With support from: 57508 Australia Bahrain Belgium Brazil Afghanistan Reconstruction Trust Fund Canada Denmark Quarterly Report to ARTF Donors European Commission Finland September 23, 2009 to December 21, 2009 France Germany India Iran Ireland Italy Japan South Korea Kuwait Luxemburg Netherlands New Zealand Norway Poland Portugal Russia Saudi Arabia Prepared by the ARTF Administrator Spain ARTF Management Committee: Asian Development Bank, Islamic Development Bank, United Nations Development Program, World Bank Sweden Switzerland Turkey United Kingdom United States Afghanistan Reconstruction Trust Fund ARTF Quarterly Report: December 21, 2009 CURRENCY EQUIVALENT (Effective December 21, 2009) Currency Unit = Afghani (AFN) US$ 1 = 48.45 AFN GOVERNMENT'S FISCAL YEAR (SY1388) March 21, 2009 - March 20, 2010 Solar Year Period SY1381 March 21, 2002 ­ March 20, 2003 SY1382 March 21, 2003 ­ March 19, 2004 SY1383 March 20, 2004 ­ March 20, 2005 SY1384 March 21, 2005 ­ March 20, 2006 SY1385 March 21, 2006 ­ March 20, 2007 SY1386 March 21, 2007 ­ March 20, 2008 SY1387 March 20, 2008 ­ March 20, 2009 SY1388 March 21, 2009 ­ March 20, 2010 Contact Information for the ARTF World Bank Kabul Office Street 15, House 19 Wazir Akbar Khan Kabul, Islamic Republic of Afghanistan Telephone: 0700-27-60-02 Nicholas Krafft ­ Country Director ­ nkrafft@worldbank.org Josie Bassinette­ Lead Operations Officer ­ jbassinette@worldbank.org Hugh Riddell ­ ARTF Coordinator ­ hriddell@worldbank.org Paul Sisk ­ Task Team Leader, Recurrent Cost Financing - psisk@worldbank.org Nancy Zhao ­ Operations Advisor, Investment Financing - nzhao@worldbank.org N. K. Thondaiman ­ Financial Management Analyst ­ nthondaiman@worldbank.org All documents are available on: http://www.worldbank.org/artf i ARTF Quarterly Report: December 21, 2009 ABBREVIATIONS AND ACRONYMS AEP Afghan Expatriate Program MoF Ministry of Finance AFMIS Afghanistan Financial Management MoFA Ministry of Foreign Affairs Information System MoPW Ministry of Public Works AFN Afghanis ­ Local Currency of Afghanistan MRRD Ministry of Rural Rehabilitation and AISA Afghanistan Investment Support Agency Development ARDS Afghanistan Reconstruction and MUDH Ministry of Urban Development and Housing Development Services NEEP National Emergency Employment Program ARTF Afghanistan Reconstruction Trust Fund NEEPRA National Emergency Employment Project for CAWSS Central Authority for Water Supply and Rural Access Sewerage NGO Non-Governmental Organization CDC Community Development Council NPBSE Non-pension-based Salary Expenditure CDP Community Development Plan NPP National Priority Program DAB Da Afghanistan Bank NRAP National Rural Access Program EQUIP Educational Quality Improvement Program NSP National Solidarity Program FS Fiduciary Standards O&M Operations and Maintenance GoA Government of Afghanistan PAM Performance Assessment Matrix IARCSC Independent Administrative Reform and PBSE Pension-based Salary Expenditure Civil Service Commission PFEM Public Finance and Expenditure Management IDA International Development Association PFM Public Financial Management IMF International Monetary Fund PPU Procurement Policy Unit KfW Kreditanstalt für Wiederaufbau PRR Priority Reform and Restructuring LEP Lateral Entry Program SOE Statement of Expenditures MA Monitoring Agent SWAP Sector wide approach MC Management Committee TAFS Technical Assistance and Feasibility Studies MCP Management Capacity Program TSA Treasury Single Account MDG Millennium Development Goal UNAMA United Nations Assistance Mission in MEW Ministry of Energy and Water Afghanistan MFI Microfinance Institution UNDP United Nations Development Program MISFA Microfinance Investment and Support UNOPS United Nations Office for Project Services Facility for Afghanistan USAID United States Agency for International MoC Ministry of Communication Development MoE Ministry of Education WB World Bank ii ARTF Quarterly Report: December 21, 2009 TABLE OF CONTENTS I. Administrator's summary of Q3 SY1388 1 II. The ARTF in relation to the budget and the flow of funds 5 III. SY1389 ARTF Incentive Program; Administrator's Technical Review 7 IV. Sector Wide Approach ­ Afghanistan Readiness Assessment; Executive Summary 15 V. ARTF Recurrent Cost Financing 22 VI. ARTF Fiduciary Framework 27 STANDARD ANNEXES ANNEX 1: Status of ARTF Investment Portfolio 32 ANNEX 2: ARTF Recurrent Cost Monitoring 73 ANNEX 