Afghanistan 2009 Donor Financial Review

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Islamic Republic of AfghanistanMinistry of Finance

Donor Financial Review

Reort 1388November, 2009





DONOR FINANCIAL REVIEW I

ACKNOWLEDGEMENT

On behalf of the citizens of the Islamic Republic of Afghanistan, it is a pleasure to

present the report of 1388 Donor Financial Review (DFR). The 1388 DFR report

represents tangible evidence of the strong partnership between Afghanistan and our

development partners in reconstruction and development of Afghanistan which is

based on the principals of the Paris Declaration on Aid Effectiveness. It also provides a

vital tool for the Government of Afghanistan and our development partners on the

measurement of the effectiveness of development assistance, national budget

planning process and the implementation of the Afghanistan National Development

Strategy.

Experience has shown that increased information sharing serves the interest of the

entire international community – not only Afghanistan. Development assistance iseffective when we work together on the basis of the five principals of Paris Declaration

on Aid Effectiveness: Ownership; Alignment; Harmonization; Managing for Results; and

Mutual Accountability.

During the past seven years, development assistance equaling to USD 35 billion has

been provided to Afghanistan. The DFR report is part of the Afghan Government’s long-

term commitment to its citizens and to the international community to increase and

improve public awareness in both Afghanistan and in our development partners’

homelands of the results of development assistance.

It is also a critical tool for both the Government and our development partners to

accurately assess and forecast levels of official development assistance; successfully

implement the ANDS; and, it provides crucial data for the Medium Term Fiscal

Framework (MTFF), a tool developed by the Government of Afghanistan to provide a

medium term rolling forecast of the interaction between government spending and

revenues and the wider economy. Therefore, provision of information to government

through DFR is very necessary for the implementation of ANDS and update of MTFF.

In closing, the Government of the Islamic Republic of Afghanistan wishes to take this

moment to express its continued appreciation to the international community working

in Afghanistan for the strong and consistent support that has been provided for the

reconstruction and development of Afghanistan. We are also thankful to UNDP for its

technical and financial support for this DFR report. We look forward to continuing our

collaborative work with our distinguished development partners in the international

community, and we welcome the comments and discussion that this important

document will allow.

Sincerely,

Dr. Omar ZakhailwalMinister of Finance & Senior Economic Advisor to President



DONOR FINANCIAL REVIEWII

CONTENTS

ACKNOWLEDGEMENT I

ACRONYMS V EXECUTIVE SUMMARY 1 INTRODUCTION 3 DONOR FINANCIAL REVIEW (DFR) 5

2.1. Objectives of Donor Financial Review ............................................ 5

2.2. Online Development Assistance Database (DAD) ........................... 6

OVERVIEW OF OFFICIAL DEVELOPMENT ASSISTANCE TO AFGHANISTAN (1380-1388) 9

3.1. Pledges, Commitments & Disbursements ....................................... 9

3.2. Rate of Aid Disbursement ............................................................. 11

3.3. Aid Investment in Afghanistan: Identified Trends .......................... 12

3.3.1. Geographic Distribution ......................................................... 12

3.3.2. Aid Investment by Sector ....................................................... 13

AID DELIVERY CHANNELS AND MODALITIES 15

4.1. Delivery Channels ......................................................................... 15

4.2.1. Delivery through Military Channels ..................................... 15

4.2.2. Delivery through Non-Military Channels ............................. 15

4.2. Aid Delivery Modalities ................................................................. 16

4.2.1. Budget Implementation Directly Managed by Donors .......... 16

4.2.2. Afghan Government Managed Budget and Implementation 16

4.2.3. Trust Funds ............................................................................ 17

4.3. Analysis of the Effectiveness of Existing Modalities ....................... 18

4.3.1. Directly Donor Managed ........................................................ 18

4.3.2. Afghan Government Managed .............................................. 19

4.3.2.1. Trust Funds ............................................................ 22

OVERVIEW OF OFFICIAL DEVELOPMENT ASSISTANCE IN 1387 AND 1388 25

5.1. Commitments and Disbursements ................................................ 25

5.2. Donor Investments by Sector ........................................................ 25

5.3. Investment by Channels and Modalities of Delivery ...................... 26

5.4. Highlighting Achievements ........................................................... 26

PERSPECTIVES ON DONOR ASSISTANCE IN AFGHANISTAN 29

6.1. Commitments and Disbursements ................................................ 29

6.2. ANDS Financing Gap ..................................................................... 31



DONOR FINANCIAL REVIEW III

RECOMMENDATIONS 33

7.1. Information sharing ...................................................................... 33

7.2. Disbursement channel .................................................................. 337.3. ANDS financing mechanism .......................................................... 34

7.3.1. PEER REVIEW ......................................................................... 34

7.3. Corruption .................................................................................... 34

7.4. Capacity Building in the Operationalization of ANDS ..................... 34

7.5. Specificity of information in the security sector ............................. 35

ANNEXES .......................................................................................................... 37





DONOR FINANCIAL REVIEW V

ACRONYMS

ANDS Afghanistan National Development Strategy

ADB Asian Development Bank

AFMIS Afghanistan Financial Management Information System

AMD Aid Management Directorate

ARTF Afghanistan Reconstruction Trust Fund

ANSF Afghanistan National Security Forces

ANA Afghanistan National Army

ANP Afghan National Police

CERP Commanders Emergency Response Program

CNTF Counter Narcotics Trust FundCSTC-A Combined Security Transitional Command Afghanistan

DFR Donor Financial Review

DAD Development Assistance Database

DAC Development Assistance Committee

DFID Department for International Development

EC European Commission

EU European Union

FCO Foreign Commonwealth Office

FY Fiscal Year

GIS Geographic Information SystemIDB Islamic Development Bank

IFI International Financial Institution

LOTFA Law and Order Trust Fund for Afghanistan

MTFF Medium Term Fiscal Framework

MoF Ministry of Finance

NATO North Atlantic Treaty Organization

ODA Official Development Assistance

OECD Organization for Economic Cooperation and Development

PFM Public Finance Management

PIU Project Implementation UnitPRT Provincial Reconstruction Team

SIGAR Special Inspector General for Afghanistan Reconstruction

SY Solar Year

USAID United States Agency for International Development

UN United Nations

UNAMA United Nation Assistance Mission for Afghanistan

UK United Kingdom

UAE United Arab Emirates

USA United States of America

UNDP United Nation Development ProgramWB World Bank





DONOR FINANCIAL REVIEW 1

EXECUTIVE SUMMARY

The international community has provided USD 1241 per Afghan citizen in

assistance since the year 2001. The people of Afghanistan are grateful to

the international community for what has been achieved since 2001 which

would not have been possible without this generous international

assistance. The assistance provided to date has been given to help turn the

30-year war torn Afghanistan into a peaceful country with a strengthened

national army and police force, governed by a democratically led

government with a legally based, market driven economy.

Since 2001 the international community has pledged to provide USD 62billion in assistance (grants and loans) to Afghanistan. Fifty-five percent of

this amount was announced in the international conferences on

Afghanistan (Tokyo, Berlin, London, Rome and Paris). At the time of this

Donor Financial Review (DFR), the Ministry of Finance has determined that

USD 46 billion (75.8% of USD 60.7 billion) has been allocated to specific

projects and activities, while the amount actually spent is closer to USD 36

billion.

To achieve a balanced growth in all areas, sectors have been identified

where the assistance is to be prioritized. The Government of Afghanistan’sfirst priority, the security sector, has been the largest recipient of

assistance. USD 19 billion, or more than 50% of the total assistance

disbursed, has been spent to strengthen the Afghan National Army and

Police Forces. The Ministry has included this spending in this DFR report

knowing that there is currently insufficient data about how this assistance

is specifically spent to determine what portion of this assistance can be

classified as ODA according to the Organization for Economic Cooperation

and Development (OECD) standard. Following Security, Infrastructure and

Agriculture & Rural Development sectors have been the largest recipient of

assistance.

