Financial Times - March 20, 2003
WORLD NEWS: Afghanistan to raise $200m in revenue By Judy Dempsey in Brussels
Afghanistan intends to raise $200m (¤188m, £128m) of domestic revenue to support its $550m annual budget but will rely on international assistance to meet the remaining shortfall, Ashraf Ghani, Afghan finance minister, said in an FT interview.
But after presenting a budget anchored on a tight fiscal and monetary policy during a meeting of donors in Brussels this week, Mr Ghani admitted that the $550m was not enough.
"We have had to look for a budget that we can afford and at the same time we have to lower the expectations of our people," Mr Ghani said.
The $550m budget for the fiscal year that starts this month is only for recurring costs, while a separate development budget of $1.7bn that will focus mostly on infrastructure projects will be entirely financed by donors.
These will be led by the European Commission, the World Bank, USAid and 40 other countries.
Some $125m of the regular budget will be spent on the army, $72m on police and local government, $125m for education, $30m for health and $25m on foreign missions.
As donors shift from humanitarian to reconstruction assistance, Mr Ghani said the government was determined to set the agenda over its spending priorities and requirements.
"The whole thing is based on accountability and transparency," he said. He insisted that his policies would not create a dependency culture. "That would lead to eternal poverty," he argued.
One of the main economic strategies of a government trying to cope with a return of millions of refugees in addition to 5m vulnerable people is to attract the private sector.
Mr Ghani, a former academic who also worked at restructuring Russia's coal industry for the World Bank, said Afghanistan had attractive assets such as telecommunications, oil and gas, "with gas resources now proven", mining and agriculture.
But his most immediate concerns were security and reducing poppy cultivation, which is "at the heart of the matter".
He said: "If you want poppies to be eliminated, you need to be prepared. It will take five years to make the transition. You have to have new livelihoods for people, training and a shift in production. It all takes time."