3: ARTF Financial Tables 80 iii ARTF Quarterly Report: December 21, 2009 I ADMINISTRATOR'S SUMMARY OF Q3 SY1388 1. Donor funding During the third quarter of SY1388, donors paid US$246 million into the ARTF, taking total contributions for the year to US$600 million. Overall pledges for SY1388 increased to US$717 million, ARTF's highest level yet. Of this, 48 percent (US$341 million) is expected to be preferenced for ongoing national programs. Figure 1: ARTF Contributions and active ARTF donors SY1381-SY1388 (projected) $800 25 $700 20 $600 $500 15 $400 Donor resources $300 10 Active donors $200 5 $100 $0 0 SY1381 SY1382 SY1383 SY1384 SY1385 SY1386 SY1387 SY1388 projected Figure 1 above highlights the positive trend in donor contributions to the ARTF. Over the last eight years, contributions have increased on average 23 percent per annum. 2. New ARTF Financing No new ARTF financing proposals were considered by the Management Committee in Q3 SY1388 because of the delay in the completion of the SY1387 project audit reports by the Control and Audit Office (CAO). All pending audits were completed and received by the Administrator on January 21, 2010. The Management Committee will therefore resume its consideration of new ARTF funding proposals at its meeting in February 2010. With an international firm of auditors now in place, the delay in submitting audit reports should not recur. 3. ARTF portfolio review As of end Q3, active commitments for recurrent costs stood at US$1.9 billion and active investment project commitments just over US$1.0 billion. The recurrent cost window has disbursed 95 percent of the total grant value. The investment window of 19 active grants has disbursed US$770 million or 75 percent of the combined total. The total value of ARTF investments to date is nearly US$1.3 billion. For SY1388, a recurrent cost financing ceiling of US$290 million was approved by the ARTF Management Committee. This is based on the successful outcome of the first round of the ARTF Incentive Program (IP). Under the IP, recurrent costs are set to decline by an automatic US$25 million per year, but an annual top-up in the form of incentive funds are available based on the performance of the government against reform benchmarks. The US$290 million ceiling for this year reflects a baseline of US$250 million (down from US$276 million in SY1387) and additional incentive funds of US$40 million. Thus far, the 1 ARTF Quarterly Report: December 21, 2009 Management Committee has approved two allocations to the recurrent cost window of US$72.5 million. All of the US$143 million has been disbursed (see figure 2). The remaining half year allocation to the ARTF recurrent cost window will be made in the last quarter. Figure 2: ARTF Recurrent Cost Window commitments and disbursements since SY1382 $350 Recurrent window commitments Recurrent window disbursements $300 $250 $200 $150 $100 $50 $0 SY1382 SY1383 SY1384 SY1385 SY1386 SY1387 SY1388 ytd Twenty ARTF project investment grants totaling US$1.0 billion are under implementation. The grants are implemented by 14 line ministries, concentrated in the Ministry of Rural Rehabilitation and Development (MRRD), the Ministry of Energy and Water, and the Ministry of Education (MoE). In value terms the rural development sector, and in particular the National Solidarity Program, dominate the portfolio. Figure 3 shows the allocation of ARTF active investments by sector as of December 21, 2009. Figure 3: ARTF active investments by sector Capacity Justice Private Sector Education Development 3% Development 9% Urban 5% 18% Development 6% Energy 11% Agriculture & Rural Development 48% ARTF projects are disbursing well, as demonstrated in Figure 4 below. In SY1388, the 20 active projects have disbursed US$210 million through December 21, as compared to US$250 million for the whole of SY1387. 