SECURING AFGHANISTAN’S FUTURE ﺣﮑﻮﻣﺖ اﻧﺘﻘﺎﻟﯽ اﺳﻼﻣﯽ اﻓﻐﺎﻧﺴﺘﺎن Securing Afghanistan’s Future: Accomplishments and the Strategic Path Forward March 17, 2004 A GOVERNMENT / INTERNATIONAL AGENCY REPORT Prepared for International Conference, March 31 April 1 2004 Asian United Nations Assistance United Nations The World Development Mission to Afghanistan Development Program Bank Bank Group 1 SECURING AFGHANISTAN’S FUTURE Steering Committee: The ‘Securing Afghanistan’s Future’ Exercise was overseen by a Steering Committee co-chaired by the Minister of Finance, H.E. Dr. Ashraf Ghani, Minister of Reconstruction, H.E. Minister Farhang and Minister of Foreign Affairs, H.E. Dr. Abdullah Abdullah. The Steering Committee represented a partnership between the Government and the ADB, IMF, UNDP, UNAMA and the World Bank. For the Government, members of the Steering Committee include Dr Arif (Office of the President), Seema Ghani (MoF), and Adib Farhadi (MoFA). Members of cabinet actively participated in the preparation and review of the report. Delegates to the Constitutional Loya Jirga also provided valuable inputs. The following advisers contributed to the Steering Committee: M. Afzal Rashid, Michael Carnahan, Clare Lockhart, and Aidan Cox. The exercise was coordinated by Peter Middlebrook (World Bank). For the Agencies, members included Margareta Wahlstrom (UNAMA), Alex Costy (UNAMA), V. Gnanathurai (ADB), Mohiuddin Alamgir (ADB), Allan Kelly (ADB) and Munawar Alam (ADB), William Byrd (World Bank), Anne Tully (World Bank), Bruno de Schaetzen (IMF), Ercan Murat (UNDP), Katarina Ammitzboell (UNDP), and. Daud Ahmad (Consultant). High Level Advisory Committee: A High Level Advisory Committee composed of Chris Donnelly (UK Defense Academy), Hafiz Pasha (Assistant Secretary General, UNDP), Shantayanan Devarajan (Chief Economist South Asia Region - World Bank) and Zmarak Shalizi (Senior Manager - World Bank) provided guidance to the Steering Committee and Working Group in the development of key themes, based on international experience. Working Group: The Working Group Team Leader for the exercise was Peter Middlebrook (World Bank). The Steering Committee appointed the following Chapter Managers: William Byrd (World Bank – Economic Growth - Prospects) with support from Stephane Guimbert, Omar Noman (UNDP – Pillar I), Mohiuddin Alamgir (ADB) and Alain Locussol (World Bank) as Joint Managers for Pillar II, Nick Manning (World Bank – Public Administration and Economic Management), Amer Durrani (World Bank - Trade and Investment) with support from S. Chander and Robert Bestani (ADB) on Private Sector Development. Mark Sedra on Security Sector, Inder Sud (Consultant) and Daud Ahmad (Consultant) on Implementation. The overall fiscal framework and costing details were consolidated by Stephane Guimbert (World Bank). The macroeconomic scenarios were prepared by the Government of Afghanistan with the advisory support of the World Bank and IMF staff. The sector leads and team members are acknowledged in the various Technical Annexes available for download from www.af/. 2 SECURING AFGHANISTAN’S FUTURE ABBREVIATIONS ACD Afghan Customs Department ADB Asian Development Bank AFMIS Afghan Financial Management Information System AIHRC Afghan Independent Human Rights Commission AMF Afghan Military Force ANBP Afghan New Beginnings Programme ARTF Afghan Reconstruction Trust Fund CAO Control and Audit Office CND Counter-narcotics Department DAB Da Afghanistan Bank DABM Da Afghanistan Brishna Moassesa DDR Disarmament, Demobilization and Reintegration EC European Commission EU European Union GDP Gross Domestic Product HIPC Highly Indebted Poor Countries IARCSC Independent Administrative Reform and Civil Service Commission IDA International Development Assistance IDP Internally Displaced Person IMF International Monetary Fund ISAF International Security Assistance Force LOTFA Law and Order Trust Fund MAPA Mine Action Plan for Afghanistan MDG Millennium Development Goals NATO North Atlantic Treaty Organisation NDB National Development Budget NDCS National Drugs Control Strategy NEEP National Emergency Employment Programme NSC National Security Council NSP National Solidarity Programme O&M Operation and Maintenance PAREM Public Administration and Economic Management PIP Public Investment Programme PMU Programme Management Unit PPP Purchasing Power Parity PRR Priority Reform and Restructuring PRT Provincial Reconstruction Teams PSP Provincial Stabilisation Plan TISA Transitional Islamic State of Afghanistan UNAMA United Nations Assistance Mission to Afghanistan UNDP United Nations Development Programme UNICEF United Nations Children’s Fund UNODC United Nations Office of Drug Control UXO Unexploded Ordinance WSS Water Supply and Sanitation CURRENCY EQUIVALENT Currency Unit = Afghani US $1 = 49 AFN (2004 Average) GOVERNMENT FISCAL YEAR March 21 – March 20 3 SECURING AFGHANISTAN’S FUTURE TABLE OF CONTENTS Presidential Message Executive Summary 10 1. Economic Framework and Prospects 2 Introduction 2 The Afghan Economy: Structure and Performance 3 Economic Growth: Why is it critical? What is needed? Is it feasible? 