Identifier
Created
Classification
Origin
06KABUL5373
2006-11-06 01:32:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Kabul
Cable title:
DEPUTY FINANCE MINISTER SHAHRANI - BUDGET
how-toVZCZCXRO9994 RR RUEHDBU RUEHIK RUEHYG DE RUEHBUL #5373 3100132 ZNR UUUUU ZZH R 060132Z NOV 06 FM AMEMBASSY KABUL TO RUEHC/SECSTATE WASHDC 3944 RUEATRS/DEPT OF TREASURY WASHINGTON DC 0204 INFO RHEHAAA/NSC WASHINGTON DC RUEKJCS/SECDEF WASHINGTON DC RUEKJCS/OSD WASHINGTON DC RUEKJCS/JOINT STAFF WASHINGTON DC RUCPDC/USDOC WASHDC RUCNAFG/AFGHANISTAN COLLECTIVE RUCNIRA/IRAN COLLECTIVE RUEHZG/NATO EU COLLECTIVE RHMFIUU/HQ USCENTCOM MACDILL AFB FL RUEAIIA/CIA WASHINGTON DC RHEFDIA/DIA WASHINGTON DC
UNCLAS KABUL 005373
SIPDIS
SENSITIVE, SIPDIS
DEPT FOR SCA FRONT OFFICE (DAS GASTRIGHT),SCA/A, AND EB/ODF
DEPT FOR ISN/ECC:JCOLLINS
DEPT PASS AID/ANE, USTR, AND OMB:PCALBOS
TREASURY FOR LMCDONALD, JCIORCIARI, AND ABAUKOL
NSC FOR AHARRIMAN
E.O. 12958:N/A
TAGS: EAID EFIN AF
SUBJECT: DEPUTY FINANCE MINISTER SHAHRANI - BUDGET
EXECUTION IMPROVED, BUT COULD BE BETTER
(U) This cable contains SENSITIVE BUT UNCLASSIFIED Information.
Please protect accordingly. Not for Internet Distribution.
UNCLAS KABUL 005373
SIPDIS
SENSITIVE, SIPDIS
DEPT FOR SCA FRONT OFFICE (DAS GASTRIGHT),SCA/A, AND EB/ODF
DEPT FOR ISN/ECC:JCOLLINS
DEPT PASS AID/ANE, USTR, AND OMB:PCALBOS
TREASURY FOR LMCDONALD, JCIORCIARI, AND ABAUKOL
NSC FOR AHARRIMAN
E.O. 12958:N/A
TAGS: EAID EFIN AF
SUBJECT: DEPUTY FINANCE MINISTER SHAHRANI - BUDGET
EXECUTION IMPROVED, BUT COULD BE BETTER
(U) This cable contains SENSITIVE BUT UNCLASSIFIED Information.
Please protect accordingly. Not for Internet Distribution.
1.(SBU) SUMMARY: Deputy Finance Minister Wahidallah Shahrani told
ECON Counselor on October 30 that the Finance Ministry recognizes
the GOA's budget execution problem and is proactively engaged to
improve the capacity of line-ministry procurement and financial
management staff. He blamed poor leadership in certain line
ministries and ineffective donor technical assistance for the poor
rate of disbursement of donor contributions to the GOA's development
budget. Nonetheless, he stressed that the GOA is spending money
faster than last year's pace. Budget execution will be a central
theme of the upcoming November 12 Joint Coordination and Monitoring
Board (JCMB) meeting. Despite Shahrani's attempt to shape the
discussion, we anticipate that the finance ministry will face some
criticism for its slow disbursement rates to line ministries. END
SUMMARY.
2.(SBU) DFM Shahrani acknowledged to ECON Counselor that development
budget execution would be a central issue in the upcoming November
12 JCMB (i.e., joint Afghan-Donor London Compact coordination)
meeting. While the government got off to a slow start because of
parliament's delayed passage of the budget, some line-ministries,
and the government as a whole, are outperforming last year's
procurement pace, he stated. For the first four months of this
year, the GOA has spent 27% of its development budget, compared to
12.5% of the development budget spent over the same period last
year. For this entire fiscal year, Shahrani projected a 60%
expenditure rate, compared to 44% last year. Afghanistan's fiscal
year begins in March.
3.(SBU) Shahrani assured ECON Counselor that the Finance Ministry is
fully aware of the seriousness of the perception among donors that
the GOA is not moving its development budget quickly enough. MOF
officials have been working closely with underperforming line
ministries, like the Energy Ministry, on procurement and financial
management, and are seeing some improvement. The Finance Ministry,
he said, also conducted two training seminars for procurement
officials earlier in the year.
4.(SBU) Shahrani stressed that capacity building in the line
ministries and the Finance Ministry itself is a major challenge. He
commented that too many foreign advisors provided by donor countries
work independently of Afghan employees in the ministries, and never
train these Afghan colleagues. When they leave the ministry, the
Afghans are unable to replace the foreigner. He reiterated Finance
Minister Ahady's preference that donors pay for regional advisors
(e.g., Indians or Sri Lankans) who are more likely to stay for
longer periods and work more closely with local staff. Shahrani
also made a pitch to be allowed to pay higher salaries to younger,
better-educated Afghans to retain them in government jobs, noting
that GoA retention of employees following training is a critical
issue. Finally, he said that capacity is improving in ministries,
like Communications and Rural Development, where ministers are
showing strong leadership.
