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Despite impressive economic growth, Afghanistan remains one of the poorest countries in the Asia and Pacific region. Ongoing security problems and capacity constraints impede progress, including the implementation of donor-supported projects and programs.
ADB assistance has focused on building capacity, helping establish policy and institutional frameworks, and rehabilitating essential infrastructure. Donor coordination is critical, and ADB actively contributes in this area as a member of the Afghanistan Compact Joint Coordination Monitoring Board as well as to the management committees for both the Afghanistan Reconstruction Trust Fund and the Counter Narcotics Trust Fund. ADB is also the lead donor agency for the energy and road sectors.
ADB provided $213.2 million in ADF loans and grants, and $8.0 million in technical assistance grants. The approval of two Japan Fund for Poverty Reduction grants totaling $38.0 million complemented ADB’s overall program of assistance.
Public sector approvals included a $118.2 million project ($78.2 million ADF loan and $40.0 million ADF grant) in support of the North–South Corridor, a road project that will rehabilitate 140.3 km of the Mazar-e-Sharif–Dara-i-Suf road and 98.9 km of the Bamian–Yakawlang road. A $20.0 million Japan Fund for Poverty Reduction project will support the construction of a link road to Bamiyan.
A $60 million ADF grant for the Private Sector and Financial Market Development Program will encourage private sector activity and improve access to financial services.
A $35 million ADF loan will support the Afghanistan component of the Regional Power Transmission Interconnection Project to connect the Afghanistan and Tajikistan power grids.
A $40 million nonsovereign loan and guarantee of up to $15 million will help accelerate the expansion of Afghanistan’s leading cellular network. The investment builds upon ADB’s 2004 investment of $35 million in Roshan, a telecommunications company owned by the Aga Khan Fund for Economic Development (see story). Roshan’s cellular network was the first private sector project to attract international commercial bank financing to Afghanistan for some 30 years, made possible through ADB’s B-loan program and political risk guarantee product. As a result of additional financing, Roshan was able to provide service to more than
1 million Afghan subscribers.
Since resuming operations in Afghanistan in 2002, ADB has approved more than $1 billion in assistance to the country. This has been complemented by $126.2 million in donor cofinancing, largely through the Japan Fund for Poverty Reduction. ADB has pledged up to $200.0 million a year over 2006–2010.
Because of lack of capacity and procurement delays, overall implementation progress has been slower than targeted. Some 228 km (51%) of the 450 km of the northern link road (from Pul-e-Khumri to Andkhoy) have been completed. A project to rehabilitate 241 km of 220-kilovolt double-circuit transmission lines will be completed by mid-2007. ADB has helped develop policy and institutional reforms related to fiscal management, restructuring of state-owned enterprises, public administration, and the country’s statistical system, as well as road sector and energy master plans. ADB, together with other donors, will help the Government prepare a national anticorruption strategy.
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