UNDP | Afghanistan | Making Budgets and Aid Work

Thematic Area: Democratic Governance

[Last Updated June 2008]

Project Start Date: May 2007
Project End Date: April 2012
Project Location: Budget Department, Ministry of Finance, Kabul
Status of the Project: Active
Implementing Partners: Direct Implementation (DIM)

The public finance management system in Afghanistan has made remarkable progress over the past several years. The UNDP funded Making Budgets Work project, which has been implemented since April 2004 as the successor project to the Aid Co-ordination project, has effectively contributed to strengthening the Ministry of Finance (MoF) in its ability to support the unified national budget process as well as the nationally-led aid co-ordination process. The introduction of a weekly monitoring and reporting system, a budget calendar, a medium-term fiscal framework and consultative and working groups to discuss priorities, have all improved the use and co-ordination of aid.However, budget implementation and expenditure still fall greatly short of targets.

To address this challenge, in May 2007 the former Making Budgets Work project was transformed into Making Budgets and Aid Work (MBAW). Following the progress made under Making Budgets Work, this new project is intended to enhance the partnership approach, whereby inputs and integration of the operational capacity, technical advisory support and capacity building support are co-ordinated and monitored on a regular basis by the MoF and other funding and advisory donors supporting the Budget Department.

In addition, while aid co-ordination has progressed significantly and commitments for both the Government of Afghanistan and donors are high, the new project seeks to improve predictability and alignment of aid to support country priorities by capturing aid flows more effectively in order to achieve benchmarks committed in line with the Paris Declaration and the Afghanistan Compact. Building sustainable institutional capacity within the Budget Department at MoF is crucial as higher skill gaps have been largely filled by project staff.

The new project therefore has three components:

• The Budget is comprehensive, policy based, prepared in an orderly manner and supportive of the National Development Strategy
• Alignment of external assistance and improved aid effectiveness to support Afghanistan’s Development Goals and Strategy.
• Implementation of the Exit Strategy to build sustainable capacity within the GoA.

Achievements:

• Three ‘fast-track’ sector strategies – Health, Education and Transportation – have been prepared and finalised by the Ministry of Finance and the ANDS Secretariat and integrated into the 1387 (2008) budget.
• The Budget Integration Reform Unit of the MoF has issued a Programme Budget Manual that outlines detailed steps to be taken by Line Ministries in order to prepare their 1387 Budgets in the programmatic form.
• Each Ministry has formed a Programme Budget Implementation Team, and training sessions on programme budgeting have been delivered to all of these teams.
• A three-day workshop on procurement procedures, organized by the MoF’s Procurement Unit, was held for the line ministries in July, 2007.
• A planning and monitoring reporting format has been finalized by the Budget Department and sent to Line Ministries in order to facilitate smooth budget planning and expenditure tracking processes
• Consultation and training on provincial budget submissions to Herat, Bamyan, Badakshan and Nangrahar provinces.
• Developed Provincial Programme Budget action plan
• Manual on the Provincial Programme Budgeting was developed and circulated to concern agencies and officials.
• A Training of Trainers (TOT) programme on Provincial Budgeting 2008 was successfully conducted at the Civil Service Institute, Afshar, and Kabul from March 29th to April 6th. A total of 29 participants, of which 4 were women, came all the way from 17 provinces representing 8 line ministries and 5 geographical regions. During this process, intimation meetings with the Deputy Ministers of MOEc, MOPW, MOWE, MOWA and other officials of the MRRD and MOPH were held in order to identify prospective TOT-participants.
• Developed Provincial Programme Budgeting website
• Policy Intent Paper for capacity building/development has been developed.
• Developed Aid Policy Paper for the Government of Afghanistan

Future Priorities:

• Capacity building, particularly at sub-national level continue to be a major issue for a more successful budget process;
• Implementation of the exit strategy / sustainability plan could be challenging unless the young graduates who has been recruited and trained are promoted in the PRR and Super-scale process;
• Security has become a bottleneck for the implementation of the provincial budgeting pilot, particularly for staff undertaking trainings and consultation in insecure provinces;
• Coordination of Technical Assistance provided to the Budget Department is critical to the successful implementation of the budget reforms and the MoF strategy;
• Finalization of the CoA and AFMIS changes, implementation of the Database, finalization of the roll-out strategy and delivering trainings to the line ministries, MoF and Moustufiats are key challenges for implementation of the Program Budget;
• Further work with Government, Parliament and Donors on program budget awareness raising is required;
• Upgrading the Development Assistance Database to incorporate the Harmonized Reporting Format (HRF) is a pending issue that requires an urgent decision by the Budget Department leadership;
• Rolled-out of database to MoE and MoF (as a leader of the process).
• Rolling out Programme Budgeting and Provincial Programme Budgeting to cover 21 ministries and 18 provinces.

Challenges and Risks:

• Deteriorating Security conditions in the provinces has hindered monitoring missions and site visits to the provinces
• Retaining Civil Servants/Fresh graduates in the budget department of the MoF recruited under the exit strategy.

Partnerships and Resources:

Target Budget: USD 7,541,170
Received Budget: USD 3,152,484
Commitment USD 10,157,738
Shortfall: 0.00
Donors: UNDP, Canada, United Kingdom and GTZ

Focal Points:

Mustafa Aria, Project Manager, (mustafa.aria@undp.org)
Dilawar Khan, Programme Officer (dilawar.khan@undp.org)

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