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Afghanistan Reborn
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This special issue of ADB Review demonstrates the major contribution the Asian Development Bank (ADB) is making to Afghanistan’s rebirth. Our country is proud to have been a member since ADB’s founding in 1966, and is grateful for the partnership. With quality assistance, on a grand scale, we have together achieved much over the past 4 years.
After the Taliban’s fall, ADB was the first international finance institution in 23 years to provide Afghanistan with loan funding. It started in December 2002 with the $150 million Post-conflict Multi-sector Program to begin rehabilitation of the energy, financial, and transport sectors, and has continued with loan and grant assistance for essential infrastructure.
At the 2004 Berlin International Conference on Afghanistan, ADB pledged up to $800 million in Asian Development Fund loans and grants for the period 2005–2008. It also pledged loans and equity investments for private sector development and technical assistance to help Afghanistan manage and accelerate rehabilitation and development. By 2008, ADB is expected to have provided the country with up to $1.5 billion in financial and technical assistance.
ADB’s careful analytical and sectoral work has made a major contribution to the elaboration of Afghanistan’s initial national development strategy and the 2004 strategic initiative Securing Afghanistan’s Future: Accomplishments and the Strategic Path Forward.
The institution’s programmatic approach and the willingness to put the Afghanistan Government in the driver’s seat have set an example. By directing support through government channels, ADB has given Afghan officials authority over reconstruction and development, while its strategic technical assistance is building the skills needed to meet the challenge of reconstruction.
Yet Afghanistan is still a post-conflict country. It has lost many of its best people and an estimated $240 billion in infrastructure and opportunity. The country’s human development and Millennium Development Goal indicators are the worst in Asia, and among the worst in the world.
Afghanistan today is dependent on aid. Foreign assistance represents more than 90% of the national budget. And while the government has adopted responsible fiscal policies and revenue is increasing, at current rates of growth, it will still take 7 years for domestic revenues to cover the public wage bill. The country’s debt sustainability levels remain less than $1.0 billion.
To secure Afghanistan’s future, we must accelerate economic growth. And to do that we need infrastructure.
If our homes and factories do not have power, and our farmers do not have access to irrigation or cannot readily get their produce to markets, if entrepreneurs do not see basic infrastructure and invest as a result, Afghanistan’s economy will not grow. Without that growth, Afghanistan will remain a ward of the international community or, worse, an impoverished, insecure, and potentially destabilizing “failed state.”
Yet, while Afghanistan’s donors and government agree that more than half of international assistance should go to repairing and developing infrastructure, the government has had huge difficulty garnering support. Donors are understandably hesitant to support costly, long-term infrastructural investments, and we are therefore expected to borrow to rebuild. This will force us to mortgage our future with debts that the country will have huge difficulty sustaining.
ADB understands the risks and potential of infrastructural investment. At the government’s request, ADB’s assistance has focused on the transport, energy, and natural resources management sectors.
As ADB’s investment portfolio demonstrates, Afghanistan needs massive capacity development as well as significant institutional reform, and the government is determined to be capable and efficient.
We are eager to develop an institutional and policy framework that is coherent, equitable, and attractive to business—one that promotes private sector investment and job creation. ADB’s program loans and technical assistance grants have helped the government move toward these goals. We look forward to working with ADB in further developing financial management systems and a modern public administration.
Afghanistan sees institutional reform and infrastructural development as interdependent. Our poverty alleviation and economic growth strategies must be mutually reinforcing. We know that we cannot postpone our political maturation into a free, just, and representative democracy while we address economic priorities. We must address these priorities concurrently.
The Afghanistan National Development Strategy, now being updated through broad-based consultation, will provide the foundation for the next—and accelerated—phase of Afghanistan’s development.
The people of Afghanistan are very appreciative of ADB’s vision, generosity, and unwavering support for reconstruction and development. We look forward to continuing this partnership on our journey toward peace, stability, and prosperity.
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