ADB Fulfils Pledge to Afghanistan, Plans $200 Million Annually in Aid

News Release | 31 January 2005

MANILA, PHILIPPINES (31 January 2005) - ADB has met its pledge to provide Afghanistan with $500 million in loan and grant assistance by the end of 2004. The commitment was made at the Tokyo conference of donors in January 2002.

Moreover, ADB plans annual assistance of $200 million for Afghanistan, up to half of which will be in grants.

In response to the Government of Afghanistan's plan, "Securing Afghanistan's Future: Accomplishments and the Strategic Path Forward," ADB pledged in April 2004 to consider assistance of about $800 million in concessional Asian Development Fund (ADF) loans and grants during 2005-2008. The plan was prepared with support from ADB, IMF, UNDP, and World Bank.

With these pledges, ADB expects assistance to Afghanistan to exceed $1 billion in 2005-2008, and $1.5 billion over the 2002-2008 period.

"The completion of ADB's initial pledge of $500 million for the rebuilding of Afghanistan demonstrates our long-term commitment," says Edward Haugh, ADB's Senior Advisor (Afghanistan Operations). "ADB will continue assistance to help the people of Afghanistan back on their feet after decades of civil conflict. The Afghan people have already demonstrated their resolve to rebuild their country."

ADB resumed operations in Afghanistan in May 2002 with the approval of an Initial Country Strategy and Program (ICSP) 2002-2004 that outlined a pipeline of loan and technical assistance grants. The program was aimed to rehabilitate essential infrastructure, build capacity, and to establish policy and institutional frameworks to promote reconstruction and development.

In December that year, ADB approved the first loan by an international financial institution to Afghanistan in over 23 years. The $150 million Postconflict Multisector Program loan has supported policy reforms, public infrastructure investment, and capacity building to promote recovery and economic growth.

A second $150 million loan, the Emergency Infrastructure Rehabilitation and Reconstruction Project, is rebuilding important road and power infrastructure.

Other major assistance includes:

  • A third loan of $55 million for an Agriculture Sector Program to promote agricultural growth and poverty reduction by developing a policy framework and establishing efficient sector institutions.
  • A $5 million Afghanistan Investment Guarantee Project to promote private sector activity and foreign direct investment.
  • A $40 million loan, Regional Aiports Rehabilitation Phase 1, to rehabilitate seven regional airports.
  • An $80 million loan, Andkhoy-Qaisar Road Project, as a further contribution to rehabilitate the primary road network.
  • The approval of $30.49 million in technical assistance grants to support capacity building and institutional reform, prepare sectoral master plans and investment projects for further reconstruction and development.

In addition, ADB is administering $60 million in projects funded through the Japan Fund for Poverty Reduction, plus a $15 million project from the Kuwait Fund. These projects support the education and health sectors, road rehabilitation, a community-based irrigation rehabilitation project, and a river basin integrated water resource management project.

ADB has also provided Afghanistan with $47.6 million in private sector support. This includes a $2.6 million equity investment in the Afghanistan International Bank, $10 million supplemental risk guarantee for the Afghanistan Investment Guarantee Facility, and a $35 million loan to extend a newly established mobile telephone system.

ADB's private sector interventions are expected to total $53 million in 2004 and $100 million in 2005. Depending on progress in policy dialogue with the Government to establish an environment conducive to investment as well as further discussions with cofinanciers, ADB is likely to support investments in the energy and transport sectors as well as in bank and non-bank financial institutions, thus contributing to the development of the financial sector.

ADB also plans to remain active in supporting the development of Afghanistan's financial sector through private sector investments.