The method and channel used to deliver the assistance are as important as

the volume and prioritization of the assistance as these affect the final and

intended impact. Based on available information, 77% (USD 29 billion) of

the USD 36 billion has been disbursed on projects and programs designed

and implemented by the donors themselves with little or no input by the

Government of Afghanistan. The remaining development assistance (USD

8.7 billion) has been delivered directly through the treasury of the

Government of Afghanistan using the national budget, but of this amount,only USD 770 million has been placed fully at the discretion of the



DONOR FINANCIAL REVIEW2

Government of Afghanistan to determine where it will be allocated and

spent

During the years 1387 and 1388 donors have officially committed USD

10.72 billion of which USD 7.41 (69%) billion has already been disbursed. Of

the 10.72 billion, the spending of USD 8.5 billion or 79% has been

controlled and managed directly by donors, while the national treasury of

the Government of Afghanistan received only USD 2.25 billion or 21

percent.

DFR continues to provide the Government and the international

community with an important tool to understand the current and future

levels of assistance coming to Afghanistan. After the Afghan NationalDevelopment Strategy (ANDS) was finalized and presented to the

international community at the Paris Conference, the international

community reaffirmed its commitment to assist the Government of

Afghanistan to implement the ANDS. Being heavily dependent on foreign

assistance for the implementation of ANDS, it is crucial that the

Government of Afghanistan be able to predict the level of upcoming

assistance to Afghanistan despite the difficulty of this task.

The influx of assistance is hoped to continue. However, the Government of Afghanistan is concerned that the levels of assistance spent outside the

government system remain large because it limits government ownership.

Development aid is only effective when there is close consultation between

donors and the recipient government, and there is a strong focus on

strengthening development capacity of the government to build its internal

institutional capacity to manage and implement its development. The

Government looks forward to continuing to enhance its partnership with

the international community in the coming months.




INTRODUCTION

The people of the Islamic Republic of Afghanistan are grateful to the

international community for its generous assistance for the reconstruction

and development of Afghanistan. The unwavering support of Afghanistan’s

international development partners has been and continues to be a vital

support as Afghanistan rises from the ashes of thirty-years of conflict. During

the past seven years the international community has generously committed

to provide Afghanistan a total of USD 46 billion in assistance of which more

than USD 35 billion was delivered by first quarter of Solar Year 1388 which

includes support for development and empowerment of the Afghan National

Security Forces of different kinds such as grants, loan and in kind.

As Afghanistan reflects on the past seven years there are many positive

achievements; for the first time in thirty-years Afghanistan had the

opportunity to elect their President and Members of Parliament, there has

been tremendous improvements in infrastructure sector; about 4000

kilometers of road have been rehabilitated or newly paved,

telecommunication has boosted and today more than 73% of population have

access to telecommunication services; and thousands of new and refurbished

schools and health facilities have been constructed and approximately six

million children have access to primary education.

Similarly, other sectors have also benefited from development assistance in

the past seven years. Given the Government’s limited domestic revenue

during this period, these achievements would have not been accomplished

without the generous assistance and strong partnership of our development

partners. Our development partners have played and continue to play a vital

role in the reconstruction and development of Afghanistan.

Understanding its geographical significance in the international community’s

effort to prevent global terrorism, Afghanistan is committed to establishing asecure and stable nation and it understands that it faces unique challenges

toward its successful development including issues related to security and

narcotics. And, despite significant progress, Afghanistan continues to be a

country highly dependent on foreign aid. Currently the Government is only

able to finance around 64% of its operating expenditures from domestic

revenue (1388 mid year budget review). For development expenditures, it is

completely dependent on the support of its international development

partners. The Government understands that it will require the long-term

assistance of its development partners to become a secure and economicallyvibrant participant in the international community.




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It is noteworthy that when compared to the per capita aid in other post-

conflict countries, Afghanistan has received less assistance than other post-

conflict nations such as Iraq and Bosnia. It is the Government’s belief that the

level of assistance, particularly the development assistance, be increased to a

level greater or similar to other post conflict countries.

Chart 1: Per Capita Aid in first five years of post-conflict

However, it is not enough to increase the levels of external assistance. The

effectiveness of the assistance must also be dramatically increased. The first

priority of Afghanistan in the area of aid effectiveness is the alignment of

external assistance with the country’s national priorities as defined in the

Afghan National Development Strategy (ANDS). While perhaps beneficial to

Afghanistan, about 80% of assistance (based on commitment) to Afghanistan in

the past seven years has bypassed the Government of Afghanistan and has

been invested in activities that were not or are not very aligned with national

priorities.

Afghanistan and its international development partners share the same

objective - high results from use of development assistance. In order to achieve

this common objective Afghanistan and

its development partners need to focus

on aid effectiveness and use the

modalities for the delivery of assistance

that are both cost effective and produce

sustainable results.

Mutual accountability and

transparency are the major

principles of aid effectiveness

and must be respected by both

the providers and the recipientsof development assistance.

$1,528

$585

$292

$-

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

Country

Iraq

Bosnia

Afghanistan




Donor Financial Review (DFR)

2.1. Objectives of Donor Financial Review

Initiated in 1385, the DFR is a semi-annual exercise that helps the people

and Government of Afghanistan and the international community in

Afghanistan to have a comprehensive picture of the development

assistance that flows to the country. The DFR is also an important input for

the formulation of the Afghan national budget and the implementation of

ANDS. Specifically, the DFR is a tool to:

1. Build strong cooperative ties between GoA & its development

partners;

2. Enhance mutual accountability and transparency;

3. Assist the Government in defining its spending priorities.

The first round of the 1388 DFR started with one-on-one meetings with 34

development partners and was completed by June 15, 2009. Three major

items were discussed during these meetings:

1. Updated disbursement for the SY1387 and SY1388

2. Updated commitment for SY 1388 and planned commitment for

SY1389

3. Predictability of assistance over the medium to long-term

During the one-on-one meetings, the discussion was limited to the three

items listed above, and a general discussion of the requirements for data

and relevant formats. We have agreed on the end of June as a deadline for

submission of data. However, most of the development partners were

unable to provide their data by the agreed deadline, the deadline wasextended until August 5. It is important to acknowledge that there is an

increasing trend of compliance with the DFR in this round compared to

SY1387. The analysis in this report is based on the information provided to

Ministry of Finance as of August, 2009 from our development partners. The

conclusions drawn in this report are based on those submissions.



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Table 1: Status of Donors’ Reporting for 1388 DFR

No. Complete DataSubmitted*

No. Data PartiallySubmitted**

No. Poor/no dataSubmitted***

1 EU/EC 16 USA 30 UAE

2 World Bank 17 Japan 31 Finland

3 ADB 18 UK 32 China

4 Norway 19 Iran 33 Lithuania

5 France 20 IDB 34 Republic of Korea

6 India 21 Turkey

7 Germany 22 Spain

8 Canada 23 Czech Republic

9 Sweden 24 Estonia

10 Netherlands 25 Hungary

11 Poland 26 Belgium

12 UN Agencies 27 Australia

13 AKDN 28 Italy

14 Switzerland 29 New-Zealand

15 Denmark

* All requested data provided: project – wise disbursement & commitment and

estimates of future assistant

** At least one item of the requested data is not provided

*** No data is submitted or very poor data is submitted

2.2. Online Development Assistance Database (DAD)

With support from UNDP, DAD was initially developed in 2002 to track the

flow of international assistance to Afghanistan. The system has been

modified several times to match the requirements of Government of

Afghanistan in the areas of aid coordination and effectiveness, particularly

the needs of national budget. In the year 1388 DAD was upgraded to a

secure web-based database and several applications such as projecttracking, grant and loan management system and reports were enhanced.

The current system which is GIS enabled is accessed through:

http://dadafghanistan.gov.af.

One of the major reasons for a secure, web-enabled DAD was to enhance

accessibility and to transfer the responsibility of data entry from

government to donors. It is a major step toward improving the quality of

information, particularly of those donors who do not have permanent

offices in Afghanistan and/or maintain their projects data in their home

countries.



