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Annual Report 2002 : South Asia

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Afghanistan

Economic performance

ADB estimates that Afghanistan’s GDP in 2002 was about $4.4 billion, and per capita GDP was $170 in current prices.

The interim and transitional government prepared a national development framework and ordinary (recurrent) budget in April, which was followed by a development budget in October 2002. Financing of about 80% of the recurrent budget and 100% of the investment budget came from external assistance.

The most significant economic management agenda for 2002 was the introduction of a new currency, which exchanged old 1,000 afghanis (Afs) to 1 new afghani. This simplified transactions and set the stage for more effective monetary control by the central bank. The exchange rate to the US dollar of Afs30,000–40,000 depreciated after the new currency was introduced in October, and reached Afs50,800 to a US dollar in December. The notes exchange operation was expected to be completed by January 2003. For more on Afghanistan, see the Special Theme chapter.

ADB operations

Operational strategy: After conducting a needs assessment with the Afghan authorities and its development partners, as agreed with the then Interim Administration of Afghanistan, ADB approved an initial CSP. The CSP has two tracks: a combination of short-term, high-impact projects, including grant-financed pilot projects in key sectors; and medium-term policy and institutional reform measures through capacity-building technical assistance and program lending.

Policy dialogue: ADB consulted closely with the Afghan authorities and development partners in formulating the CSP. Policy dialogue centered on policy and institutional reforms to improve governance; strengthen the financial, transport, and energy sectors; and contribute to economic recovery and growth within a market-based system, consistent with the Government’s National Development Framework and National Development Budget.

Loans, technical assistance, and grants: The United Kingdom’s Department for International Development provided grant funds of nearly $18 million to clear Afghanistan’s arrears with ADB, thus lifting the final barrier for ADB to resume operations. On 4 December 2002, ADB approved a $150 million loan for a Postconflict Multisector Program—the first loan to Afghanistan by an international financial institution since lending was suspended in 1979. The first tranche of $100 million was disbursed to the Government on 6 December. Two technical assistance totaling $15.1 million and three grants totaling $22 million were approved in 2002 (see tables 1, 6, 24, 25, and 35 in the Statistical Annex).

Project implementation: Since joining ADB in 1966, Afghanistan has received 10 loans totaling $245.1 million, of which 1 was active at the end of 2002. Contract awards totaled $100.2 million, bringing the cumulative figure to $134.5 million. Disbursements in 2002 totaled $100.2 million, bringing cumulative disbursements to $128.1 million (see tables 14–23 in the Statistical Annex).

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