NO LONGER IN ARREARS, AFGHANISTAN HAS BUDGET

C O N F I D E N T I A L KABUL 000303

SIPDIS

DEPT FOR SA/PAB, SA/AR-AMB JOHNSON
NSC FOR ZKHALILZAD, JDWORKEN, HMANN, RHANSON, DSEDNEY
PACOM FOR POLAD
CENTCOM FOR POLAD

E.O. 12958: DECL: 02/05/2013
TAGS: ECON EFIN EAID PREL AF IMF IBRD
SUBJECT: NO LONGER IN ARREARS, AFGHANISTAN HAS BUDGET
ISSUES TO TACKLE, SAYS GHANI

REF: STATE 032463 (NOTAL)

Classified By: Ambassador Robert P. Finn for reasons 1.5 (b)
and (d).


1. (C) In a chance meeting with the Ambassador and Security
Coordinator MG Karl Eikenberry at the presidential palace on
February 4, a clearly pleased Finance Minister Ashraf Ghani
noted that Japan had come through with pledged funding the
day before. As a result, Afghanistan was no longer in
arrears to the IFIs. Canada was following through with
pledged funding as well, said Ghani, who asked the Ambassador
to pass his thanks on to Under Secretary Larson and Treasury
Under Secretary John Taylor for their efforts on this issue.


2. (C) Ghani said the defense budget would require intensive
work in the coming days. He had made some progress with the
Defense Ministry on projected army size, and planned to
impose a sliding scale on the defense budget, with
progressively smaller amounts budgeted for salaries each year
until attrition reduced the total army size to a target
level. Besides dealing with the defense budget, reducing the
total number of government ministries also was an imperative,
Ghani said.


3. (C) Noting another step forward, Ghani said the Finance
Ministry had received 2 million USD in customs revenues from
Herat province. This is in addition to 2 million USD Herat
gave the center last fall.
FINN