2 ARTF Quarterly Report: December 21, 2009 Figure 4: Active ARTF Investments, Commitments and Disbursements $350 $300 Investment Window Commitments Investment Window Disbursements $250 $200 $150 $100 $50 $0 SY1382 SY1383 SY1384 SY1385 SY1386 SY1387 SY1388 ytd Nevertheless, the Management Committee requested the Administrator to undertake an analysis of the accumulated un-disbursed project balances. These balances reflect funds that the Management Committee has committed to projects but have not yet been disbursed. Increasing amounts of undisbursed funds could indicate that some ministries are struggling to absorb project funds. The Administrator's analysis, as presented to the Management Committee, made five main points: · The ARTF project disbursement ratio ­ at 75 percent of committed value ­ is better than most World Bank portfolios in the region. · Accumulating un-disbursed balances derive mainly the growth in ARTF allocations to investment projects over the past eight years. This growth, accompanied by an expanding range of sectors and line ministries means there are different disbursement dynamics than in previous years ­ in particular there are now more projects in slower disbursing sectors. · Of the total value of undisbursed balances 84 percent are related to projects which have more than one year remaining to complete project activities. The portfolio is quite young and projects typically implement over three to four years. Therefore the ARTF investment window can be expected to have a certain balance that is un-disbursed balance at any moment in time. · In the course of regular World Bank portfolio reviews, issues related to slow disbursements or problem projects are carefully reviewed with project teams in the line ministries. Outstanding issues are brought to the attention of the Ministry of Finance. The findings of the portfolio review were summarized in the September 2009 quarterly ARTF report. · Un-disbursed ARTF cash balances are managed by the World Bank treasury department. Funds are invested to match the ARTF's cash management needs, and any investment yields are returned to the ARTF to increase the funds available. This year, the Management Committee approved a plan to invest a small portion of the cash balances in higher yielding securities. It was able to approve such a plan given the extension of the ARTF through June 2020, the increasing value of the overall fund, and the ability to make some reasonable assumptions of financial sources and uses in the coming period. The Management Committee requested that the Administrator keep it informed of any `problem projects' that risk substantially slowing ARTF disbursements. 3 ARTF Quarterly Report: December 21, 2009 4. ARTF Quarterly Donor Meeting On November 10, 2009, the representatives of 16 ARTF donor countries met in Kabul with the Management Committee and government representatives led by the Ministry of Finance. The agenda included a status report on the ARTF, a presentation by the government on the draft ARTF Financing Strategy (to be presented in the next ARTF quarterly report), the preliminary findings of the SWAp Readiness Assessment (see section IV) and the findings of the MRRD investigation into corruption allegations under the NSP. The full meeting minutes are available on the ARTF website at www.worldbank.org/artf. 4 ARTF Quarterly Report: December 21, 2009 II THE ARTF IN RELATION TO THE BUDGET AND FLOW OF FUNDS 1. National budget structure The national budget is the main mechanism for translating the Afghanistan National Development Strategy (ANDS) into policy and implementation. The national budget consists of a Core Budget and an External Budget (see Figure 5 for SY1387). The Core Budget tracks those funds that flow through the government's treasury system and includes core operating expenditures and core development expenditures. The External Budget includes expenditures disbursed directly by donors outside the treasury system. The External Budget (according to the budget document) represents about seventy percent of all expenditures in the country. Even this may represent a serious underreporting of the external budget. All ARTF investments utilize the treasury system and are reflected in the Core Budget. Figure 5: Structure of the National Budget- SY1387 Actual Resources Expenditures Domestic Revenues 13% Operating Grants to Expenditures Operating 21% Budget 9% Grants/Loans Development to Expenditures External Development 14% External Budget Budget Budget 65% 64% 14% Source: Ministry of Finance 2. SY1388 Mid-Year Budget Review The SY1388 mid-year budget review was approved in the first week of January 2010 ­ and is reflected in Table 1 below. The delay was mainly a result of the slow cabinet nomination process. The government's revenue target in the SY1388 budget was revised upwards to AFN 52.5 billion (US$1,009 million) 1 from the original budget of AFN 50.7 billion (US$972 million). The IMF's Poverty Reduction