Report on Progress Toward Security and Stability in - United States ...

In November 2011, the Executive Board of the International Monetary Fund (IMF) approved a
new three-year, $133.6M Extended Credit Facility program for Afghanistan, which is intended to
support strengthened economic and financial governance. Following the collapse of Kabul Bank,
the IMF required the Afghan Government to place Kabul Bank in receivership and take a series
of steps to strengthen governance of the banking system prior to approval of a new program. In
addition to the prior actions for approval of the program, the Afghan Government and IMF staff
developed a 30-point banking sector action plan for the government to implement between
spring 2011 and March 2013. Adherence to the conditions of the IMF program allows the
Afghan Government to demonstrate commitment to economic and financial reforms and
maintain the support of international donors, some of whom had withheld aid for the Afghan
Government until a new IMF program was in place.
The Afghan Government continues to work with the international community to garner support
for the 22 National Priority Programs (NPPs) agreed upon at the 2010 Kabul Conference. The
NPPs outline strategic security, governance, development reform, and service delivery priorities
over the next three years. The NPP process resumed after a 10-month delay stemming from the
Kabul Bank crisis 27
The international community had collectively determined that it only endorse NPPs that are
feasible and that they were willing to fund, reflecting a renewed commitment to the NPPs and
the Kabul Process. The current level of endorsement of 50 percent of NPPs is encouraging;
however, the priority programs remain significantly behind schedule, as all NPPs were due to be
endorsed by July 2011. The Afghan Government has committed to finalizing the remaining
NPPs prior to the July 2012 Tokyo conference. At the July Conference, the international
community will expect Afghanistan to present a prioritized and sequenced set of NPPs, given
sufficient funds will not be available for all projects at the same time.
5.2: ASSESSMENT OF SUB-NATIONAL GOVERNANCE
The institutional structure of sub-national governance in Afghanistan is provided by the Afghan
Constitution, the extant Local Government Law, the Sub-National Governance Policy, Public
Financial Management Laws and the organizational and administrative structure of the
Independent Directorate for Local Governance (which includes Provincial Governors’ Offices,
District Governors’ Offices, and provincial municipalities as structures). The result is a highly
centralized structure for sub-national governance in which budgeting is done by central
Ministries and the Ministry of Finance. Provincial and district administrations, under the
provincial and district governor, provide coordination, planning inputs, and monitoring of
services delivered by Ministries. Implementation of services is primarily done by central
ministries, which are expected, over time, to delegate more implementation responsibilities to the
provincial level, increasing the scope for sub-national planning and accountability.
Sub-national bodies at provincial and district levels have established structures in most regions
but remain unable to provide many basic government services. The Afghan Government
27 The Joint Coordination Monitoring Board is the body responsible for overseeing the implementation of the Afghan
Compact, and is composed of Afghan Government officials, members of the international community, NATO/ISAF,
and national representatives from the region.
71