World Bank increases support for public administration

Washington, January 27, 2005 - The World Bank today approved a US$27 million grant to strengthen the administrative functions of the Government of Afghanistan. It will support ongoing work to improve public procurement, financial management and accountability systems.

Afghanistan's economy has performed strongly in the past two and half years with non-drug GDP reaching US$4.6 billion in 2003-04 (corresponding to a GDP per capita of about US$200 per year), an increase of almost 50 percent, albeit from a very low base. This is mainly attributable to the recovery of agriculture from the drought, revival of economic activities after major conflict ended, and the commencement of reconstruction efforts. This solid performance has been supported by the government's sound macroeconomic polices-a highly successful currency reform in late 2002, a prudent no overdraft policy prohibiting domestic financing of the budget deficit, conservative monetary policy, and good management of the exchange rate.

"The Government of Afghanistan has taken substantive measures to build an effective public administration that is small and focused on core functions. It is more decentralized, better skilled, equipped and managed, more accountable, and more representative in terms of gender and ethnicity," said Jean Mazurelle, World Bank Country Manager for Afghanistan. "However enormous challenges remain, including improving security throughout the country, re-establishing national unity, developing institutions capable of formulating and implementing policies, and reaching out to provinces to collect revenues and deliver services."

The Third Public Administration Capacity Building Project, financed by a grant from the World Bank's International Development Association, builds upon successful work of two earlier projects and aims to build capacity within the government in key procurement and fiduciary areas so that government staff can assume key functions to adequate standards. The project will help develop the regulatory and institutional framework in core fiduciary management areas; furthering systems development based on a full understanding of medium-term requirements and the country's implementation capacity; and building capacity so that government staff can maintain and operate systems independently and effectively.

The project will be implemented by the Ministry of Finance, the Afghanistan Research and Development Services, and the Control and Audit Office.