Afghanistan: "Building on Success"

Statement by
Haruhiko Kuroda
President
Asian Development Bank
At the London Conference on Afghanistan
London, United Kingdom
Excellencies, Distinguished Co-Chairs, and Fellow Delegates

Today's meeting represents another landmark in Afghanistan's emergence from nearly two decades of conflict. The Bonn Process guided Afghanistan's political normalization and provided a firm foundation for the country's reconstruction and development. The Afghanistan Compact, which we jointly endorse today, launches a new international partnership with Afghanistan that will help ensure a better future for the country and its people, including enhanced security, effective development, and greater regional cooperation.

The Asian Development Bank is pleased to have been one of Afghanistan's key development partners over the past four years. ADB already has met its Tokyo Conference pledge, committing $500 million in highly concessional assistance, and is well on the way to fulfilling its Berlin Conference pledge of furnishing a further $800 million in Asian Development Fund loans and grants over the 2005-2008 period. As of end-December 2005, ADB had approved nearly $1 billion in loans, grants, capacity development technical assistance, and private sector investments to support Afghanistan's development, and is administering a further $82.6 million in donor-financed or cost-shared activities including assistance through the Japan Fund for Poverty Reduction. Working in close collaboration with the Afghan authorities, and with all ADB resources provided through Government channels, we are proud that our assistance is contributing to the country's economic and social development, while helping reestablish strong regional ties.

Mr. Chairmen -

The Government of Afghanistan, as well as the donor community in Kabul, is to be congratulated for the preparation of the Interim Afghanistan National Development Strategy, or I-ANDS. The high degree of collaboration and engagement that characterized the development of the I-ANDS, including detailed sectoral and thematic consultations, is evidence of the strong partnership that has been forged over the past four years.

ADB strongly endorses the emphasis given to private sector development, and believes that the I-ANDS outlines an appropriate role for the Government - that of facilitator and regulator in most sectors. ADB also feels that the ambitious targets outlined in the I-ANDS are tempered by an appropriate sense of realism, balancing opportunities against the country's very real development constraints. ADB commends the Government for planning a further process of review and consultation before the I-ANDS is finalized. We are particularly pleased that this review process will include Afghan civil society, given the importance of national ownership.

While ADB agrees that it is necessary to set detailed benchmarks and targets for Afghanistan's further development, the ambitious slate of benchmarks and timelines contained in the Afghanistan Compact and the I-ANDS might contribute to unrealistic expectations on the part of the Government, its development partners, and - most importantly - of the Afghan people. Thus, it will be necessary to carefully monitor progress across a range of benchmarks not only so that we may celebrate progress made, but also so that even greater attention can be paid to those areas where we inevitably will fall short.

Mr. Chairmen -

This Conference marks a landmark in the partnership between Afghanistan and the international community. The Afghanistan Compact is a bold and ambitious effort to concretize the principles of the Paris Declaration on Aid Effectiveness. ADB welcomes this initiative, and pledges that it will do its utmost to subscribe to the Compact's principles, including delivering on our commitment to provide Afghanistan with assistance that effectively contributes to the country's key development priorities, particularly the reduction of poverty None of us needs to be reminded that Afghanistan remains one of the world's poorest countries, and that it will continue to face over the coming years an array of daunting development challenges. It is incumbent on all Afghanistan's donor partners to ensure the effectiveness of the aid provided to Afghanistan. I encourage all of our donor partners to gradually increase the portion of their development assistance provided directly through government channels. This will build the capacity of the Government, ensure accountability, and improve the cost effectiveness of the assistance. At the same time, I urge the Government to continue to its efforts to improve the quality of its public financial management and raise domestic revenues, which are crucial to sustainable development. Stringent efforts must also be made to eliminate the scourge of corruption, which harms the poor most of all. In addition, all of us must support its effort to eliminate the production of illicit drugs.

Mr. Chairmen -

Looking forward to the five-year period covered by the Afghanistan Compact - signed here today - I am pleased to announce ADB's intention to provide Afghanistan with up to $200 million per year over the coming five-year period for a total of $1 billion, subject to progress in the implementation of the Compact and the I-ANDS, as well as the outcome of future Asian Development Fund negotiations and the overall availability of ADF funding. ADB will continue to provide at least half of its support to Afghanistan on a full-grant basis, and over the medium term will consider ways to increase the overall proportion of its grant assistance. ADB also pledges to continue to provide Afghanistan with significant amounts of grant-financed technical assistance, as well as to mobilize additional private sector financing to further catalyze the country's private sector-led economic growth.

Building on the success of the past four years, ADB is confident that together we can help secure a better future for Afghanistan and its people.

Thank you.