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Information about CoverttoOvert

Published on February 4, 2008

Author: Taddeo


From Covert to Overt External Financing:  From Covert to Overt External Financing Michael Carnahan 15 September 2004 Afghan Context:  Afghan Context How was expenditure financed Covert Financing Deficit Financing Questionable Mandate Divided Cabinet De jure centralised De facto federal/decentralised Rest of talk:  Rest of talk Revenue Operating budget SY 1381 (02/03) SY 1382 (03/04) Development Budget Evolution over time Revenue 1 - Tribute:  Revenue 1 - Tribute From tribute to taxation Herat Northern Afghanistan Setting the domestic revenue target How much is already being collected Revenue 2 – customs reforms:  Revenue 2 – customs reforms Previous system Developing reform proposals Organised opposition Finding a compromise Implementing the compromise solution The role of TA in customs reform Operating Budget – SY 1381:  Operating Budget – SY 1381 What level of precision can be expected Technically? Politically? Different audiences Domestic International What will get funded vs what builds capacity Operating Budget – SY 1382:  Operating Budget – SY 1382 Actual decision-making process Budget as a tool of policy Forcing prioritisation Budget as a teaching device Benefits in future years Operating Budget is Ministers’ priority Choose staff numbers and pay average – total less than 20:  Choose staff numbers and pay average – total less than 20 Operating Budget execution:  Operating Budget execution Initial salary payments The legacy of early actions FMIS The importance of context Slow start to 1382 execution Development expenditure:  Development expenditure Someone else’s shopping list The wedding registry The sector/program approach MTEF/Budget support 1. Someone else’s list:  1. Someone else’s list Just try to find out what is actually happening Supply/donor/agency driven Hostility towards anything else No prioritisation Government played off against itself Necessary evil Not a budget, but need to pretend 2. The wedding registry:  2. The wedding registry Predominantly demand driven Single funding/appeal document Attempts to corral donors Funders provided with a prioritised list and asked to choose off the list Discipline only maintained through moral authority Development partners and line ministries collude to subvert discipline 3 & 4 Next steps (theoretical):  3 & 4 Next steps (theoretical) Sector wide approach Projects on the wedding registry put in a coherent context Donors asked to put cash in for the dining setting, not just buy some plates MTEF/Budget support All the sectors are individually at stage three Operating budget support is included Next steps (actual):  Next steps (actual) Ongoing problems with: Government (line Ministry) ownership Donor misbehaviour Solution “Core budget” (funds controlled by government) “External budget” (funds spent outside government accounts Goal – replace “external” with “core” Perennial Problems:  Perennial Problems Planned/Committed/Disbursed Disbursed by who Lack of a pipeline of projects Development expenditure will be close to zero in the first 18 months Recognising this may guarantee that it isn’t zero in the next 18 months! Conclusions:  Conclusions Lots of progress – lots more still to be done Public finance has driven reforms And will continue to do so once Parliament sits Focus needs to be on implementation for both revenue and expenditure

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