Islamic Republic of Afghanistan - Enhanced Integrated Framework ...

Afghanistan National Development Strategy (ANDS)Security will remain the top priority sector for Afghanistan in terms of expenditure. Over the lifetime of theANDS, security spending is expected to total $14.2 billion. The funding for this sector is expected to comeprimarily through international assistance. The Government estimates that in the future, the need for securityassistance will decrease as the threat declines. However, given the uncertain nature of the instability facingAfghanistan, the Government envisions the possibility of potentially significant revisions to the financingenvelope for the security sector.In the short-term, the Government will focus its public expenditure programs on investments in infrastructureand agriculture and rural development in recognition of the high importance of these sectors for thedevelopment of the private sector and for employment growth. Over the lifetime of the ANDS, the Governmentwill focus progressively more resources on education, governance, health, and social protection. TheGovernment is committed to allocating sufficient amount of resources to the key priorities of strengtheningeconomic governance and improving the enabling environment for private sector development.Costing and prioritization of the ANDS sectorsThe full costing of the projects and programs included in the ANDS is not yet complete. In the process ofpreparation of the ANDS, it became clear that in many sectors neither cost information nor detailed investmentplans were available. Further, full costing was not possible until the prioritized sectoral objectives wereidentified as a basis for costing of key sectoral outputs. Therefore, it was decided that three sectors withrelatively higher institutional capacity would be costed in the initial phase. The sectors chosen for the pilotcosting exercise were health, education, and roads—a sub-sector in the Transport sector. The Ministry ofFinance is leading the costing process, working directly with line ministries and incorporating ProvincialDevelopment Plans. The work on costing of the next group of priority sectors—security, social protection andthe remaining components of the infrastructure sectors—has already commenced. These sectors are expected tobe fully costed by the summer of 2008.Expected assistance for ANDS implementationThe total estimated cost of the ANDS over its five-year time span is approximately US$50.1 billion. Of thisamount, the Afghan government will contribute US$6.8 billion and external assistance is expected to beUS$43.2 billion. The US$50.1 assumes a significant incremental increase in funds being channeled through theGovernment Core Budget. However, if funds continue to be channeled externally this will result in much higheroverhead costs, thereby increasing by a sizeable amount the total aid requirements for successful ANDSimplementation over the next five years.Over the lifetime of the ANDS Afghanistan will continue to rely on external financing. The Government’smedium-term objective is to reduce aid dependency and improve sustainability by increasing domestic revenues.To that end, the Government is pursuing policies that will strengthen the performance of the economy andimprove revenue collection. Meanwhile, the Government encourages its international partners to make multiyearcommitments to support the goals and the priorities of the ANDS. This will improve the predictability ofaid flows and permit the Government to better plan sustainable expenditures and manage priorities moreeffectively over the medium-term.VIII. AID EFFECTIVENESSWithout significant improvements in the effectiveness of aid, Afghanistan will be unable to achieve theambitious goals set out in the ANDS, even with large increases in aid. The Government is committed toensuring that maximum benefit is gained from international development assistance. The ANDS, with itsimplementation, monitoring and evaluation framework, will facilitate greater aid effectiveness. TheGovernment has developed an aid effectiveness strategy, in line with the Paris Declaration for Aid Effectivenessand Afghanistan’s international obligations.20