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Finance Minister Ahady Concludes U.S. Official Visit

Afghanistan’s Finance Minister Anwar ul-Haq Ahady concluded an official visit to the United States on April 23 following his participation in the annual Spring Meetings at the World Bank and IMF. Throughout these meetings a series of bilateral and multilateral discussions took place on finance and debt related matters between Afghanistan and the international community.

Minister Ahady forecasted growth in 2007 to reach 11 to 12 percent. He addressed last year’s growth of 8 percent, attributing the lower performance to drought. Tax receipts were forecast to grow by 30 percent next year to over $715 million. The Minister expressed hope that foreign investment flows could match last year's $1 billion.

In his meetings at the World Bank, IMF, and the U.S. Congress, as well as with senior U.S. government officials, Minister Ahady called for a more coherent international capacity-building strategy that undergoes a transition from donor-driven to government-driven aid.

Approximately $30 billion dollars has been pledged to Afghanistan since 2001, of which $19 billion is a firm commitment until the year 2009. $12.8 billion has been already disbursed, but of that amount, only $3.7 billion has been channeled through the government budget thus far.

The Minister stressed a great need for increased aid effectiveness, explaining that the Afghan government’s procurement system is much more cost effective than money currently being spent by external budgets, and that a review of the competitiveness of procurement that takes place outside of the government budget might be necessary. Minister Ahady also emphasized the need for more aid to be reserved for economic development, contrasting the $8.6 billion currently proposed by the U.S. government for security in Afghanistan with the $2 billion proposed for economic development.

On April 13, Minister Ahady briefed two Congressional roundtables on the progress made in Afghanistan’s rebuilding efforts. Representatives from the offices of Senators Lugar, Biden, Coburn, Hagel, Webb, Boxer, and Feingold, as well as Representatives Lantos and Costa, and the House Committees on Foreign Affairs and Armed Services attended the briefing sessions.  

On April 16, the Brookings Institution hosted Minister Ahady for a public discussion on the latest status of Afghanistan’s financial health. His remarks focused on fiscal sustainability, aid effectiveness and the implementation of the Poverty Reduction and Growth Facility (PRGF), an IMF controlled program that limits government expenditures in the interests of fiscal sustainability.

Minister Ahady said that the Afghan government was making progress in increasing revenues and attracting foreign investments, but he urged donors to continue aid flows to ensure the gains can be maintained. "There is still enormous need for international assistance in Afghanistan. Premature disengagement will lead to previous investments being wasted," he said.

The Minister listed a number of fiscal and macroeconomic improvements that helped double the Afghan national income in the last five years, including $550 million in government revenues gathered in 2006-2007, up from $180 million in the previous year, as a result of improved tax collection; reforms in its customs regime making the country’s rates one of the most liberal in the region; the privatization of firms, including more than a dozen banks; and some of the most liberal investment laws in the region, allowing easy repatriation of profits abroad.

Minister Ahady said that the narcotics trade continues to be a major challenge for the Afghan government. However, poppy’s current rate of 27 percent of the gross domestic product is a reduction from almost 40 percent in recent years. The Minister identified increased funds for alternative livelihoods through Afghan-government administered programs as the key to reducing the influence of narcotics in the region, so that “elimination of narcotics does not mean the starvation of the two million people that work in those fields.”

"I think we have a very clear vision" of the future in Afghanistan, Minister Ahady said. The Minister said that he was confident that the insurgency will be defeated, governance will improve and the economy will be secured with the help of the international community, especially the United States, which supports half of the entire external budget assistance to Afghanistan. “Afghans are grateful to the U.S. government and American tax-payers for their generous support to our people. We look forward to continued cooperation to help Afghanistan rebuild,” he said.

To Watch a CSPAN Video of Minister Ahady's Speaking Engagement, Please Click HERE

To Read a Transcript of the Event, Please Click HERE

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