Afghanistan

World Bank provides US$133.8 million in grant support to Afghanistan

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Press Release No:2007/406/SAR

WASHINGTON, May 29, 2007 ─ The World Bank today approved a US$133.8 million package of grant assistance to Afghanistan, of which US$80 million will deepen and sustain the reforms underway in the areas of public administration and fiscal management; US$33.4 million will enhance public financial management systems; and US$20.4 million will improve the management of the country’s civil service for better results on the ground. This package brings the total World Bank commitments to US$1.4 billion since re-engagement in 2001 and closes a record fiscal year in which over US$312 million has been committed to seven projects (compared to US$240 million in fiscal year 2006).

After two decades of conflict, significant progress has been made to secure peace and start the reconstruction of the country. Growth has been strong since 2001 and is expected to grow at around 8 percent per annum over the next five years. The government has initiated important structural reforms, including introducing a new currency and an open trade regime. Important achievements have also been made to build core state institutions by reforming public administration and improving budget and fiduciary management. All of the World Bank’s assistance is channeled through the government’s own systems towards the core priorities of government as set out in the interim National Development Strategy.

“Despite the impressive achievements of the past five years, Afghanistan remains a challenging environment,” said Alastair McKechnie, World Bank Country Director for Afghanistan. “In addition to security and governance problems, capacity remains weak and the needs for investment and services are very large. The government’s challenge is to deepen its reform program beyond Kabul and to implement reforms that will deliver effective government services and generate broad-based growth.”

The US$80 million Programmatic Support for Institution Building III is designed to deepen and sustain the reforms underway in the areas of public administration and fiscal management. The project will support reforms to enable efficient allocation of fiscal resources in the areas of health and education development and private sector development. It complements separate investment and technical assistance operations that, together, support the implementation of comprehensive reforms in key sectors such as public administration reform, private sector development, public finance management and budget management.

The US$33.4 million Public Financial Management (PFM) Reform Project is designed to develop an efficient and effective public financial management system and the human resource capacity of the Ministry of Finance (MOF) and Control and Audit Office (CAO) to ensure better operation of public financial management. To meet these objectives the project will assist departments within the MOF and the CAO to develop and implement the structures, procedures and systems required to carry out their mandates under the new public financial management law and provide consultants, training opportunities, and materials for the development of skills of MOF staff, line ministry staff, and CAO staff.

The US$20.4 million Civil Service Reform Project aims to support key government ministries to improve their performance in terms of service delivery and accountability for the use of public resources. To meet this objective, the project will provide support to core ministries as they reorganize their structure and staffing so as to better meet their tasks. The project will also support the government in managing the civil service according to clear rules and procedures.

“The success of these reforms is essential for building an accountable and effective state and is critical for successful poverty reduction,” said Mariam Sherman, World Bank Country Manager for Afghanistan. “These projects will help the country achieve satisfactory and sustainable development outcomes, set out in the Interim Afghanistan National Development Strategy.”

The grants are from the International Development Association, the World Bank’s concessionary lending arm. The World Bank also administers the Afghanistan Reconstruction Trust Fund (ARTF), in partnership with the United Nations, the Islamic Development Bank, and the Asian Development Bank. The ARTF has mobilized over US$2 billion from 27 donors for the government’s recurrent budget and for government’s priority development investments.

For more information on the Bank’s work in Afghanistan, please visit http://www.worldbank.org.af

Contacts:

In Kabul: Abdul Raouf Zia (93) 702 80800, Azia@worldbank.org
In Washington: Benjamin Crow (202) 473 5105, bcrow@worldbank.org