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For this round of DFR the donors were asked to introduce focal points,

preferably local staff, to be trained to be responsible for data entry andupdates of their portfolios in DAD. Donors identified their focal points and

training was provided to all focal points in first week of June. Subsequently,

refresher training sessions were conducted for small groups of focal points

after the DFR meetings.

Due to unavailability of focal points or not being able to participate in the

training, some of our partners did not physically enter the data themselves

and chose to submit their data directly to Aid Management Directorate

(AMD). As an exception, the AMD agreed to receive that data in differentformats, and fed them into the online DAD. However, future DFR’s will

require donors to enter their own data using the online secure DAD

system. Training and technical assistance will be provided to our

development partners to help them submit their data in a timely manner.






Overview of Official Development

Assistance to Afghanistan (1380-1388)Since 2002, Afghanistan has been provided with a remarkable amount of

Official Development Assistance (ODA). The country has been pledged

development assistance through a series of Pledging Conferences. The

Tokyo Conference in 2002 was the first event where donors pledged to

provide the country with USD 5.1 billion. It was followed by the Berlin

Conference in 2004 and the London Conference in 2006. Finally, at the

Paris Conference in 2008 the Government of Afghanistan presented its first

five-year National Development Strategy (ANDS). The strategy drew theattention of the Afghanistan development partners and was warmly

welcomed by all. As a result, a further aid assistance of USD 14 billion to

achieve the ANDS targets was pledged.

3.1. Pledges, Commitments & Disbursements

Pledged ODA refers to unwritten commitments that the donors announced

in the pledging conferences and or at different occasions since 2002.

Ministry of Finance’s records show that the total pledges by conference as

indicated in Table 1 stands at USD 33.4 billion. Apart from this, donors

outside the pledging conferences have individually announced the sum of

USD 28.6 billion as supplemental pledges for Afghanistan. This takes the

total pledged ODA, for Afghanistan to USD 62 billion.

Table 2: Overview of Official Development Assistance to Afghanistan (2002-2013)

in US$ Billion

Pledge by Conference

Total Pledge

by Conference

Total

SupplementalPledges

Grand Total

of PledgesTokyo(2002)

Berlin(2004)

London(2006)

Rome(2007)

Paris(2008)

5.1 5.6 8.7 0.04 4.0 33.4 28.6 621

Records of the Ministry of Finance indicate that the amount of committed

ODA consisting of both Grants and Loans from 1381 (2002) to the present

stands at USD 46 billion, of which USD 36 billion has been disbursed. Out of

the total disbursed ODA, around USD 19 billion has been invested in

1Disclaimer: the amount in the above table represents only new pledges at each conference, and

does not include the amount that has been previously pledged. The numbers have been verified

by Government of Afghanistan with each donor.



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security sector to support reform, training and empowerment of the

Afghan National Army (ANA) and Afghan National Police (ANP). This

indicates that over 50% of the total committed ODA has been disbursed toANA and ANP activities. [Note: The OECD DAC has agreed that certain

assistance related to conflict prevention, peace building and security

expenditures meet the development criteria of ODA but to meet this

definition requires a detailed cost breakdown of the assistance provided

under security sector reform. From the data provided for this report, such

analysis was not possible. Because security is one of the major pillars of

the ANDS, however, security related assistance is broadly included in this

DFR under ODA]. The remaining ODA supported development activities.

Compared to the total amount of grant assistance that Afghanistan has

received, the Loan Portfolio comprises a small proportion of the overall

assistance with a total amount of USD 1.4 billion.

Chart 3: Donors' Commitment for period 1380-1888

Chart 2: Pledge ODA to Afghanistan (1381-1391)

27,389

2,249 2,247 1,803 1,448 1,378 1,236 1,206 1,044

5,455

-

5,000

10,000

15,000

20,000

25,000

30,000

U S A

U K

E U

WB

A D B

J a p a n

I n d i a

C a n

a d a

G e r m a n y

O t h

e r s

F i g u r e s i n U S $ M i l l i o n

Source: Budget Department, AMD-MoF, Sep 2009



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Afghanistan has been receiving aid from about 47 donor countries and

development agencies since 2002. As far as the amount of aid to

Afghanistan is concerned, the United States of America remains by far thelargest donor followed by the United Kingdom, European Union (EC),

World Bank, Asian Development Bank, Japan, India, Canada, and Germany.

Other donors’ commitments together build up to USD 3.4 billion.

3.2. Rate of Aid Disbursement

The overall disbursement rate which stands at 78% in the past seven years

has been satisfactory. However the disbursement rate has decreased since

the last DFR where the disbursement rate was 82%. Based on governmentanalysis, the decrease is mainly because of the availability of more

information, particularly on security sector, which was not available last

time; and the new commitments that have been recently made and have

not been yet disbursed. The disbursement rate may increase by the close

of the current fiscal year.

The trend of disbursement is very different when it’s analyzed individually

by each funding source. The following chart shows the trend of Donors’

performance in terms of disbursement against commitment from 1381 to

1388. In terms of amount, the USA remains the largest provider of aid

assistance for Afghanistan. However, when it comes to comparing the

amount of aid disbursed against the amount committed, Sweden seems to

have disbursed over 90% of the commitment it has made thus far. It is

followed by UK 85%, USA 83%, and so on.

Chart 4: Ratio of Disbursement versus Commitment (2002-2009)

0%

20%

40%

60%

80%

100%

SWED UK USA* EU/ EC NDL CAN WB JAP Others GER NOR IND ADB

Source: Budget Department, AMD-MoF-Sep, 2009

Un-Disb Disb



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Note: This report recognizes that commitments may be for multiyear activities and a portion

of the gap between commitments and disbursements is a result of planned disbursement in

the out years. Also while using the ratio of disbursement to commitment it is important to

note that this ratio is strongly influenced by the type of projects and the sector in which adonor is working. For donors engaged in infrastructure sector and other long term project

investments in which disbursement will occur over several years, they make their

commitments to the full cost of the project at project start which would result in a low ratio

in the initial years of the project.

3.3. Aid Investment in Afghanistan: Identified Trends

3.3.1. Geographic Distribution

As far as the geographical allocation of aid in Afghanistan is concerned, the

government does not have a very clear picture due to lack of information.Although DAD provides the platform for tracking the geographical location

of assistance, the quality of information in this regard is very poor. Based

on this experience and the importance of information on geographical

location of assistance, the DAD has been upgraded to a web-based version

to track better information of aid assistance on a geographical level.

The available information from DAD shows that around 66% of overall aid

has been invested in activities with national impact. Examples are the

support for Afghan National Army and Police, National Solidarity Program,

National Rural Access Program, and Basic Package of Health Services. While

the majority of overall aid assistance has had nationwide impact, theremaining has been allocated to fund various projects across difference

sectors in all provinces of Afghanistan. The nationwide approach does not

Chart 5: Geographical Distribution of ODA

32615

5252

1410 1202 993 1353 1744 1639

0

5000

10000

15000

20000

25000

30000

35000

N a t i o n w i d e

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S o u t h - W e s t

W e

s t

N o r t h

N o r t h -E a s t

F i g u r e s i n U S $ M i l l i o n

Zone



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give a clear indication of how much aid assistance has gone to which

province. It is still a problem for the government to solve with the

assistance of donors and development agencies to identify the exactlocation of every project that is reported to the Ministry of Finance.

In addition, the Provincial Reconstruction Teams (PRTs) have allocated

about USD 2 billion (this includes the assistance through Commanders

Emergency Response Program – CERP) in various provinces to fund small-

scale and quick impact development projects. Most of the projects that the

PRTs implement are planned and discussed at the grass roots level with

community elders, and do not involve views of the central government.

Although the PRTs have actively participated in the reconstruction of

Afghanistan and implemented development and humanitarian projects insome of the most difficult and remote areas, there is a perception among

Afghan people that most of the projects were not aligned with the

government priorities and plans, and have not delivered sustainable

results. The recent SIGAR report (July 2009) also indicates that the military

agencies providing development assistance in Afghanistan does not have

the capability to ensure that their assistance is used effectively.