6 Economic Growth Projections 10 Methodology for Costing Reconstruction 12 Fiscal and Debt Sustainability 12 2. Building Social and Human Capital 14 Introduction 14 Social Indicators and the MDGs 15 Government Vision And Strategy 16 Investment Requirements and Financing 17 Refugees and Internally Displaced Persons 18 Present Situation 18 Government Vision and Targets 18 Implementation and Reforms 19 Education 21 Nutrition and Health 25 Livelihoods and Social Protection 29 Culture, Media and Sport – Steps Towards a More Open Community 33 3. Developing Physical Infrastructure / Natural Resources 39 Introduction 39 Key Issues 40 Government Vision and Strategy 41 Investment Requirements and Financing 43 Transport – A Key to Development 44 Energy – Critical for Economic Growth 49 Mining – High Growth Potential but in Need of Appropriate Regulation 51 Telecommunications – Rapid Private Sector-Based Development 52 Natural Resources – A Critical Sector for Afghanistan 53 Urban Services – Coping with Large and Growing Populations 56 4. Public Administration Reform and Economic Management 59 Introduction 59 Accomplishments and Future Challenges 60 Strategic Vision, Goals, and Key Priorities 63 Costing of Targets 66 Implementation Strategy 68 5. Enabling Trade, Investment, and the Private Sector 70 Introduction and Context 70 Key Constraints 71 Government Vision and Strategy 72 Sector Priorities for Private Development 73 Investment Programme 74 Implementation and Capacity Building 76 4 SECURING AFGHANISTAN’S FUTURE Conclusions 76 6. Security 78 Introduction 78 Strategic Goals and Framework 79 Key Issues and Constraints to Improving National Security 79 Developing a Unified National Security Framework 80 Investment Requirements and Financing 83 National Police And Law Enforcement 83 Counter-Narcotics 85 National Army 88 Justice 90 Human Rights 92 Disarmament, Demobilization, and Reintegration of Ex-Combatants (DDR) 93 Mine Action 95 7 Strengthening and Accelerating Implementation 97 Introduction 97 Accomplishments 98 Current Implementation Arrangements 99 Implementation Issues and Constraints 100 Actions to Strengthen Implementation Capacity 103 8. Cost and Financing Estimates 107 Ordinary Budget 108 Capital and Development Budget 109 Time Profile and Sequencing of Expenditures 109 Sustainability 110 Maximizing Benefits through the Quality and Modalities of Assistance 110 Annexes Annex 1 Projections of Economic Growth 2003-2015 112 Annex 2 Estimating the Human Development Index for Afghanistan 122 Maps Map 1 Proposed Road Network Development in Afghanistan 47 Tables Table 1.1 Afghanistan Poverty Indicators against Millennium Development Goals..................... 4 Table 1.2 Afghanistan’s Opium Economy..................................................................................... 5 Table 1.3 Long-term Growth Rates of Selected Countries............................................................ 7 Table 1.4 Growth Potential by Sector............................................................................................ 9 Table 1.5 Economic Projections .................................................................................................. 11 Table 2.1 Social Indicators .......................................................................................................... 15 Table 2.2 Required External Funding Assistance ($ 000,000) ................................................... 17 Table 2.3 Possible Scenarios for Refugee Return........................................................................ 18 Table 2.4 Costing Different Scenarios for Refugee Return and Repatriation.............................. 20 Table 2.5 Targets for the Education Sector ................................................................................. 22 Table 2.6 Summary Health and Nutrition Sector Targets............................................................ 27 Table 2.7 Significant Achievements in 1382............................................................................... 30 Table 2. 8 LSP Programme: 7 and 12 Year Service Delivery Targets ......................................... 32 Table 2.9 Targets for Culture, Media and Sport .......................................................................... 35 Table 2.10 Afghanistan MDG Targets .......................................................................................... 37 Table 2.11 Comparing