and Growth Facility (PRGF) has set a revenue target of AFN 54.5 billion (US$1,048 million) for SY1388 ­ which will also apply for the ARTF Incentive Program's automatic revenue matching scheme. Core operating expenditures budgeted for SY1388 were increased to AFN 97.0 billion (US$1.9 billion) from the original amount of AFN 93.9 billion (US$1.8 billion). The increase was mainly for higher security sector expenditure. The budgeted core development expenditure was increased to AFN 118.9 billion (US$2.3 billion) from AFN 59.1 billion (US$1.1 billion). The sharp increase occurs almost every year after including undisbursed allotments carried-forward from the previous year. 1 This section uses the government's official exchange rate as of the Mid Year Review of the Budget in 2009 of AFN52 = US$1. 5 ARTF Quarterly Report: December 21, 2009 Table 1: ARTF and the Core Budget: SY1381-SY1388 (US$ million) SY1381 SY1382 SY1383 SY1384 SY1385 SY1386 SY1387 SY1388 2002/3 2003/4 2004/5 2005/6 2006/7 2007/8 2008/9 2009/10 <----------------------------Actual---------------------------------> MYR A. Domestic Revenues 131 208 268 416 578 674 814 1,009 B. Expenditures 346 613 965 1,091 1,570 1,986 2,248 4,152 Operating Expenditures 346 448 561 643 865 1,019 1,358 1,866 Wage and Salaries n/a 282 373 411 530 671 940 1,165 Goods and Services n/a 87 111 143 248 254 314 270 Capital Expenditure n/a 61 41 48 40 28 35 28 Other n/a 18 35 42 47 66 69 400 Development Expenditures 0 165 404 448 705 967 891 2,286 C. Fiscal Balance (before grants) -215 -406 -697 -675 -992 -1,312 -1,434 -3,142 D. Donor Grants 208 293 487 725 715 694 1,845 n.a ARTF 59 230 294 337 465 517 576 n.a Recurrent 59 214 235 253 299 291 276 n.a Investment 0 16 59 84 166 226 300 n.a Other 1/ 149 63 193 388 250 177 1,269 n.a E. Fiscal Balance (after grants) -7 -113 -210 50 -277 -618 411 n.a F. Financing 7 113 210 -50 277 618 n.a n.a External Financing (Net) n/a 100 309 107 27 169 n.a n.a Sale of Non-Financial Assets n/a 56 40 1 n.a n.a Domestic Financing (net, including adjustment) n/a 13 -99 -213 210 448 n.a n.a Memorandum Items External Budget 1,165 1,612 2,322 4,219 3,618 9,282 4,101 n.a GDP 4,007 4,436 5,409 6,484 7,725 9,662 11,713 12,904 Exchange Rates 45 49 48 50 50 50 51 52 Domestic Revenues (% GDP) 3.3% 4.7% 5.0% 6.4% 7.5% 7.0% 6.9% 7.8% Expenditures (% GDP) 8.6% 13.8% 17.8% 16.8% 20.3% 20.6% 19.2% 32.1% Fiscal Deficit (before grants, % GDP) -5.4% -9.1% -12.9% -10.4% -12.8% -13.6% -12.2% -24.4% 1/ Financing is still very preliminary Source: Ministry of Finance, World Bank, IMF 3. Preliminary results of the first nine months of SY1388 Preliminary results show that domestic revenues reached AFN 43.8 billion (US$843 million), 84 percent of the revised annual target. Domestic revenues in the first nine months were higher by 60 percent compared to the same period in SY1387, and exceeded total revenue collected in SY1387 (AFN 41.4 billion). A two percent Business Receipt Tax (BRT) on imports introduced in SY1388 and revenues related to FLGE (the Fuel and Liquid Gas Enterprise, a state fuel company under the control of the Ministry of Commerce) both contributed to the increase in domestic revenues in SY1388. 2 Core operating budget expenditure was AFN 58.1 billion (US$1,118 million), while core development expenditure was AFN 30.1 billion (US$594 million), representing only 26 percent of the revised development budget. The causes of low development budget execution in Afghanistan are complex, but are chiefly the result of unrealistic budget formulation, poor implementation capacity in line ministries and habitual delays in the delivery or availability of donor funds. 2 Both of these policy measures were included as benchmarks in the SY1388 ARTF Incentive Program. 