This book, which reflects the IMF staff's work in Afghanistan from early 2002 through the first quarter of 2004, provides an overview of the institutional and economic achievements in Afghanistan in the post-Taliban period, that is, from late 2001 to early 2004. During this period, the staff focused on helping (often under difficult circumstances) the Afghan authorities quickly establish abasic framework for economic management and policies, including rebuilding key institutions. Reconstructing Afghanistan describes the strong economic recovery that took place during 2002 and 2003; traces the formulation and implementation of the government’s budgetary policy; discusses the progress made in rebuilding fiscal institutions; and outlines the challenges and issues that the authorities faced in the area of monetary and exchange rate policy.
A3.1 Afghanistan’s 2002/03 Budget Compared with Budgets of Selected Low-Income Countries
A3.2 Sample of Low-Income Countries Used for Comparison
A4.1 Tax Summary
The following symbols have been used throughout this paper:
...to indicate that data are not available;
—to indicate that the figure is zero or less than half the final digit shown, or that the item does not exist;
—between years or months (for example, 2002—03 or January—June) to indicate the years or months covered, including the beginning and ending years or months;
/ between years (for example, 2002/03) to indicate a crop or fiscal (financial) year.
“Billion” means a thousand million.
Minor discrepancies between constituent figures and totals are due to rounding.
The term “country,” as used in this paper, does not in all cases refer to a territorial entity that is a state as understood by international law and practice; the term also covers some territorial entities that are not states, but for which statistical data are maintained and provided internationally on a separate and independent basis.
This study was prepared by an IMF staff team headed by Adam Bennett. Team members included Louis Dicks-Mireaux, Felix Fischer, Thierry Kalfon, Ron van Rooden, and Bruno de Schaetzen. Reconstructing Afghanistan reflects the staff’s work in Afghanistan beginning in early 2002, with the establishment of the interim administration headed by President Hamid Karzai, through the first quarter of 2004. During this period, the staff focused on helping (often under difficult circumstances) the Afghan authorities quickly establish a basic framework for economic management and policies, including rebuilding key institutions, notably the Ministry of Finance and the central bank, Da Afghanistan Bank. A preliminary version of this study was first published during the Annual Meetings of the IMF and the World Bank in Dubai in the fall of 2003, in the context of the IMF’s 2003 Article IV Consultation with Afghanistan.
The authors are grateful for the excellent cooperation received from the Afghan authorities. In particular, our thanks go to Ashraf Ghani, Minister of Finance of Afghanistan (2002—04); Anwar Ul-Haq Ahady, Governor of Da Afghanistan Bank (2002—04); and Michael Carnahan, Larry Seale, and Martin Dinning, three key advisors in the Ministry of Finance and the central bank. The authors are also grateful to the United Nations Office on Drugs and Crime, which provided valuable information on and useful insights into the illicit drug sector in Afghanistan. The study covers the key areas in which the IMF staff has made important contributions toward the reconstruction of Afghanistan. In this regard, the authors would like to acknowledge the work of Paul Chabrier, Jean Le Dem, and Milan Zavadjil, who respectively led the staff team before Adam Bennett took over in the spring of 2003. The authors also acknowledge the work of the staff members of the IMF’s functional departments who have provided technical assistance to the Afghan authorities in their various areas of expertise, especially Steven Symansky and Emil Sunley of the IMF’s Fiscal Affairs Department, Ake LÖnnberg of the Monetary and Financial Systems Department, Tobias Asser of the Legal Department, and Adriaan Bloem and Vilay Soulatha of the Statistics Department. The authors are also grateful for helpful comments and suggestions received from our colleagues in the IMF’s Middle East and Central Asia Department, especially George Abed and Mohammad Shadman-Valavi. The authors are indebted to Sheila Tomilloso for providing invaluable secretarial assistance, both at the IMF headquarters in Washington and in Kabul, and to Archana Kumar of the IMF’s External Relations Department for editing this book and coordinating its publication.
The views expressed here are those of the authors and do not necessarily reflect those of the IMF, its Executive Directors, or the Afghan authorities.
List of Acronyms
Afghan Aid Coordination Agency
Afghanistan’s Financial Management Information System
Afghan Interim Administration
Afghan Interim Administration Fund
Administrative Reform and Civil Service Commission
Afghanistan Reconstruction Trust Fund
Asian Development Bank
Afghan Transitional Administration
Commercial Interest Reference Rates
Corporate income tax
Central Statistics Office
Da Afghanistan Bank
Economic Cooperation Organization
Food and Agriculture Organization
Grant Management Unit
International Accounting Standards
Illicit Crop Monitoring Program
International Development Association
International Security Assistance Force
Islamic Development Bank
Immediate and Transitional Assistance Programs
Law and Order Trust Fund for Afghanistan
Large taxpayer unit
Ministry of Finance
National Cash Registry
National Development Budget
National Development Framework
Poverty Reduction and Growth Facility
Personal income tax
Real time gross settlement
Transitional Assistance Programs for Afghanistan
Taxpayer identification number
United States Agency for International Development