3.3.2. Aid Investment by Sector

This section provides information about expenditure of donors’ fundingacross ANDS sectors since the year 1381. The analysis of data shows that

over 45% of aid assistance has been committed for security sector.

Infrastructure has received 15% of donors’ funding, and both Agriculture &

Rural Development and Governance have received 9% of the resources.

Other sectors such as Education, Health, Economic Governance, and Social

Protection have jointly received around 22% of aid assistance. The

unclassified proportion represents the amount of aid spent on cross cutting

programs such as gender, counter narcotics, environment protection, and

anti corruption. This indicates that due to large spending in security sector,less attention has been given to other priority sectors of the ANDS.

Looking only at pure development assistance in the past seven years,

excluding assistance for security sector, a different picture emerges. A

major part of the total development assistance was invested in

infrastructure and agriculture and rural development sectors. The

Governance and Rule of Law sectors have received 12% of the total

assistance followed by Economic Governance and Social Protection with

10% each. Health and Education, the two important sectors, have received

the minimum assistance



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Note: a major part of the 12% unclassified expenditure represents donors’ assistance to

government operating budget.

Chart 6: Breakdown of ODA Excluding Security (1380-1388)

12%

24%

9%6%

18%

9%

10%

12%

Governance & Rule of Law

Infrastructure & Natural Resources

Education & Culture

Health

Agricluture & Rural Development

Social Protection

Economic Governance

Unclassified




Aid delivery channels and modalities

4.1. Delivery Channels

In the past seven years the donors have primarily chosen to manage the

delivery of their assistance to Afghanistan directly. Due to presence of

International Security Forces in Afghanistan, the country has received

development assistance from two major sources namely non-military and

military sources:

4.2.1. Delivery through Military Channels

With 41 countries having military presence under NATO or coalition forces,

the amount of assistance provided through military channels in

Afghanistan is large. Currently there are 26 PRTs in different provinces,

most of which are engaged in development activities. In addition to PRTs, a

huge amount of assistance has been channeled through Combined Security

Transitional Command for Afghanistan (CSTC-A) and Commanders

Emergency Response Program (CERP). Available data shows that 40% or

USD 18.3 billion of the total development aid commitment has been made

by military agencies. Of this amount the USD 17.9 billion provided by the

US Department of Defense. Out of total assistance through militarysources, only about 9% or USD 1.7 billion has been invested in several small

scaled development activities while the remaining 91% has been invested

in the security sector reform.

So far the government of Afghanistan does not have a clear picture of the

assistance provided by military sources. The information in this report has

been taken from SIGAR report of July 2009. This is challenging from the

transparency perspective. Moreover, the assistance from military channels

has been provided through direct channels and has bypassed governmentagencies responsible for coordination and management of foreign

assistance. Strengthening of the security sector is indeed one of the top

priorities in Afghanistan and requires great attention. However, this should

not be provided at the cost of development assistance and should be

provided in close consultation with the government agencies responsible

for coordination and management of foreign assistance.

4.2.2. Delivery through Non-Military Channels

Since 2001 development agencies including multilateral and bilateral havecommitted about USD 27.8 billion for reconstruction and development of

Afghanistan. Compared to military sources, development agencies have



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better capability to provide effective assistance. The development agencies

are the traditional providers of assistance and therefore have the capacity

and resources to manage their funds more effectively.

Table 3: Assistance through Military and Non Military Channel (1381-88) in USD

Million

Funding Channel Commitment %age Disbursement %age

Development 27,816 60% 21,516 58%

Military 18,388 40% 15,401 42%

Grand Total 46,204 100% 36,917 100%

Disclaimer: This amount is greater from the amount mentioned in previous pages because

the disbursement to trust funds have considered as the first delivery point which is from

donor’s account to trust funds account.

4.2. Aid Delivery Modalities

The development assistance provided to Afghanistan in the past seven

years is either managed directly by the donors or provided through the

Government of Afghanistan. Three major modalities have been used:

4.2.1. Budget Implementation Directly Managed by Donors

Available information shows that a majority of assistance provided in thepast seven years was directly managed by donors. About 80% of the total

assistance delivered to Afghanistan has been committed and implemented

directly by donors. The remaining 20% or USD 7.7 billion that has been

disbursed through government includes assistance channeled through trust

funds and assistance for the recurrent expenditures of Government of

Afghanistan. About USD 4.1 billion (including USD 2.6 billion for operating

expenditures) have been channeled through trust funds (assistance

through trust funds eventually flows through government systems).

4.2.2. Afghan Government Managed Budget andImplementation

During the past seven years, about USD 3.6 billion was given directly to the

Government of Afghanistan of which only 23% or USD 826 million was

discretionary or un-earmarked assistance. In other words, the Government

of Afghanistan had the control of only USD 826 million, a major part of

which was loan, to use for its priorities and the remaining priorities have

been set by donors. The IFIs such as the World Bank and Asian

Development Bank were the main providers of discretionary resources.Bilateral donors such as Japan and US Department of Agriculture are



N o v e m b e r 2 0 0 9


providing diesel and Soya bean oil from monetization of which the

Government also receives some discretionary funds.

4.2.3. Trust Funds

The Trust Funds namely the Afghanistan Reconstruction Trust Fund (ARTF),

Law and Order Trust Fund (LOTFA), and Counter Narcotics Trust Fund

(CNTF) remain a significant pooled funding mechanism for the Government

of Afghanistan to finance its priority programs and to achieve the results of

its development strategy. While a remarkable amount of Trust Fund

resources are utilized to finance a portion of the Government’s recurrent

costs, a sizable amount of it is utilized to finance the development projects

across different sectors. The following Trust Funds are used to pool theresources from the donors:

Afghanistan Reconstruction Trust Funds (ARTF)

The ARTF which is by far the largest recipient of donor funding, on behalf

of the Government of Afghanistan, has managed a sizable amount of

Official Development Assistance channeled through the core budget of the

Government. All ARTF funding is on-budget, which means that it uses the

public financial management of the government. 79% of the total

assistance through the Trust Funds has been provided through ARTF.Administered by the World Bank, the ARTF was established in 2002 to

support the shortfall of government recurrent expenditures. With the

increase in the size of donors’ assistance to ARTF the investment window

has expanded significantly in recent years, enabling pooled financing for

scaling up government programs, mainly national programs. The ARTF

funds are managed by a Management Committee which consists of the

World Bank (the administrator), Islamic Development Bank, the Asian

Development Bank, UNAMA, and UNDP. Ministry of Finance plays the role

of observer in this committee. As of September 2009, a total of USD 3.3

billion has been made available to ARTF and USD 3.1 billion has been

disbursed.

Law and Order Trust Fund for Afghanistan (LOTFA)

Administered by UNDP, LOTFA was established in 2002 to mobilize

resources for the support of Afghanistan National Police (ANP). This trust

fund is a very useful source of financing the recurrent expenditures of ANP

as well as of some ANP infrastructure projects. As of July 2009, around USD

920 million has been committed by donors and USD 868 million has been

paid to LOTFA.



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Counter Narcotics Trust Fund (CNTF)

Also administered by UNDP, CNTF was established in 2005 to mobilize

resources needed by the Government of Afghanistan to implement theNational Drug Control Strategy. Although CNTF was ended in December

2008, it has been extended for another year to support counter narcotics in

Afghanistan. By July 2009, donors paid a total of USD 65 million to CNTF to

finance major projects designed to achieve the National Drug Control

Strategy.

Disclaimer: The percentages are based on the donors actual disbursement where the

disbursement for trust funds is considered based on first point of delivery.

4.3. Analysis of the Effectiveness of Existing Modalities

4.3.1. Directly Donor Managed

Assistance directly managed by donors is effective only when it is aligned

with the priorities of recipient country and does not undermine its

ownership. This could be achieved only if there is sufficient consultation

with the recipient country and also if the donors demonstrate flexibility in

the allocation of their resources. This modality is very effective for quick-

response or emergency activities where immediate response is very

important or because of bureaucracy, channeling of assistance through

government would not be suitable.