6 ARTF Quarterly Report: December 21, 2009 III THE ARTF INCENTIVE PROGRAM SY1389 Each year, the Administrator is responsible for delivering a technical review of the government's performance under the ARTF Incentive Program. The technical review of the SY1388 Incentive Program was delivered in the June 2009 quarterly report. In this quarter, the Administrator completed the second technical review and has delivered that and its recommendation to the Management Committee for the recurrent cost window ceiling in SY1389. The Administrator's Technical Review is reproduced below for the information of all donors. ADMINISTRATOR'S TECHNICAL REVIEW Preamble 1. In December, 2008, ARTF Donors agreed with the Government of Afghanistan to establish the ARTF Incentive Program within the Recurrent Cost (RC) Window of the ARTF. The objective of the Incentive Program is to support the Government's reform agenda, in particular progress toward fiscal sustainability. The Incentive Program offers incentive funds to top-up the ARTF RC Window baseline financing for SY1389 in the amount of US$60 million. The funding is allocated through two schemes: a structural reform scheme (accounting for three quarters of the available incentive funds) and the revenue matching grant scheme (accounting for one quarter of the available incentive funds). 2. Following a series of Working Group discussions with donors, the Ministry of Finance and the World Bank (as Administrator) signed a Memorandum of Understanding (MoU) on August 1, 2009. The MoU included the SY1389 benchmarks and the review protocol. It stipulated that all supporting evidence for the fulfillment of the structural reform benchmarks would be delivered to the World Bank not later than November 30, 2009. The Technical Review would be delivered to the ARTF donors of the Working Group3 before being presented to the Government of Afghanistan within 15 business days after the submission of all supporting evidence for all benchmarks or no later than mid-December 2009. 3. This Technical Review has been undertaken by the World Bank as Administrator, with support of sector experts from ARTF donors. Part I of this Technical Review describes in detail the assessment for the SY1389 structural reform program based on the evidence provided. Part II of this Technical Review summarizes the recommendation to the ARTF Management Committee with regard to the amount of the top-up of the SY1389 ARTF RC window ceiling. Part I: Performance Assessment against SY1389 Benchmarks 4. This Technical Review provides the performance assessment against the SY1389 structural benchmarks of the ARTF Incentive Program only. Structural reforms for the SY1389 Incentive Program tracked government commitments under three reform areas (with three respective benchmarks under 3 EC, US, UK, Italy & Germany. 7 ARTF Quarterly Report: December 21, 2009 each theme): A. Enhancing Domestic Revenue Generation, B. Improving Public Sector Governance and C. Enabling Private Sector Development. 5. All verification material to demonstrate the fulfillment of structural benchmarks was submitted by the Government, as per the agreed schedule. The delivered evidence was then assessed by experts of the ARTF donors and the World Bank and in some cases went through several rounds of clarification and adjustment. The benchmarks were negotiated with close involvement of the relevant line ministries/agencies and the Working Group of donors. Line agencies involved included the Ministry of Finance, the Ministry of Transport and Civil Aviation, the Ministry of Commerce and Industries, the Ministry of Mines, the Independent Administrative Reform and Civil Service Commission, the High Office of Oversight and Anti-Corruption (HOO) and the Board of the Da Afghanistan Breshna Sherkat (DABS). 6. The Administrator's Technical Review assessed, based on the evidence received, that the Government of Afghanistan met all SY1389 ARTF structural benchmarks, as described in Table 2 below. On the benchmark: "progress on the DABS corporatization and governance" a revised plan - approved by the DABS Board - to reduce commercial and technical losses, including a timetable and action plan for the establishment of commercial activities and better customer services (see Annex II), is expected to be provided to the ARTF donors by end-March 2010. Part II: Recommendation on Incentive Fund Allocation for SY1389 7. The Administrator's Technical Review recommends that the ARTF Management Committee increase the SY1389 ARTF recurrent cost window ceiling from the baseline of US$225 million to US$270 million, reflecting an additional US$45 million for the Incentive Program structural benchmarks agreed in the MoU. 8. The assessment and recommendations based on the calibrated schedule of the Revenue Matching Grant Scheme will take place once actual revenue numbers are confirmed by the Treasury - i.e., after the close of the solar year (around March 20). This means the Revenue Matching Grant will be calculated and confirmed only after the SY1389 budget is passed by Parliament. 