Afghanistan

Afghanistan: ARTF provides grant support to enable government pay wages and improve utilization of government and donor resources

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Over 200,000 civil servants, mostly outside the capital, receive monthly salaries without any delay

KABUL, June 25 2007 - The Afghanistan Reconstruction Trust Fund (ARTF) Management Committee approved a US$80 million package of grant assistance for Afghanistan, of which US$70 million will help the Government pay wages of non-uniformed civil servants and US$10 million to improve the utilization of government and donor resources.

The US$70 million grant, which is out of the US$270 million recurrent costs approved in the national budget for 1386, finances salaries and wages of over 200,000 non-uniformed civil servants, mostly teachers and doctors, and the Government's operating and maintenance expenditures outside of the security sector. Between May 2002 and March 20, 2007, the ARTF provided nearly US$1.2 billion to the Government of Afghanistan for recurrent cost financing, of which US$1.06 billion had been disbursed.

The Government is gradually improving its own revenue base, through customs and taxation, so it can pay its recurrent costs fully in the future. Improvements are being made, and in 1385, revenue collection was 40 percent above the previous year. However, it will be some time before the Government is fully able to support its recurrent costs.

"Over the past five years, Afghanistan's capacity to absorb donor assistance has improved much," said Alastair J. Mckechnie, World Bank Country Director for Afghanistan. "However, many challenges remain to build government capacity, particularly at sub-national level where it is hard to find professional and experienced civil servants. Moreover, the government needs to build a more accountable and transparent systems in place to convince donors to channel their assistance through government budget."

The US$10 million grant for the Management Capacity Program will help ministries to temporarily improve their capacity in key managerial areas. This should enable the government to manage resources more effectively and deliver results faster on the ground. The program will fund qualified Afghan staff, currently working in NGOs and international agencies, to work in critical positions in government in areas such as financial management, procurement, human resource management, policy and administration. A priority will be given to positions in sub-national offices of line ministries.

About ARTF:

The multilateral Afghanistan Reconstruction Trust Fund (ARTF) was set up in May 2002 to provide support to Afghanistan in two areas. First, it provides for the recurrent costs of the government, such as the salaries of teachers, health workers, civilian staff in ministries and provinces, operations, and maintenance expenditures; and bulk purchases of essential goods for the government. Second, it supports investment projects, capacity building, feasibility studies, technical assistance, and the return of expatriate Afghans.

The ARTF is administered by the World Bank under the supervision of a Management Committee comprising the Asian Development Bank, the Islamic Development Bank, the United Nations Development Program, and the World Bank. Government representatives (mainly from the Ministry of Finance) also participate in the monthly

Management Committee meetings as observers. A monitoring agent has been recruited to assist in ensuring proper fiduciary management for the recurrent cost financing done under ARTF.

As of June 13, 2007, 27 donors had pledged US$2.22 billion to ARTF, of which more than US$1.85 billion had been received. Over US$1 billion had been disbursed to the Government of Afghanistan to help cover recurrent costs, and US$420 million has been disbursed for investment projects.

The ARTF has emerged as one of the main instruments for financing the country's recurrent budget deficit, and is set to evolve into a major source of technical assistance and investment support for Afghanistan.

For more information on:

- The World Bank's work in Afghanistan - http://www.worldbank.org.af

- The ARTF - http://www.worldbank.org/artf

Media Contacts in Kabul:
At the World Bank
Abdul Raouf Zia 0700 280 800 Azia@worldbank.org