Integrity Score 380
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Progress and Pitfalls of “Peace-Building”
in Afghanistan continues....
In terms of economic governance and public finance management,
since March 2004, the Government has been implementing an International Monetary Fund (IMF) Staff-Monitored Program (SMP).
The program aims to maintain macro-economic and financial stability,
pursue essential structural reforms, and build statistical capacity.
Performance during the first year of the SMP was strong, and most of the
targets and structural benchmarks were met. Output continued to grow steadily. Core inflation remained limited. Money growth and fiscal revenue were in line with programme projections. In a SMP review, most structural benchmarks were met. The review stressed that this performance was promising well for the long-term course of the economy.
Nonetheless, the SMP report highlighted the following challenges to the
economy: (i) pervasive drug economy; (ii) a weak enabling environment
for private sector development; (iii) poor infrastructure; (iv)significant
fiscal pressures; (v) high levels of poverty; (vi) an underdeveloped financial sector, and (vii) low administrative capacity with governance concerns.
Budget preparation and execution have improved significantly,
particularly with the introduction of a core budget in 2004/5 that
consolidated the operating budget with the development budget.
Domestic revenue increased from USD 132 million in 2002/3 to USD
207 million in 2003/4 and to USD 269 million in 2004/5, equivalent to
4.5 percent of licit GDP. This figure is projected to rise to 5.4 percent of
GDP in 2005/6, still less than any other countries.
To be continued.....