8 ARTF Quarterly Report: December 21, 2009 Table 2: SY1389 Structural Reform Matrix with Evidence Assessment a Theme A: Enhancing Domestic Revenue Generation Benchmarks Monitoring and Evaluation Evidence Status Assessment A1. Customs reforms: (i) The customs · The Afghan Customs Department (ACD) will · Evidence received. ACD provided the World · Met. department at MOF reports quarterly provide the World Bank team with the Bank with the quarterly reporting on key on an agreed set of key output quarterly reports of the defined output output indicators to calculate customs indicators, which will allow better indicators and together with the World performance indicators. The World Bank assessment of general progress made Bank Customs Experts will calculate the assesses the data as satisfactory. The b within customs administration , and (ii) customs performance indicators. These indicators were posted on the ACD web- ASYCUDA roll-out to Sher Kahn Bandar. indicators will be posted on the ACD web- page and a link to the web-page was page. provided. · The MOF/ACD will track the ASYCUDA roll- · Evidence received. The official letter from out to Sher Kahn Bandar. It will provide the DM Revenue and Customs informing us that World Bank with a progress report on the the ASYCUDA system is fully operational and roll-out. implemented as of November 19, 2009 at the Sher Khan Customs station (with the first electronic processed customs declaration attached). A2. Tax and Non-tax revenue transparency: · The MOF will provide the World Bank with · Evidence received. Copy of the MOU · Met. (i) A MOU on revenue collection is a copy of the signed MOU between MOF received in English and Dari. signed between MOF and Ministry of and MOTCA. Transport and Civil Aviation (MOTCA); (ii) Publication and posting on the · The World Bank will verify the posting of · Evidence received. Web-site links were MOF/ACD webpage of all fees and fees and processing charges and the provided for fees and processing charges processing charges at the Revenue and monthly detailed customs collection data and for monthly detailed customs collection Customs Offices; (iii) Monthly posting of on the MOF/ACD web-page. data. The World Bank assessed the data as detailed customs collection data (by satisfactory. c customs station ) on the MOF/ACD web-page. A3. Improving tax compliance: The number · The MOF/Afghan Revenue Department · Evidence received. Lists which identify · Met. of companies that are non-compliant (ARD) will provide the World Bank with a newly compliant companies from LTO and with the Business Receipt Tax (BRT) or list of compliant companies (with blacked MTO, amounting to 106 newly compliant Income Tax at the start of SY1388 is out names) for the beginning of 1388 and companies (out of 634) or a 17 percent 9 ARTF Quarterly Report: December 21, 2009 reduced by 10 percent by the third for Q3 1388 to allow for verification of increase in the number of compliant d quarter of SY1388. increase in compliant companies. companies. Theme B: Improving Public Sector Governance Benchmarks Monitoring and Evaluation B1. Asset declaration: (i) Asset declaration · The HOO confirms in a formal signed · Evidence received. World Bank received · Met. roll-out (with no less than 60 percent of statement to the World Bank team how Dari copies of 18 asset declarations from the current Cabinet Ministers many Cabinet members provided an asset Cabinet ministers, accompanied by a cover submitting their asset declarations), and declaration by November 30, 2009, if letter from HOO in Dari and English, detailing (ii) A draft implementation strategy for possible it lists the respective Cabinet that those reflect complete asset asset declarations (including verification members. declarations from 72 percent of all Cabinet procedures) is developed for Cabinet members. approval and shared with donors. · The HOO will circulate to ARTF donors and World Bank Experts a draft implementation · Evidence received. A revised draft strategy strategy for asset declarations (including on asset declaration implementation was verification procedures). The World Bank transmitted and went through several Experts will stand ready for assistance in comment rounds from DFID and World Bank. developing and refining the strategy. Although some suggestions of the DFID and World Bank were incorporated in the current version of the implementation