Afghan Government Has Cash, Won't Spend

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Ministries failing to use up their budgets despite pressing need for more reconstruction work.

By Khan Mohammad Danishju - Afghanistan

ARR Issue 391, 22 Feb 11

There may be many reasons for the failure of reconstruction in Afghanistan, but it is not always down to lack of cash. Analysts say many ministries are incapable of spending efficiently, at a time when official data shows a serious government underspend on development, welfare and rebuilding.

As the end of the Afghan financial year, which runs to March 21, draws nearer, most national ministries have spent only a fraction of their development budgets - the money they are given to carry out projects as opposed to paying for their general running costs.

Finance ministry figures show that the government spent only a quarter of the total government development budget of 112,000 afghanis, 2.6 billion US dollars, in the nine months to the end of December 2010, by which time it should have spent about three-quarters of the money.

At opposite ends of the scale were the foreign ministry, which spent just 1.5 per cent of the development funds allocated to it, and the interior ministry and national security agency, which used up 49.5 percent and 74 per cent, respectively.

Spending in the key areas of education and healthcare was above average at 34 and 37 per cent, respectively.

Take for example the ministry of refugees and repatriation, responsible for an area of enormous challenges given that 9.5 million refugees have returned from Pakistan and Iran since 2001.

Despite the plight of many refugees seeking government assistance with accommodation, in particular, the ministry spent just 14 per cent of its annual development budget as of the end of December, much lower than the already poor 24 per cent average for the welfare sector as a whole.

Wali Mohammad Shibani, director of planning at the ministry, refused to comment on its failure to deliver, saying only that while some accommodation projects were going well, the contracts for others had not been signed yet.

Many of those who have returned to Afghanistan cannot understand the ministry's failure to help them.

Latifullah, 50, has been waiting five years for the ministry to rule on his application to be re-housed.

"The biggest problem facing returnees is the lack of housing, yet when we go to the ministry... they tell us they don't have a budget," he said. "Where can this budget be coming from if it hasn't arrived after five years?"

The Afghan finance ministry report detailing the underspend as of the end of 2010 cited a number of problems including the inability of ministries to plan and budget for activities and to spend on them in an effective and timely manner.

It also said some international donors, who underwrite much of the Afghan government budget, were poor at formulating new projects, took a long time making the procurements needed, and then failed to disburse funds on time. Finally, continuing security problems obstructed projects taking place on the ground.

Commentators interviewed by IWPR broadly agreed with this analysis.

Political analyst Jawid Kohistani said bureaucratic procedures were a major block to progress.

"It takes months of processing to obtain money from the finance ministry for any given project," he said. "Many months go by and the budget doesn't get spent down properly."

Saifuddin Saihun, an economics lecturer at Kabul University, agreed that budget approval and distribution was too slow.

"The three months that the budget takes to get through parliament is a major problem," he said.

Daud Sultanzoi, formerly chairman of the Afghan parliament's economics committee, disputed this, saying the current budget for 2010-11 had been passed exactly on schedule.

He blamed other factors like the disruption caused by the September parliamentary election and the strained relationship with the United States, which he said had hindered government from spending according to plan. Another factor, he said, was that many current ministers were only temporary since parliament had approved only seven of the 26 nominations submitted by President Hamid Karzai.

Saihun said there was no mechanism for checking on ministers' performance and calling them to account if they failed to use the resources available to them.

"When a minister is unable to spend half his development budget, it shows he lacks expertise in the field and he should face questions," he said. "To date, not one minister who has failed to spend his development budget has been sacked or summoned."

Political analyst Wahid Mushdah says government institutions are packed with incompetent staff hired because of personal ties.

"Unprofessional people with no expertise are employed because of ethnic, regional and personal affiliation, and that is why the budget cannot be spent," he said.

Economic expert Abdullah Kazim said this year's pattern of across-the-board underspending on the development side was a repeat of previous years.

"Corruption and the absence of policies compelling everyone to report on income and expenditure are preventing the economic system from becoming effective," he said.

The finance ministry has said that although spending on the government's overall operating budget stood at 60 per cent of the annual target three-quarters of the way through the financial year, it could still achieve 90 per cent by March. By contrast, with a mere 25 per cent of target achieved so far, the final quarter was unlikely to bring a significant improvement on development-budget spending.

Khan Mohammad Danishju is an IWPR-trained reporter in Afghanistan.