In order to align the donors’ managed assistance with government

priorities, it is necessary that consultation should take place with the

recipient country prior to allocation of resources. In Afghanistan, somedonors do involve the government in allocation of their resources and

Chart 7: How Aid Assistance Has Been Channeled

77%

23%

Donors Managed Assistance

Government Managed

Assistance



N o v e m b e r 2 0 0 9


many other donors bypass the government. In general, the government

does not see much flexibility in the allocation of such resources and in

many cases is not able to secure assistance for its priorities throughdonors’ managed assistance. Therefore, it is difficult to say that donors’

managed assistance has been aligned with government priorities. For such

assistance to be effective it is very necessary that the government be

actively involved in the allocation of resources and donors demonstrate

flexibility in considering the government priorities while committing their

assistance to specific activities.

4.3.2. Afghan Government Managed

In order for development assistance to be effective, it should be provided

according to the principles of Paris Declaration on Aid Effectiveness, which

was endorsed and signed by all traditional (OECD DAC) donors in 2005. One

of the Paris Declaration Principles on Aid Effectiveness calls for the

ownership of the resources and planning to be vested in the hands of the

recipient countries. Alignment which is another principle of Paris

Declaration calls upon donors to align their assistance with the national

priorities of the recipient countries and to use local systems such as

national budget, procurement and reporting systems. It clearly indicates

that the assistance channeled though systems of recipient countries ismore effective. However, donors that are unable to fund through

Government, still should align their projects/programs with the

Government priorities to make aid effective in terms of development

delivery and impact. The effectiveness and development impact from the

assistance outside the Government systems has been reduced where

donors have failed to consult with Government and have funded non

priority activities. This has been a significant problem over the past seven

years.

The two major challenges in all post conflict countries or countries in

conflict, including Afghanistan, are the government’s capacity, and

corruption which results in donors being reluctant to deliver their

assistance through the systems of recipient countries. These problems are

the major and common results of long conflicts. The problem of low

capacity can be addressed with the support of donors. According to OECD

Principles for Good International Engagement in Fragile States and

Situation (April 2007), international actors should understand the specific

context in each country and should recognize the different constraints of

capacity and should mix and sequence their aid instruments according to

context, and avoid blue-print approaches (Principle 1).





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“More than half of all reconstruction dollars have been allocated to build the

Afghan National Security Forces (ANSF). SIGAR’s audit examining the ability of

the Combined Security Transition Command - Afghanistan (CSTC-A) to monitorcontractor performance found that CSTC-A, which is responsible for the

training program, did not have the mechanisms in place to ensure funds were

managed effectively and spent wisely”

SIGAR report July 2009

Another major challenge that the Government faces is the retention of

current capacity. With the meager resources available to the Government

of Afghanistan, it is difficult to retain the capacity because of the higher

turnovers of the local staff, particularly of the contracted staff. The localstaff working with the Government is attracted to the international

agencies, private companies or the Project Implementation Units (PIUs)

which pay higher salaries than those paid by the Government. This means

that the newly built government capacity is depleted by the international

agencies or private companies.

A common indicator of measuring the government capacity is the

absorption capacity or budget execution rate. It is true that the national

budget execution rate has been lower than the execution rate of donors’

managed budgets. One of the major reasons for slow disbursement of government funds is the control system. The government has to follow the

fiduciary disciplines which require more time than other non-governmental

procedures. However, this situation is distorted by security spending

(which is channeled entirely through donor managed funds) – if this

spending is removed, the execution rates of Government and donor

managed funds are very similar. Thus the execution rate is a problem for

both Government and development partners.

Note: Budget execution through government is inclusive of operating budget.

Chart 8: Budget Execution Rate

0%

20%

40%

60%

80%

100%

120%

1383 1384 1385 1386 1387 1388

Through GoA

Directly

Managed by

Donor



Novemb er2 0 0 9


Similarly corruption is one of the key challenges in post conflict countries

with large aid flows, given the limited institutional capacity and the size of

the interventions. It is an issue for both Government and externally fundeddonor supported development activities. It is a problem in Afghanistan and

the Government is trying to address it. The Government has established an

international standard Public Finance System, budgetary processes and

transparency have been strengthened through the implementation of the

Public Finance and Expenditure Management (PFEM) Law in 2005 and its

regulation in 2006. Combined with procedures and controls the

computerized financial management systems provide a very sound

fiduciary control framework. Procurement activities continue to be

supported by a central agency (Afghanistan Reconstruction and

Development Services) for large contracts. The legal and institutional

framework has been developed with the Procurement Law (2005) and the

creation of Procurement Policy Unit in MoF in 2006. In January 2009,

amendments to the law were approved (Procurement Law with

Amendments 2008). Vulnerability to Corruption assessments have been

undertaken in several government agencies, and have been useful assisting

key departments in identifying areas with high corruption risk and take

measures to mitigate such risks.

As said earlier, corruption is a common problem for both Government andexternally funded donor supported activities and requires joint efforts to

be tackled. It is very important both for government and its development

partners to take measures to curb corruption. Avoiding Government and

using external mechanism to deliver assistance will not solve the problem.

4.3.2.1. Trust Funds

Multi-donor Trust Funds are very effective alternative aid instruments in

countries where capacity is an issue with the government institutions.

Donors that have concerns on the capacity of government but would like to

support government priorities usually use the multi-donor trust funds. In

Afghanistan three major trust funds have been established namely the

Afghanistan Reconstruction Trust Fund (ARTF), Law and Order Trust Fund

for Afghanistan (LOTFA) and Counter Narcotics Trust Fund (CNTF). A huge

amount of assistance has been provided to support the priorities of Afghan

government. An emerging interest has been observed among donors in

providing more assistance through trust funds. The assistance through

trust funds eventually flows through government systems and government

has an active role in allocation of assistance from trust funds. However, inrecent years, donors have tended to provide funds with increasing



N o v e m b e r 2 0 0 9


“preference.” This has been a particular concern in the ARTF where donor

preferences risk undermining the value of the budget as the main policy

tool. Discussions led by the Government are underway between ARTFdonors and the ARTF Management to develop an ARTF Financing &

Investment Strategy that would establish a framework for multi-year

allocation of resources by sector. This would increase predictability for

improved planning and would anchor referencing within a multi-lateral and

government led framework.






Overview of Official Development

Assistance in 1387 and 1388

3.1. Commitments and Disbursements

One of the major focuses of this DFR is to review the assistance of the

current fiscal year (1388), as well as the year preceding (1387). As per the

information received from our development partners, a total of USD 10.72

billion was committed during this period of which USD 7.41 billion or 69

percent has been disbursed so far. The liquidation may increase as the end

of the fiscal year approaches. From the total commitment during thisperiod, 79 percent has been directly managed by donors and only 21

percent of the total assistance (USD 2.33 billion) has been committed to be

provided through government, of which around 50 percent ( USD 1168

million) is for operating expenditures.

3.2. Donor Investments by Sector

Available information shows that security sector has received the largest

portion (USD 5.28 billion or 49 percent) of the total commitmentthroughout 1387-1388. It is followed by Good Governance and Rule of Law

sectors with USD 1.2 billion (11%) and Infrastructure and Natural Resources

sectors with USD 991 million or 9 percent.

Chart 9: Sector-wise donor assistance for the period of 1387 and 1388

46%

13%

11%

5%

5%

8%

3%4%

5%

Commitment 1387 - 1388

Security

Governance & Rule of

Law

Infrastructure &

Natural Resources

Economic Governance

Agricluture & Rural

Development

Health



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The United States provided 67 percent or USD 7.14 billion of the total

commitment during this period. World Bank with USD 796.19 million (or 7

percent) commitment and EC with USD 513.65 million (or 4.7 percent)remained the 2nd and 3rd major contributors.

The level of disbursement against commitment varies from donor to donor

in this period. As the largest provider of aid, the United States has

disbursed the largest amount of assistance (USD 4.5 billion); it is followed

by the World Bank with USD 221 million and UK with USD 212.5 million.

However, if we look at the disbursement rate of each donor in this period,

we have a different picture. The USA only disbursed 64 percent of its

committed amount followed by the UK with 42 percent, and the WB with

28 percent.

