Fiscal reforms over the past four years can be categorized into three sections:
the performance of government investments, leading to better economic
outcomes and alignment of national priorities with public resources.
- Ensuring that the budget is more accurate, transparent and free of corruption
to build the capacity of the state to manage reforms, by investing in
human resources, administration, finance, IT and communications across
the Ministries, starting with the Ministry of Finance
– Deliver average growth of 5 percent per year until 2020
PROGRESS: – Partially Achieved
Actual economic growth has marginally increased each year, but not reached 5%.
Increase development budget expenditures by 10-15 percent each year as
we expand delivery of education and health services in the medium-term
For the first time in the last decade, development
expenditures have risen each year steadily close to projected rates,
with an increase in 23% percentage points from 2014 to 2017. In 2018,
the development expenditures were at 86%, a significant increase from
– Grow domestic revenue by up to 12 percent annually, with the
overarching goal of having domestic revenues account for 14 percent of
Revenue collection increased steadily each year, exceeding
projected annual growth rates of 12 % (Source: National Budget Fiscal
Year 1397) All targets set by the International Monetary Fund have been
met, and in December 2018, the IMF agreed to extend the extended credit
facility program until December 2019. Read the IMF reviews below:
- First review under the IMF extended credit facility arrangement, May 2017
- Second review under the IMF extended credit facility arrangement, December 2017
- Third review under the IMF extended credit facility arrangement, March 2018
- Fourth review under the IMF extended credit facility arrangement, December 2018
Further fiscal targets achieved in 2017:
- Net International Reserve was targeted to remain at $6,548.7 billion in 2017, which was achieved
- Inflation was targeted to remain as a single digit for 2017, and it remained below 5 percent
a minimum cash balance of 10 billion Afghanis in the Treasury Single
Account was a goal, which was achieved and exceeded in 2018 by 24.5
billion Afghanis. This serves as a buffer against fiscal shortfalls.
current public debt is at only 6 percent of the GDP, which is
significantly lower than the debt level of other similar countries.
Actual revenue collection (AFG) each year Values in 100 percent Actual
percentage increase Percentage of GDP in 2018 (1397) : 181 billion in
2017 (1396) : 169 billion in 2016 (1395) : 147 billion in 2015 (1394) :
122 billion0102030405060708090100in 2017 (1396) : 169 billion● Actual
percentage increase: 20 %● Percentage of GDP: 11.9 %
– We will work towards a consolidated national budget by 2019
The National Unity Government prepared a consolidated
national budget for 2018 (1397) that was passed by the Parliament in
March 2018, completing this target one year ahead of schedule. Below are
some of the key reforms, which increased accountability and
transparency and cut corruption:
- The 2018/1397 budget
is more detailed and now meets international standards. A Government
Finance Statistics (GFS)based budget provides policy-makers and analysts
with valuable information for better decision-making, details on
financial operations and financial position of the Government, better
comparability of budget, and better accountability and transparency.
- The operating and development budgets are now presented by economic classification, function and geographical split.
- Detailed budget statements for each ministry are presented, organized by province, program and project.
statement on Fiscal Risks, Contingent Liabilities and Assets has been
included for the first time, disclosing risks that are not incorporated
into forward estimates.
- This statement includes a number of
disclosures on risks to the budget that are not incorporated into the
forward estimates. To increase reliability and credibility, the budget
was prepared based on the “use it or lose it” principle, which allows
allocations to be made based on the executing capacity demonstrated by a
government body. It also allows funds to be shifted from poor to well
- Both operating and development budgets are
presented in Afghanis, making it easier to adjust fiscal variation
against the US dollar over the year.
- Detailed historic budgetary information is now disclosed for sound comparison and better decision making.
- Detailed disclosures by administrative.
– We will supplement the current medium-term fiscal
framework with a simplified medium-term budget and expenditure framework
that sets out the estimated cost of government policy over four years
A medium-term fiscal framework was introduced in the 2017
(1396) budget, and the 2018 (1397) budget includes a detailed forward
estimate for the next 4 years as well. These forward estimates provide
the first ever comprehensive picture of the current cost of existing
government policy within existing budget constraints. They form the base
funding for ministries and spending units, not only for 2018 (1397),
but also for the next 3 years. This means that if there is no change in
policy by the government, a ministry or government agency need not seek
approval each year for these activities. To read the Fiscal Strategy
Paper for Medium Term Fiscal Framework for 2017, visit this link.
initial reforms to the national budget, the Open Budget Index gave
Afghanistan’s 2017 national budget a score of 49 out of 100, higher than
the global average score of 42. Afghanistan was also ranked as having
the second most transparent budget in the region, following Nepal. That
ranking is expected to vastly increase when the newly reformed 2018
budget is assessed.”
Partially achieved and on-going.
The goal has been to use public funds
in a more efficient and focused way that directly aligns with national
priorities as outlined in the ANPDF and National Priority Programs. For
the 2018 budget, the Ministry of Finance took initial steps to align
policy objectives with budgeting by including the Ministry of Finance’s
Policy Department and the Macro-Fiscal Performance Directorate (MFPD) in
the budget hearing sessions. The Policy Department, the Budget
Directorate, the Aid Management Directorate (AMD) and MFPD are working
together to develop a more effective approach for prioritization,
savings and expenditures for the 2018 mid-year review. Currently, the
main increases in spending in 2018 budget are in security,
infrastructure and education. The full first phase of the Citizen’s
Charter is reflected in the budget and forward estimates.
2. Moving forward
the budget balance is a continuous effort, which has been carefully
followed throughout the year. The current level of 2018 budget deficit
is maintained close to zero, which is low compared to budget deficits of
other similar countries. The budget deficit at the moment is about 1.1
percent of the GDP, but it needs to be brought further down to a
sustainable level. It was agreed with the IMF during the March 2018
mission to reduce the deficit to around 0.4 percent of the GDP, as part
of the mid-year review of 2018 Budget.
- The second phase of the
budget reform process will commence in the first half of 1397 (2018). It
will be implemented over the next year. After the initial budget
reforms phase brought increased transparency, accountability and
credibility to the budget, the second phase of reforms will 1) find
efficiency savings in the operating budget and 2) allocate more
resources to high performing development programs.
- By the
beginning of 2019, the government expects further reforms to the budget
process to clearly establish the cost of current policy, including cost
estimates for operations and maintenance. Over the course of the next
few budget cycles, this reformed process will help to align all
expenditure financed by domestic revenue and development assistance to
national priorities, including by reallocating funds in the annual
budget. Ongoing enhancements to the budget cycle will improve the
effectiveness of the budget and the ability of the government to deliver
tangible results across the country.