PARLIAMENT APPROVES REVISED BUDGET

UNCLAS SECTION 01 OF 02 KABUL 002551 SIPDIS SENSITIVE SIPDIS DEPT FOR SCA/FO, SCA/A, G KATE FRIEDRICH, G/IWI DIANNE GRAHAM NSC FOR AHARRIMAN, KAMEND CENTCOM FOR POLAD, CG CFC-A, CG CJTF-76 TREASURY FOR APARAMESWARAN, ABAUKOL STATE PLEASE PASS USAID FOR AID/ANE, AID/DCHA/DG SAN JOSE FOR JANAE COOLEY REL NATO/ISAF, AUS, NZ E.O. 12958: N/A TAGS: PGOV PREL PINR ECON EFIN KDEM AF SUBJECT: PARLIAMENT APPROVES REVISED BUDGET REF: KABUL 2323 ¶1. (SBU) SUMMARY. The Afghan National Assembly approved a revised national budget, including modest increases in government salaries and payments to the disabled, on June 3. The new budget, which did not go above the previously agreed ceiling, accommodates Parliament's most significant concerns; during debate, the GOA also promised to take Parliament's other suggestions into consideration for the next fiscal year. END SUMMARY. Revised Budget Passes by Large Margin -------------- ¶2. (SBU) Minister of Finance Ahadi resubmitted the GOA 1385 budget to the Wolesi Jirga (lower house of Parliament) on June 3. The budget contained two significant revisions: a 300 Afghani/month raise for government employees and a 100 Afghani/month increase in the stipends paid to the disabled, widows, and orphans. The below table describes the overall changes to the budget: 1385 Budget Revisions (in Afghanis) Category Previous Budget (4/7) Revised Budget (5/31) Wages & Salaries 24,492,173,000 24,921,172,000 Goods & Services 9,337,685,000 8,998,685,000 Capital 1,227,130,000 1,220,130,600 Allowance: Martyrs & Disabled 750,000,000 965,000,000 Policy Reserve 780,000,000 561,000,000 Emergency Contingency 600,000,000 530,000,000 All Other 3,159,204,000 3,150,204,400 Total 40,346,192,000 40,346,192,000 ¶3. (SBU) The increase in allowances for Martyrs & Disabled totals 215 million AFs, and is effective upon approval (the allowance is increasing by 100 AFs per person per month, from beginning of FY1385). The increase in wages and salaries totals 497.5 million AFs, and is effective upon Mid-Year Review and a strong revenue situation (wages and salaries will increase by 300 AFs per person per month). The increase in these funds was paid for by offsets from the following accounts: Policy Reserve (losing 219m AFs),Emergency Contingency fund (70m AFs),and the ministries of Public Works (200m AFs),Defense (75m AFs),Education (60m AFs), Finance (50m AFs),Martyrs and Disabled (10m AFs),Labor and Social Affairs (18.5m AFs),and Youth (10m AFs). Therefore, the revised budget did not break the previously agreed budget ceiling. ¶4. (SBU) After Ahadi gave a speech making clear the consequences of rejecting the budget (mentioning the debt relief deal specifically) and urging fiscal responsibility, MPs turned to a short debate on the revised budget. Most comments were in favor of passing the budget, if only to prevent a fiscal crisis (one MP stated that he would hold his nose while voting for the budget). Several dissenting voices did complain about the lack of funding for roads and some continued to complain about international constraints on KABUL 00002551 002 OF 002 Afghanistan's sovereignty. Wolesi Jirga Speaker Yunus Qanooni summarized debate before the vote by saying: We were able to accommodate the needs of workers and the disabled during this budget process and showed that we make our own decisions. He continued: We have started out on a sound basis - we will start small and hope for better in the future. ¶4. (SBU) The vote on the budget came surprisingly quickly after only a few hours of additional debate, and was overwhelmingly in favor - 125 for the budget, with only a handful (5-6) votes against. After the vote, applause broke out in the session. Remaining Parliamentary Schedule Unclear -------------- ¶5. (SBU) Parliament has several confirmations (five Ministers, seven Supreme Court Justices, and a few other remaining posts) left on its agenda, but all are pending official nominations from the executive branch. While there were rumors that Parliament would extend its session past its June 6 scheduled recess date in order to deal with the budget, it is unclear what business will be before them or if Parliament will be inclined to stay longer now. In conversation with A/DCM on June 2, Karzai Chief of Staff Jawid Ludin stated that the Palace would still like to resubmit the Supreme Court before Parliament's recess (although it was unclear whether it would be able to finalize its nominees and strategy to do so),but will not be resubmitting the Ministerial nominees until regular session resumes in July. Comment -------------- ¶6. (SBU) While the budget passed overwhelmingly, most MPs remain discontented with the process and expect significantly more input into the 1386 budget. The vote does indicate, however, that Parliament's priorities in the process were to (A) assert Parliamentary independence and the WJ's constitutional "power of the purse," and (B) have something to deliver to constituents when they return home on leave. The vote also shows that the GOA put more effort into advocating for its budget the second time around: not only did MOF officials hand out a thorough binder of budget materials to all MPs (as compared with several pages of spreadsheets before),but the first five MPs to comment after Ahadi finished his speech all delivered pro-government speeches that they had written (rather than the normal off-the-cuff comments that make up legislative debate). The outstanding question now is whether the revised budget will be acceptable to the IMF authorities. END COMMENT. NEUMANN