3.3. Investment by Channels and Modalities of Delivery

Trust funds remained one of the main funding sources for government

expenditures during this period. Donors have committed a total of USD1.2

billion for ARTF of which USD 861 million has been paid.

Following ARTF, the Law and Order Trust Fund for Afghanistan (LOTFA) was

the main financier of Afghan National Police. Donors have pledged USD 457million for LOTFA and paid a total of USD 405 million by July 2009. Donors’

contribution to LOTFA during this period was very stable and remained

almost the same in both years.

3.4. Highlighting Achievements

It is very important to see the results of the investment of development

assistance during this period. Because of a lack of information on the

results of donors’ managed assistance, it is very difficult to present majorachievements during this period. Based on the information provided by line

ministries, following are some of the major achievements during this

period;

Electricity supply was expanded to 630 Megawatt from 485 Megawatt

in 1386. The transmission line connecting Afghanistan with Uzbekistan

was completed in this period and a total of 100 megawatt electricity

imported from which 70 Megawatt provided to Kabul city.

More than 3 million new fixed and mobile subscribers added duringthis period. With this new achievement, the total number of

subscribers of fixed and mobile telephone has approached 9.5 million.



N o v e m b e r 2 0 0 9


The implementation of fiber optic project has been improved and

about 80% of work has been completed by this period. After

completion of this project in 1388, Afghanistan will be connected forthe first time with Tajikistan, Iran and Uzbekistan through fiber optic.

A major portion of regional and connecting roads were constructed

during this period. During the first six months of 1388 approximately

1842 kilometers of regional roads and 1119 kilometers of connecting

rods were constructed.

A remarkable increase was noticed in the domestic revenues during

this period. The revenue in 1387 was increased by 23% while in the

first half of 1388 it increased about 58% from the first half of 1387.

Several health facilities were constructed during this period and the

Basic Package of Health Services was provided to 85% of the

population. About 90% work of 107 health facilities was completed

during this period. In addition to this, the 350 bed Jamhoryat Hospital

was constructed and equipped in Kabul. One blood bank in Kabul and

four other regional blood banks were opened during this period.

Nationwide 1709 general education schools were newly constructed

and at the same time the construction work began on 1189 schools.

During the first six months of 1388 approximately 6.2 million childrenenrolled in schools and the number of schools was increased to 11000.

Similarly in other sectors there many other achievements. But due to lack

of proper information we have not been able to reflect all major

achievements here. We hope in future reports we would be able to list all

major achievements.






Perspectives on Donor Assistance in

Afghanistan

6.1. Commitments and Disbursements

Predictability of assistance is one of the key principles of Aid Effectiveness

and is very necessary for countries that are highly dependent on external

assistance. Afghanistan is a country highly dependent on aid where 100

percent of its development expenditures and 36% of its operating

expenditure are financed by external assistance.

When it comes to predictability of aid in Afghanistan, many donors have

failed to provide information on their future aid program. There has also

been inconsistency in the information that has been provided to

Government. This inconsistency can be seen by comparing the estimates in

the two DFRs from January and November of 2009:

Estimated Funds for 1387-91 in January DFR less USD 20.8 billion

Less Funds committed in 1387 USD 6.7 billion

Estimated funds for 1388-91 in November DFR USD 10.2 billion

Discrepancy USD 3.9 billion

This appears to indicate a reduction in donor funding for the period of USD

3.9 billion when comparing the two DFRs. No notification of intent to

reduce funds committed has been received from any donor. It therefore

must be concluded that over a period of only eight months there has been

a significant shift in the predictability of aid flows resulting from

inconsistencies in the way the funding is counted. There appear to

particular problems arising from the lack of information from major donors

such as United States, Japan, Netherlands, Spain and Turkey. Thus, the

Government of Afghanistan does not have a clear picture of assistance in

future years and is unable to plan for the medium term.

Since Afghanistan is highly dependent on external assistance, the

formulation of the national budget is also dependent on the predictability

of the assistance; therefore, the information on the predictability of

assistance is highly important for the Government. The inconsistency has

hampered the efforts of the Government to plan for the medium term, andto implement its development programs without any hesitation of

financing.



Novemb er2 0 0 9


The available information shows that from the total USD 10.2 billion that

may be provided in the coming four years, donors will continue to spend a

large amount of their assistance outside of government systems and a very

small portion of their assistance will be channeled through Government. It

is predicated that a total of USD 7 billion will be managed by donors and

only about USD 3 billion will be channeled through Government which

includes the assistance through trust funds. .

Note: the percentage is not very reliable given that large donors that do not channel funds

through government have not reported for this DFR. This percentage will drop largely if

more information will be available.

Chart 10: Comparison of aid predictability by two DFRs

Chart 11: Predictability of funding modality (1388 – 1391)

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

1388 1389 1390 1391

I n M i l l i o n U S $

1387 DFR

1388 DFR

30%

70%

Through Government

Managed by donors



N o v e m b e r 2 0 0 9


6.2. ANDS Financing Gap

Based on donors estimates of their future assistance, a total of USD 10.2billion will be provided to Afghanistan in the coming four years.

Considering the needs of the ANDS which is estimated at USD 50.1 billion,

the donors’ assistance falls short. The ANDS was presented by the

Government of Afghanistan in the Paris conference in 2008, and was

endorsed by its developing partners. In order to finance the ANDS, the

Government requested around USD 43 billion from its development

partners while it remained committed to secure USD 6.8 billion from its

domestic revenues. In SY1387 Government revenue was Afs 41.4 billion or

USD 828 million and about USD 5.3 billion ODA was disbursed by donors.

Considering the amount spent in 1387 and the donors’ estimates in coming

four years, there is a shortfall of USD 27.8 Billion for the implementation of

ANDS.

Table 4: ANDS Financing GAP

A. ANDS Funding Requirement 50.1 Billion USD

B. ODA Disbursed in 1387 5.3 Billion USD

C. Domestic Revenues in SY1387 0.82 Billion USD

D. Donors Estimates for Coming Four years 10.2 billion USD

E. Estimated Domestic Revenues 1388 to 1391 5.9 Billion USD

Funding shortfall = (B+C+D+E) - A 27.8 Billion USD

Though this conclusion is a little sweeping because of lack of clear

information on future volume of assistance it is very important for the

Government to inform its development partners of the concern over the

implementation of ANDS given the available information. Given that

Afghanistan is highly dependent on foreign aid, it is very important for the

country to be aware of assistance flow at least for the medium term. It is

also very important to note that provision of information on thepredictability of assistance is very necessary for such assessments.






Recommendations

7.1. INFORMATION SHARING

COMMENT: Afghanistan is financially dependent upon international

assistance and accurate and precise information about the available

assistance is a vital to its budget preparations. It is crucial that the

Government have as exact information as possible not only on the current

activities but also on long and mid-term predictability of anticipated ODA.

In Accra, donors recognized the importance of this information sharing as a

condition for making aid more effective, the donors committed at the Accra

Agenda for Action in 2008 to:

“publicly disclose regular, detailed and timely information on volume,

allocation and when, available, results of development expenditure to

enable more accurate budget, accounting and audit by developing

countries”, “support information systems for managing aid”; and “provide

full and timely information on annual commitments and actual

disbursements”.

Through this information, the Government will be able to develop both along and a mid-term perspective of assistance and further enhance its

Medium Term Fiscal Framework (MTFF).

RECOMMENDATION: Further increase information sharing on

development assistance between the Government of Afghanistan and the

donors in order to assist the Government of Afghanistan to improve its

budget process thereby increasing transparency and accountability on both

sides.

7.2. DISBURSEMENT CHANNEL

COMMENT: The Paris Declaration on Aid Effectiveness requires that donor

funding be channeled to build government capacity, ensure alignment with

national priorities and increase national ownership.

RECOMMENDATION: Increase the level of development assistance

provided directly to the national treasury.



