equipment,” he said.
Ahady admitted the gap between donor commitments and disbursements had created unrealistic expectations among the local population about the pace of reconstruction and stirred domestic discontent. “Aid needs to be planned and budgeted this takes time, this is what the people need to realize.”
The US state department’s annual terrorism report released this Wednesday said terrorist attacks in Afghanistan jumped 16% last year, killing 1966 people, 55% more than 2006. Ahady said that there had been a regrouping of the Taliban over the last two years since the US-led toppling of the regime in 2001.
He argued that this will jolt the international community to further support the reconstruction efforts. “There has been more attention to Afghanistan as donor countries realize they have probably spent too much resources to Iraq,” he concluded.