Development Cooperation Report 2012 - UNDP Afghanistan

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funding mechanisms such as the ARTF, LOTFA, AITF and others. A considerable amount
of aid channeled through the trust fund mechanism (47%) was used to finance
recurrent expenditures of the government. The US department of defense and LOTFA
has been two of the largest sources of support to the operating budget, while ARTF’s
support to government’s operating budget has slightly decreased during 2011.
Government of Afghanistan’s efforts to prepare a realistic budget with medium term
outlook was weakened by lack of predictable data on aid allocations. External assistance
continued to finance close to 52% of the national budget. However, lack of timely
information on annual donor commitments, even indicative, and actual disbursement
data undermined the planning process. Available data shows that only USD 4.5 billion
will be provided by donors to support development during 2013. This number is
considerably lower than the level of aid provided during 2011 and inconsistent with
the level of aid pledged at Chicago and Tokyo (i.e. USD 8 billion per year for the next
four years).
DEVELOPMENT COOPERATION REPORT
The share of aid through the national budget allocated to development projects has
declined in 2011. This is despite the fact that the share of aid channeled through the
budget has experienced an increment of 17% over the year 2010. Out of USD 2.17
billion provided through the FY1390 (2011) national budget, only USD 688 million was
used to finance development projects. This is in part because 86% of the remaining
USD 1.48 billion was allocated to cover security related expenditures.
An important milestone for the international community, as it relates to aid
effectiveness, was to deliver on their Kabul Conference commitments of channeling
at least 50% of external aid through the budget and aligning 80% of their assistance
with the national priorities within two years from July 20, 2010. In nominal terms
the amount of aid through the budget has increased from USD 1.8 billion in 2010
to USD 2.17 billion in 2011. Yet aid through the budget as a percentage of total aid
disbursements remained at 18% for both years, a clear indication that progress on
achieving the Kabul Conference targets have been lagging during 2011.
In terms of achieving greater alignment of aid with national priorities, MoF is not
in a position to present a clear picture of progress achieved through 2011. This is in
part because the focus was invested in the preparation of National Priority Programs
agreed to during the Kabul process. One measure that provides a good indication
of donor’s progress in improving alignment of aid is the extent to which they have
used the national budget system. As mentioned earlier, only 18% of aid was disbursed
through the national budget during 2011. Another measure of alignment is the extent
to which projects funded through external aid are consulted with line agencies and are