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7.3. ANDS FINANCING MECHANISM

COMMENT: The ANDS Financing Mechanism which was recently developed

jointly by government and its development partners is an essentialcomponent in increasing national and government ownership of the

development of Afghanistan, and assists in aligning development

assistance with ANDS priorities.

RECOMMENDATION: Both government and its development partners to

take immediate steps to finalize and implement the ANDS Financing

Mechanism based on the proposed action plan by Government.

7.3.1. PEER REVIEWCOMMENT: Peer Review has already been piloted in two ministries and

has proved an effective tool to positively enhance coordination between

the Government and the international community on donors managed

programs/projects.

RECOMMENDATION: Both government and its development partners to

further develop and strengthen the use of the Peer Review Mechanism for

projects implemented and managed directly by donors.

7.3. CORRUPTION

COMMENT: The Government is committed to enhancing its ability to

address corruption and asks its development partners to continue to

support it in tackling this serious and global issue.

RECOMMENDATION: Donors to continue to support the Government to

enhance its ability to address corruption at all levels.

7.4. Capacity Building in the Operationalization of ANDS

COMMENT: Any development strategy which is not changed into

actionable plan remains on paper. The ANDS is a five-year strategy that

paves the ground toward a sustainable development in Afghanistan.

Unless it is changed into actionable programs, it will be difficult to

implement it with the expected results. In order to achieve the expected

results, the Government needs institutional capacity to design practical

programs aligned with the ANDS.



N o v e m b e r 2 0 0 9


RECOMMENDATION: Donors to strengthen and prioritize the

Government’s institutional capacity to implement the policy and priorities

of the ANDS into actionable activities.

7.5. Specificity of information in the security sector

COMMENT: Without specific activity level information about security

sector spending, it is difficult to determine what security sector assistance

can be officially classified as ODA.

RECOMMENDATION: Donors to Increase the specificity of the information

provided regarding assistance to the security sector.






Annexes

Contents

1. Donors Official Development Assistance to Afghanistan:

i. Pledges: 2002 – 2013

ii. Commitments: 2002-2009

iii. Disbursements: 2002-20092. Official Development Assistance to Afghanistan classified by

source of funding:

i. Commitments and Disbursements: 2002-2009

3. Donors' Commitment to Government Operating Budget

4. Modalities of the Assistance (1381-88)

5. Predictability of ODA for Afghanistan (1388-1391)

6. Breakdown of Commitment and Disbursements by Donor

7. Core and External Support to ANDS Sectors (2001-2009)




Table 5: Donors Official Development Assistance to Afghanistan

Figures in US$ Million

Rank Donor2002-2013 200-2009 2002-2009

Pledge Commitment Disbursement

1 USA 38,000 28,366 23,4172 UK 2,897 1,810 1,546

3 WB 2,800 1,883 1,364

4 ADB 2,200 1,552 618

5 Japan 1,900 1,378 990

6 EU/EC 2,037 1,973 1,576

7 Canada 1,679 1,206 898

8 India 1,200 1,236 662

9 Germany 1,188 1,044 584

10 Norway 938 598 324

11 Iran 864 330 341

12 Netherlands 753 902 715

13 Denmark 673 290 151

14 Saudi Arabia 533 135 98

15 Italy 515 424 268

16 Spain 486 100 88

17 Australia 369 202 130

18 UAE 308 23 15

19 Pakistan 305 5 -

20 Sweden 289 518 430

21 United Nations 252 492 182

22 Agha Khan 239 180 73

23 China 197 138 58

24 Turkey 190 165 151

25 Finland 152 160 132

26 France 152 228 125

27 Russian Fed. 141 147 147

28 Switzerland 134 124 63

29 Other Sources 123 198 103

30 Belgium 87 61 52

31 Korea (Rep of) 85 54 50

32 Islamic Dev. Bank 70 61 5

33 Kuwait 60 19 1934 Ireland 33 25 21

35 New Zealand 30 12 8

36 Taiwan 29 - -

37 Croatia 28 - -

38 Czech Republic 22 6 4

39 Qatar 20 - -

40 Austria 14 6 6

41 Greece 12 2 1

42 Luxemburg 7 11 10

43 Oman 6 - -

44 Poland 5 15 10




Disclaimer: Due to lack of accurate information from some donors for this DFR the actual

commitment and disbursement numbers might be greater than what is reflected in this table.

And also the information in this table is as of July 2009 and any commitment and

disbursement made after this period is not reflected in this table.

45 Hungary 3 6 5

46 Malta 3 - -

47 Egypt 2 - -

48 Lithuania 2 3 2

49 Portugal 2 2 150 Slovakia 1 - -

51 Brazil 1 - -

52 Vietnam 0.01 - -

53 Estonia - 1 1

54 Singapore - 2 2

55 Brunel - 4 0

56 Kazakhstan - 2 2

Total 62,035 46,099 35,450








Table 7: Donors’ Commitment to Government Operating Budget

Funding

Source1381 1382 1383 1384 1385 1386 1387 1388

Grand

Total

ARTF 59 214 235 253 300 291 310 250 1,913

LOTFA 7 66 65 81 107 136 229 230 921USDoD 64 91 115 271

Total 66 280 300 334 407 491 630 595 3,104

Note: in 1388, the figure for LOTFA is donor commitment from which 17.8 million has been disbursed so

far.

Table 8: Modalities of the Assistance (1381-88)


Modality Disbursement %ageDonors Managed Assistance 29,189.55 77%

a. Military Source 14,867.47 39%

b. Non-Military Source 14,322.08 38%

Government Managed Assistance 8,691.07 23%

a. General Budget Support 3,653.57 42%

1. Discretionary 770.35

2. Non Discretionary 2,883.22

b. Development Support

through Trust Funds1,495.00 17%

1. ARTF 1,430.002. CNTF 65.00

c. Support to the recurrent

Budget3,542.50 41%

1. ARTF Recurrent window 1,774.77

2. LOTFA 847.00

3. USDoD 920.73

Grand Total 37,880.62

Note: The disbursement through trust funds is from donors' to trust fund administrator and that is why the

total disbursement is greater than the disbursement by sector and also in %.



DO

Table 9: Predictability of ODA for Afghanistan (1388-1391)


S.No. Description

Annual Breakdown

1388 1389 1390

2009-2010 2010-2011 2011-20

1 Total funding envelope 6,643.66 1,686.77 1,00

2 Sectoral Allocation of the above

A Security 2,262.59 87.74 6

B

Governance & Public Administration Reform &

Human Rights 803.36 257.88 24

C Justice and Rule of Law 28.46 56.49 1

D Religious Affairs 0.00 0.00

E Energy 730.07 139.49 7

F Transport 799.91 46.79 4G Urban Development 66.49 69.77 6

H Mining 26.01 11.04

I Information & Communications Technology 30.65 0.00

J Water 152.72 145.96 2

K Education 229.98 173.74 14

L Culture, Media & Youth 11.97 7.14

M Health & Nutrition 326.87 268.39 10

N Agriculture and Rural Development 584.91 223.76 7

O Social Protection 92.81 32.75 P Refugees, Returnees & IDPS 45.74 5.64

Q Private Sector Development & Trade 148.78 74.20 5

R Unclassified 302.34 86.01 6




3 Modality for Delivery of Assistance

Of the above how much will flow through

Total Core Budget 2,069.46 405.86 26

1) Direct Core Budget 1,484.47 29.08 3

2) Trust Funds 576.92 366.78 22a- ARTF 314.62 356.78 21

b- LOTFA 262.31 10.00 1

c- CNTF 0.00 0.00

Total Off-budget (external budget) 4,603.57 1,202.01 76




Table 10: Donor-wide Funding (Commitment & Disbursement Breakdown)

for 1387 and 1388 including Trust Funds

FundingSource

1387

Commit in

DAD

(USD)

Disb

(USD)

