Everything seems up in the air a few months before foreign military forces pullout from Afghanistan. The US has not been able to sign the Bilateral Strategic Agreement (BSA), a successor for President Hamid Karzai has not been elected, and the economy has taken a beating with international aid shrinking. Big attacks by the Taleban have worried people even more.
Ministry of Finance (MoF) officials say donor countries have not released aid that was contingent on the holding of free and fair elections.
The budget in the 2013-14 fiscal year (ended in March) was 348.2 billion Afs (61.3 million USD) that included 141.6 billion Afs (24.8 million USD) for development, of which 31.4 billion Afs (54 million USD) of was being raised from internal sources. Trade is at a low, the Ministry of Commerce and Industries said. According to the Central Statistic Organisation, exports were down by 24 percent.
The government has put curbs on spending on offices, and redeployed the money for paying staff salaries. MoF spokesman Abdul Qader Jailani confirmed the political crisis as a result of the deadlock over the presidential election had affected the government’s ability to pay salaries for even one month.
“We have requested the candidates to feel the sensitive situation of the country because the economic activities have decreased, the revenues have decreased 11 percent of our target and the financing of some of developmental projects has been delayed,” he said.
Scraping the bottom
On August 18, Ministry of Foreign Affairs spokesperson (MoFA) Shekeb Mustaghni told a press conference that aids from some countries was conditional on pledges by the Afghan government to eliminate administrative corruption or hold transparent elections for instance. “One of the conditions – the successful holding of elections has turned into a problem,” he admitted.
Afghans braved Taleban threats and voted in presidential elections, not once but two times, but the result has become mired in controversy. An audit of every vote cast in the runoff is underway in an agreement brokered between the two rival candidates. The MoFA spokesperson said Afghanistan’s allies were waiting for the results of the election. “Afghanistan’s allies and countries in the region are concerned. Our relations with friendly countries are strong and will continue,” he was optimistic.
US President Barack Obama had reaffirmed his country’s support – also financial – to President Karzai on the occasion of the country’s independence day. However, political experts question the commitment. US aid to Afghanistan was affected by the government’s failure to sign the BSA, they say. It was never linked to the condition of transparent elections, they add, since civilian aid was whittled down by 50 percent at the start of 2014 without a reasonable cause.
Economist Hamidullah Farooqi who teaches at Kabul University said seemingly the US says the government did not manage aid properly but the main point of contention is disagreement between the two over the BSA. President Karzai demanded new conditions that led to a stalemate with Washington. He then left it to his successor to sign the agreement.
“US policy, which led to a rift with the Afghan government saw the US decrease the 1.5 billion USD budget of USAID to the allocated 1.12 billion USD. Civilian aid was shrunk,” observed Farooqi.
According to sources, USAID has sought 1.67 billion USD mainly for administrative purposes in the current financial year. They have sought a budget of 2.19 billion USD.
Wasted aid
SIGAR (special inspector general for Afghanistan reconstruction), which provides independent and objective scrutiny of more than 104 billion USD provided to implement reconstruction programmes in Afghanistan has regularly blamed US officials for mismanaging the funds. For instance, a report published in July this year found two incinerators at Shindand Airbase built at a cost of 4.4 million USD were being operated at a “highly reduced capacity” because of technical reasons. Even when repairs took place US-generated solid waste was being sent to the Afghan-operated burn pit.
Afghan columnist Nazim Samoon rues the “improper” use of aid. “The international community has made Afghanistan dependent on aid … and prepared the ground for corruption and improper spending of aid,” he observed. “Our problem was that we neither made infrastructure for economic growth nor did investment for establishing national institutions through transparent use of aid.”
As a result more than three quarters of the budget is based on international assistance. “A 10 percent decrease in aid puts pressure on the Ministry of Finance,” he said.
According to Samoon, the drop in international assistance has nothing to do with the political crisis sparked by the contested election result. The latter has affected customs revenue because of slow-down in imports. “MoF has calculated a 11 percent decrease in revenue, which is not unexpected. We should have strengthened our own sources, capacities, and production centres,” he commented.
Another Kabul University lecturer, Taj Mohammad Akbar, shared the view, and blamed the government for failing to build up domestic sources of revenue like mines and hydro projects. Money has been invested in construction including wedding halls, but they are not revenue sources. “We are dependent on 95 percent imports … our administrative system is corrupt, government revenue goes to the mafia. Now as international aid decreases the economy is under pressure,” said Akbar.
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