5.(SBU) COMMENT: Shahrani, one of the GOA's sharper senior economic
officials, recognized the opportunity to try to shape the coming
JCMB debate on the GOA's poor performance on budget execution by
trying to lay blame on poor donor and line-ministry performance,
while emphasizing the finance ministry's proactive approach to the
problem and appealing for donor support. However, we believe the
Finance Ministry shares responsibility for not disbursing funds to
line ministries' requests for payment as quickly as it could, and
needs to play a strong leadership role in engaging with and
developing capacity with line Ministries. We will explore ways to be
supportive, including shaping discussion with UNAMA and other donors
through the JCMB process, and notably at the November 12 JCMB
meeting. END COMMENT.
SIPDIS
SENSITIVE, SIPDIS
DEPT FOR SCA FRONT OFFICE (DAS GASTRIGHT),SCA/A, AND EB/ODF
DEPT FOR ISN/ECC:JCOLLINS
DEPT PASS AID/ANE, USTR, AND OMB:PCALBOS
TREASURY FOR LMCDONALD, JCIORCIARI, AND ABAUKOL
NSC FOR AHARRIMAN
E.O. 12958:N/A
TAGS: EAID EFIN AF
SUBJECT: DEPUTY FINANCE MINISTER SHAHRANI - BUDGET
EXECUTION IMPROVED, BUT COULD BE BETTER
(U) This cable contains SENSITIVE BUT UNCLASSIFIED Information.
Please protect accordingly. Not for Internet Distribution.
1.(SBU) SUMMARY: Deputy Finance Minister Wahidallah Shahrani told
ECON Counselor on October 30 that the Finance Ministry recognizes
the GOA's budget execution problem and is proactively engaged to
improve the capacity of line-ministry procurement and financial
management staff. He blamed poor leadership in certain line
ministries and ineffective donor technical assistance for the poor
rate of disbursement of donor contributions to the GOA's development
budget. Nonetheless, he stressed that the GOA is spending money
faster than last year's pace. Budget execution will be a central
theme of the upcoming November 12 Joint Coordination and Monitoring
Board (JCMB) meeting. Despite Shahrani's attempt to shape the
discussion, we anticipate that the finance ministry will face some
criticism for its slow disbursement rates to line ministries. END
SUMMARY.
2.(SBU) DFM Shahrani acknowledged to ECON Counselor that development
budget execution would be a central issue in the upcoming November
12 JCMB (i.e., joint Afghan-Donor London Compact coordination)
meeting. While the government got off to a slow start because of
parliament's delayed passage of the budget, some line-ministries,
and the government as a whole, are outperforming last year's
procurement pace, he stated. For the first four months of this
year, the GOA has spent 27% of its development budget, compared to
12.5% of the development budget spent over the same period last
year. For this entire fiscal year, Shahrani projected a 60%
expenditure rate, compared to 44% last year. Afghanistan's fiscal
year begins in March.
3.(SBU) Shahrani assured ECON Counselor that the Finance Ministry is
fully aware of the seriousness of the perception among donors that
the GOA is not moving its development budget quickly enough. MOF
officials have been working closely with underperforming line
ministries, like the Energy Ministry, on procurement and financial
management, and are seeing some improvement. The Finance Ministry,
he said, also conducted two training seminars for procurement
officials earlier in the year.
4.(SBU) Shahrani stressed that capacity building in the line
ministries and the Finance Ministry itself is a major challenge. He
commented that too many foreign advisors provided by donor countries
work independently of Afghan employees in the ministries, and never
train these Afghan colleagues. When they leave the ministry, the
Afghans are unable to replace the foreigner. He reiterated Finance
Minister Ahady's preference that donors pay for regional advisors
(e.g., Indians or Sri Lankans) who are more likely to stay for
longer periods and work more closely with local staff. Shahrani
also made a pitch to be allowed to pay higher salaries to younger,
better-educated Afghans to retain them in government jobs, noting
that GoA retention of employees following training is a critical
issue. Finally, he said that capacity is improving in ministries,
like Communications and Rural Development, where ministers are
showing strong leadership.
5.(SBU) COMMENT: Shahrani, one of the GOA's sharper senior economic
officials, recognized the opportunity to try to shape the coming
JCMB debate on the GOA's poor performance on budget execution by
trying to lay blame on poor donor and line-ministry performance,
while emphasizing the finance ministry's proactive approach to the
problem and appealing for donor support. However, we believe the
Finance Ministry shares responsibility for not disbursing funds to
line ministries' requests for payment as quickly as it could, and
needs to play a strong leadership role in engaging with and
developing capacity with line Ministries. We will explore ways to be
supportive, including shaping discussion with UNAMA and other donors
through the JCMB process, and notably at the November 12 JCMB
meeting. END COMMENT.