Islamic Republic of Afghanistan - Enhanced Integrated Framework ...

ooooIncrease interdiction efforts againstmedium and large drug traffickersand their sponsors;Actors associated with the drug industrywho are discovered to holdpowerful “legitimate” positions ingovernment or private sectorshould be removed and prosecuted;The government should focus onsensible rural development, insteadof short-term alternative livelihoodsprograms;The counter-narcotics dimensionshould be mainstreamed into developmentprogram.• Improving macroeconomic policy managementand aid effectiveness: It is veryimportant that macroeconomic policy formulationis transparent and avoids shorttermad-hoc measures. Some strategiescould include:oooFurther strengthening coordinationamong relevant line ministries. It isimportant that line ministries sharethe same view regarding the directionof macroeconomic policy;Continuing to enhance the budgetprocess and the role of the budgetas the central instrument for policyand reforms;Maintaining macroeconomic stabilityand progressing toward fiscalsustainability together with prudentmonetary policy will continueto be important.In order to break the evolving informal equilibrium,we must also ameliorate specific privatesector investment constraints. The results ofWorld Bank’s investment climate assessment in2005 show that more than half of respondentsidentify: (i) electricity; (ii) access to land;(iii) corruption (discussed above); and(iv) access to finance as major constraints toprivate investment. As the increase in privateinvestment is a key assumption to achievehigh, sustainable and quality growth rates, thefollowing specific strategies are suggested: 31• Electricity: Involve the private sector toexpedite power generation and distributionprojects in urban centers as well as in ruralareas. Specific strategies include:oooDeveloping the legal framework topermit and encourage power generationand distribution by the privatesector;Accelerating the execution of prioritypower generation initiatives;Improving distribution system.• Access to land: Implement measures tofacilitate access to land by clarifying propertyrights, simplifying procedures for thetransfer of titles, and allowing for longertermleases. Specific strategies include:oooDeveloping a strategy for industrialparks;Implementing improved and simplifiedprocedures for transfer ofprivately owned land;Developing better legal frameworksfor land registration and land adjudication.• Access to finance: Strengthen the financialsector to increase access to credit and financialservices, paying special attention toalleviating capacity constraints. Specificstrategies include:o Enacting an appropriate legalframework;ooBuilding capacity in the financialsector;Increasing the availability of financialservices in rural areas.Scaling up of industrial parks is a possibleshort-term solution: Although in themedium-term the Government should tacklethe abovementioned issues, in the short-term31 See the Government’s “Policy for Private Sector Growth andDevelopment”, presented at the Enabling Environment Conference,June 2007.Macroeconomic Framework 45