Commit

ARTF

Disb

ARTF

Commit

LOTFA

Disb

LOTFA

Total

Commitment

in 1387

Total

Disbursement

in 1387ADB 118.24 60.50 - - - - 118.24 60.50

Aga Khan - - - - - - 0.00 0.00

Australia 50.13 11.73 31.44 31.44 1.920 1.92 83.49 45.09

Austria - - - - - - 0.00 0.00

Belgium 0.85 0.85 2.61 2.61 - - 3.46 3.46

Brazil - - - - - - 0.00 0.00

Brunei 0.62 - - - - - 0.62 0.00

Canada 162.80 105.37 22.07 22.07 17.900 17.90 202.77 145.34

China 19.96 5.47 - - - - 19.96 5.47

Czech Republic 4.71 2.69 - - - - 4.71 2.69

Denmark 28.53 21.50 20.86 20.86 - - 49.39 42.36

EC 392.37 0.13 11.31 11.31 55.375 55.38 459.05 66.82Estonia 0.39 0.42 - - - - 0.39 0.42

Finland 7.48 3.55 7.92 7.92 1.940 1.94 17.34 13.41

France 25.24 21.78 5.130 5.13 30.37 26.91

Germany 232.90 77.74 74.000 74.00 16.820 16.82 323.72 168.56

Greece - - - - - - 0.00 0.00

Hungary 2.87 3.46 - - - - 2.87 3.46

IDB 0.26 0.26 0.00

India 198.79 3.39 0.190 0.19 - - 198.98 3.58

Iran 25.65 - - - - - 25.65 0.00

Ireland - - 1.580 1.58 - - 1.58 1.58

Iceland 0.100 0.10 0.10 0.10

Italy 79.92 76.15 34.070 34.07 1.295 1.30 115.29 111.52Japan 53.77 23.85 13.820 13.82 67.59 37.67

Korea 1.30 - - - - - 1.30 0.00

Latvia - - - - 0.020 0.02 0.02 0.02

Lithuania 1.25 0.92 - - - - 1.25 0.92

Luxembourg - - 1.140 1.14 - - 1.14 1.14

Netherlands 78.51 41.64 39.460 39.46 25.580 25.58 143.55 106.68

New Zealand 4.48 5.53 - - - - 4.48 5.53

Norway 88.27 39.09 31.470 31.47 - - 119.74 70.56

Other Source 83.21 5.90 - - - - 83.21 5.90

Poland 4.59 2.22 1.171 1.17 - - 5.76 3.39

Russian Feder - - 2.000 2.00 - - 2.00 2.00

Red Cross - - - - - - 0.00 0.00

Saudi Arabia 4.00 - - - - - 4.00 0.00

Spain - - - - - - 0.00 0.00

Sweden 58.14 51.82 18.350 18.35 - - 76.49 70.17

Switzerland 12.82 4.20 - - - - 12.82 4.20

Turkey 78.46 62.18 - - - - 78.46 62.18

UAE 3.29 3.16 - - - - 3.29 3.16

UK 72.61 23.61 162.540 162.54 3.570 3.57 238.72 189.72

UN 56.58 40.70 0.251 0.25 56.83 40.95

USA 3,853.35 3,607.00 159.500 159.50 - - 4,012.85 3,766.50

Unspecified - - - - - - 0.00 0.00

WB 224.40 189.47 - - - - 224.40 189.47

Total 6,030.73 4,496.03 626.81 626.82 138.59 138.59 6,796.13 5,261.43

Source: DAD (Aug, 2009), ARTF Report (Aug, 2009), and LOTFA Report (Jul, 2009).




Table 11: Donor-wide Funding (Commitment & Disbursement Breakdown)

for 1387 and 1388 including Trust Funds

FundingSource

1388

Commitin DAD

(USD)

Disb(USD)

CommitARTF

DisbARTF

CommitLOTFA

DisbLOTFA

TotalCommitment

in 1388

TotalDisbursement

in 1388ADB 301.93 110.00 14.99 - - - 316.92 110.00

Aga Khan 16.75 0 2.87 - - - 19.62 0.00

Australia 18.88 2.4 - 14.99 - - 18.88 17.39

Austria - - - - - - 0.00 0.00

Belgium 12.93 - - - - - 12.93 0.00

Brazil - - 0.20 - - - 0.20 0.00

Brunei 2.21 - - - - - 2.21 0.00

Canada 119.04 9.98 46.69 34.23 8.09 8.09 173.82 52.29

China 15.94 - - - - - 15.94 0.00

Czech Republic 0.87 0.95 - - - - 0.87 0.00

Denmark 56.52 8.28 5.97 - - - 62.49 8.28

EC 34.81 0 17.25 11.25 2.59 - 54.65 11.25Estonia 0.23 0.52 - - - - 0.23 0.52

Finland 4.42 0 8.86 8.86 - - 13.28 8.86

France 76.55 15 - - - - 76.55 15.00

Germany 52.19 0 35.83 - - - 88.02 0.00

Greece - - - - - - 0.00 0.00

Hungary 1.22 0.33 - - - - 1.22 0.33

IDB 45.65 0 - - - - 45.65 0.00

India 75.94 0.8 0.01 - - - 75.94 0.80

Iran 1.50 - - - - - 1.50 0.00

Ireland 4.34 1.55 2.78 2.78 - - 7.12 4.33

Iceland - - - - - - 0.00 0.00

Italy 126.34 3.05 - - - - 126.34 3.05Japan 52.45 12.002692 - - 124.80 124.80 177.25 136.80

Korea 0.50 - - - - - 0.50 0.00

Latvia 0.40 - - - - - 0.40 0.00

Lithuania 1.64 0.607098 - - - - 1.64 0.61

Luxembourg - - 1.14 1.14 - - 1.14 1.14

Netherlands 59.33 59.599 49.01 2.50 - - 108.34 2.50

New Zealand 3.03 - - - - - 3.03 0.00

Norway 107.03 45.5 38.44 17.51 - - 145.48 63.01

Other Source 82.02 3.41 82.02 3.41

Poland 6.32 3.422161 6.32 3.42

Russian Feder 2.00 2.00 2.00 2.00

Red Cross 0.00 0.00

Saudi Arabia 20.00 20.00 0.00

Spain 35.23 35.23 35.23 35.23

Sweden 66.13 37.39 18.33 84.46 37.39

Switzerland 25.39 2.69173 25.39 2.69

Turkey 0.00 0.00

UAE 0.002 0.00 0.00

UK 94.569 0.283 106.07 11.56 11.56 212.20 11.85

UN 88.95 31.114735 0.25 0.25 89.20 31.36

USA 2,912.36 1084 221.50 104.00 3,133.86 1,188.00

Unspecified - - - - - - 0.00 0.00

WB 571.79 32.51 - - - - 571.79 32.51

Total 5,060.18 1,404.84 607.15 234.48 147.29 144.70 5,814.62 1,784.02

Source: DAD (Aug, 2009), ARTF Report (Aug, 2009), and LOTFA Report (Jul, 2009).



DO

Table 12: Core & External support to ANDS Sectors 1380-88 (2001-09)

Figures in million US$

Sector 1380 1381 1382 1383 1384 1385 1386

Com Disb Com Disb Com Disb Com Disb Com Disb Com Disb Com Disb

Security 70 46 420 353 779 582 1,303 1,318 3,373 3,200 2,250 2,137 7,487 7,941

Governance &Rule of Law

62 38 169 40 242 191 245 216 341 302 519 197 1,236 254

Infrastructure &Natural Resources

70 50 227 120 1,299 362 1,166 427 592 480 856 930 1,315 618

Education &Culture

70 46 198 89 282 170 226 120 366 201 397 168 393 211

Health 98 77 54 39 221 68 88 58 184 110 358 160 186 204

Agriculture & RuralDevelopment

159 124 326 145 498 146 420 209 771 369 318 358 886 757

Social Protection 390 342 295 301 295 256 202 203 199 139 117 146 183 113

Economic

Governance

0.42 0.42 156 78 106 58 277 166 75 293 129 140 107 520

Unclassified 69 43 83 90 242 236 254 253 266 268 429 353 359 374

Total 988 767 1,929 1,254 3,964 2,070 4,181 2,970 6,167 5,361 5,374 4,590 12,153 10,992

USA data source is SIGAR July 2009 report.







Afghanistan 2009 Donor Financial Review

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