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Islamic Republic of Afghanistan - Enhanced Integrated Framework ...

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een prioritized within the overall macro-fiscalframework to allow a logical progression <strong>of</strong>investments that systematically overcome thecore binding constraints to growth and socialdevelopment. An integrated approach focusesinvestments through the sector strategiessummarized below. The sector strategies weredeveloped based on strategies first put forwardby individual ministries and groups <strong>of</strong> ministries.Although Ministry strategies were thestarting point, the sector strategies are broaderthan those <strong>of</strong> the ministries for several veryimportant reasons. First, the sector strategies inmany cases involve actions and programs thatneed to be undertaken by several ministries.Considerable attention has therefore beengiven to developing better coordination betweenministries through Inter-MinisterialCommittees. The sector strategies have alsotaken account <strong>of</strong> donor activities being implementedoutside <strong>of</strong> ministries and informed bythe Provincial Development Plans (PDPs). Thesuccess <strong>of</strong> the sector strategies will be heavilydependent on resource effectiveness, revenueenhancement and fiscal sustainability, humanand natural resource development and investmentsin productive and trade-based infrastructureand private sector driven development.Private Sector DevelopmentThe ANDS strategic objective is to enable theprivate sector to lead <strong>Afghanistan</strong>’s developmentwithin a competitive market-based economyin which the Government is the policymaker and regulator <strong>of</strong> the economy, not itscompetitor. The establishment <strong>of</strong> a strong enablingenvironment for a competitive privatesector is an on-going effort by both the Governmentand donors. Almost all sector strategiesinvolve the development <strong>of</strong> new legislation.The Government will enact and implementkey laws and amendments to establishthe basic legal and regulatory framework thatwill encourage private sector involvement insocial and economic development. Almost allsector strategies involve institutional strengtheningthat is designed to improve the ability <strong>of</strong>ministries and other agencies to administer legislationin an unbiased and predictable manner.Privatization and corporatization <strong>of</strong> stateowned enterprises is an on-going program thatis on schedule. It represents an important stepin expanding the scope for private sectorgrowth and development. These steps will: (i)improve general levels <strong>of</strong> efficiency in theeconomy; (ii) assist in eliminating corruption;(iii) encourage better resource allocation, and(iv) generate increased government revenues.An open trade policy will facilitate a competitiveenvironment for private sector development,avoid the high costs incurred with protectionistpolicies and facilitate <strong>Afghanistan</strong>becoming better integrated as a ‘trading hub’ inthe region. Any proposals to provide protectionto particular industries will be evaluatedwith a proper ‘economy wide’ perspective thatfully accounts for the costs and benefits fromsuch actions, including the negative impacts onother firms and on the consumers who mustpay higher prices. Increased priority will begiven to regional economic cooperation initiativesaimed at developing regional transportationand transit infrastructure, facilitating regionaltrade and investment flows and developing<strong>Afghanistan</strong> as a regional business hublinking Central and East Asia with the MiddleEast and South Asia.A second major component <strong>of</strong> the private sectordevelopment strategy attempts to encourageincreased private sector investment by creatinginvestor friendly regulatory frameworksfor private sector operations in the development<strong>of</strong> natural resources and infrastructure.This approach has been very successful in thetelecommunications sector, where phone usagewent from less than 15,000 under a state monopolyto over five million subscribers as privateinvestments in cellular communicationwere encouraged. Significant initiatives areincluded in the sector strategies for energy,mining and agriculture based on leased accessto state lands to strengthen these investorfriendly regulatory frameworks, and pilot projectsand innovative initiatives are being investigatedto allow public funding to support privatesector activities in the provision <strong>of</strong> educationservices, vocational training and publichealth services.A third and closely related component <strong>of</strong> thestrategy is based on a concerted effort by theGovernment and the donor community tomore vigorously promote private sector investment.Given the limited capacities in thepublic sector and in the nascent domestic privatesector, much <strong>of</strong> this effort will focus ontrying to encourage foreign firms with the ex-The ANDS: An Overview 7

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