U.S., U.N. and Afghan finance ministry officials have discussed
ways to resolve what they say has become a critical situation for
the budget, with civil projects most at risk as international
assistance starts to taper off.
"If the political situation of the country does not become normal
and businesses do not start again soon this problem will become even
more worrying," Alhaj Muhammad Aqa, director general of the treasury
at the finance ministry, told Reuters on Wednesday. "We will not
only face problems in paying salaries of employees but we will have
difficulties in other issues too."
Funding for security will not be affected, as costs are met by
foreign governments which recognize that any chance of stability in
Afghanistan rests on quelling the Taliban insurgency.
At the start of the month, Afghans voted for a new president to
replace Hamid Karzai who steps down after 12 years in power. The
international community poured billions of dollars of aid into
Afghanistan during Karzai's rule, but the country's next leader
could struggle to receive the same levels of support.
Preliminary final election results are due on Saturday, but early
tallies show no outright winner, meaning further delays in the
political transition. A run-off would occur in late May or early
Of the two frontrunners, ex-World Bank official Ashraf Ghani has
called for radical economic reforms, while former foreign minister
Abdullah Abdullah campaigned on job creation and fighting
"We have to put pressure on the international community to help us
cope with this problem," Aqa said. "This will become bigger if the
presidential election goes to a second round."
Officials put the growing hole in the $7.6 billion budget down to a
sharp decline in domestic revenue, forcing some development projects
to be put on hold. So far this year, the shortfall stands at $375
million due to falling customs, the finance ministry says.
About a third of the overall budget is earmarked for development
projects, ranging from building schools and hospitals to roads.
JOBS UNDER THREAT
Employees of a project producing electronic identification cards, a
task jointly managed by the interior and communications ministries,
said they have been told their jobs might go.
"The head of the treasury department of the finance ministry came
with his team to our office and told us that there is a shortfall of
around $500 million and they have to cut from every development
project," Homayun Mohtat, head of the electronic ID card department,
Some employees said they had not been paid for months.
[to top of second column]
International assistance covers $5 billion of this year's budget,
with the remainder filled by domestic revenue raising, mainly in the
form of customs duties.
But customs revenue and imports are down since the start of the
year, the finance ministry says. Taxes and exports contribute little
to the state finances.
The U.N. envoy to Afghanistan Jan Kubis said last week Afghan
revenue was much less than expected and the budget was a major
problem. He said international donors and the finance ministry were
meeting to agree a way to cover the hole.
The U.N. office in Afghanistan and the U.S. embassy in Kabul
declined further comment.
In January, U.S. lawmakers halved development aid to $1.2 billion
for the 2014 fiscal year and with most foreign troops due to leave
by the year's end, the new Afghan administration is being left, more
than ever, to stand on its own feet.
After a dozen years of massive international aid efforts,
Afghanistan is still one of the world's poorest countries. The U.S.
decision to cut aid is also expected to shape the contributions of
other donor nations.
Foreign powers have poured billions of dollars of aid into
Afghanistan since the fall of the Taliban in 2001, but the country's
next leader is unlikely to receive the same levels of financial
The prospect of dwindling inflows of foreign aid could stoke
uncertainty as the United States and other NATO countries move to
end their long war in Afghanistan, and as Washington seeks an
agreement that would permit some U.S. forces to stay there beyond
(Editing by Simon Cameron-Moore)
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