prioritization and implementation plan - Cooperazione Italiana allo ...

2. Programs based on significant analytical and
feasibility work have a higher chance of success in
the shorter term and also merit attention. This is
especially so where they are leveraging the
successes of existing programs.
3. Budgeting and planning needs to be
strengthened for both on and off-budget programs.
Arrangements for multi-year budgeting, multi-year
obligations, and annual appropriation and
commitment controls remain inadequate. There
remain a number of inefficiencies that contribute to
low budget execution performance, including
limited capacity for planning and project
management, fragmented budgeting between
Government and donors (and even amongst
donors), and weaknesses in medium-term fiscal
forecasting (such as grant forecasting from
donors). More rigorous budget planning and
program costing, and a more flexible approach to
the reprioritization of both on and off-budget funds
from poor performing programs to high performing
programs, will contribute to improved budget
execution rates.
4. Implementation arrangements for all National
Priority Programs need to be in line with broader
improvements to the public financial management
system, but in the short-term, management of
fiduciary and development risks are paramount. A
number of existing programs have what might be
termed “work arounds”, such as the use of contract
employees in the Ministries. While these need to
be integrated into government systems in the longrun,
where they pose small fiduciary risks now but
are supporting good budget-execution, they should
not be removed. Removing them would severely
affect the implementation of a number of key
National Priority Programs. If the risks are not
known, then a rapid independent assessment needs
to be undertaken.
5. Resources concentrate on key implementing
Ministries. Ministry capacity remains low, and a
certain amount of “projectizing” of the National
Priority Programs is needed to ensure the timely
execution of these activities. Project
implementation units need to be located within
Ministry structures, and financial control must
remain with the Ministry. However, broader
capacity to manage the financial aspects of the
National Priority Programs will take several years.
Therefore, broader capacity-building of Ministries
needs to be undertaken in parallel to executing the
programs agreed at the Kabul Conference.
Emphasis needs to be on increasing capacity in
budget planning, procurement, treasury functions,
and, in particular, budget execution.
6. Action and time-based outputs (milestones)
should be used to support implementation, but not
as the primary basis to assess performance.
Intended results from program activities, in terms
of outcomes, are based on high level assumptions,
including good implementation performance. It
needs to be understood that outcome targets are
indicative and will have to be updated through an
iterative process over time. Good use of available
financial and non-financial information in the
management of programs is lacking and should be
improved.
Absorptive capacity, fiduciary, and development
risks
Afghanistan’s absorptive capacity - its ability to do
more - is expanding (see figure one below), and
inherent fiduciary and development risks are
falling rapidly. But there remain significant
challenges in these areas, with limited capacity in
some line ministries to plan the continued
perception of financial misuse amongst the public
and international community. Governance Cluster
programs will contribute to increased Government
capacity and transparency and accountability,
which will further reduce absorptive capacity,
fiduciary, and development risks in the future.
However, these areas require sustained and
consistent support if they are to achieve positive
results.
Analysis reveals that weak absorptive capacity is
associated with high aid levels; constrained levels
of private sector capacity; and low levels of
institutional capacity. Analysis also suggests that
Afghanistan is receiving arguably sufficient levels
of aid in aggregate, given the quality of
governance and public financial management.
There may, however, be a case for some additional
aid or reallocation of current resources to priorities
that are “owned” by the Government to emphasize
development effectiveness.
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