strategy, other suggestions, like on public disclosure, remain to be included. Also, it is expected that some recommendations, particularly in regard to sanctions, will be addressed in future versions, through changes in the Anti- corruption Law and in the context of clarifying the overall role of the HOO (Annex I). B2. Strengthening GOA's Internal Audit · The MOF will provide the World Bank with · Evidence received. A letter from the MOJ in · Met. function: Reinstatement of Article 61 of a copy of the Presidential Decree on the Dari (with English translation) was received the Public Expenditure and Financial reinstatement of Article 61 of the PEFM confirming the validity of Article 61 of the Management (PEFM) Law regarding Law. PEFM Law. MOF's government-wide purview over Internal Audit through a Presidential Decree. 10 ARTF Quarterly Report: December 21, 2009 B3. Progress in P&G implementation: A · The Independent Administrative Reform · Evidence received. A full report detailing all · Met. progress report of P&G implementation and Civil Service Commission (IARCSC) will requirements, i.e. a description of progress is prepared covering MOF, Ministry of deliver the P&G implementation progress on P&G implementation in the five Rural Rehabilitation and Development report to the World Bank and will work ministries, an explanation of experienced (MRRD), Ministry of Education (MoE) closely with the World Bank Public challenges and delays, a section on overall (including teachers), Ministry of Justice Administration Reform Team during the lessons learned and with action plans for (MoJ) and Ministry of Agriculture, preparation of the report. finalizing P&G implementation at the Irrigation and Livestock (MAIL), ministries during the remainder of 1388. featuring: (a) progress of P&G by line Evidence was commented on and reviewed ministry as of October 31, 2009, by the World Bank team and deemed including analysis on re-grading; (b) satisfactory. comparison with the timetable for that ministry set earlier; and (c) action plan for each ministry implementing P&G for the remainder of the year 1388. Theme C: Enabling Private Sector Development Benchmarks Monitoring and Evaluation C1. Progress in DABS corporatization and · The DABS Board will provide to the World · Evidence received. Copies of a revised first · Met. governance reforms: The DABS Board Bank the approved plan and the minutes of summary plan for DABS to reduce technical approves a plan to reduce commercial the Board Meeting during which the plan and commercial losses and of the DABS and technical losses within the next two was approved ­ alternatively a signed cover Board Resolution (from the DABS Board years; including a timetable and action letter with the approved plans attached is meeting of November 23, 2009) endorsing plan for the establishment of acceptable. The World Bank Power the plan were transmitted. It incorporates commercial activities and better specialist will review the plans and, upon most of the suggestions from the World customer services, including the Kabul request, assist DABS during the drafting Bank who reviewed the plan and provided region, previously known as the Kabul period. inputs to the DABS team for improving the Electricity Directorate, KED. plan. Agreement was reached with DABS that the basic principles of a business plan and forecast are in the plan, but that further improvements are needed within the next months (mainly by making sure better reporting data will become available and will be incorporated; a spread-sheet based monitoring system will be prepared) (see Annex II). It was agreed that the revised plan 11 ARTF Quarterly Report: December 21, 2009 will be adopted by the DABS Board by March 2010. C2. Roll-out of the Central Business · The Ministry of Commerce and Industry will · Evidence received. A letter from the · Met. Registry to provinces: A pilot Central confirm in a formal letter the opening of Minister of Commerce confirms the Business Registry will be launched in the Central Business Registry in Jalalabad. establishment of the CBR in Jalalabad. USAID Jalalabad. confirmed CPR establishment. C3. Improvement of the regulatory · The government will provide the World · Evidence received. Gazettes are transmitted · Met. framework and transparency in the Bank with the Gazettes of the Minerals Law in hard-copy to the World Bank (plus mining sector: (i) The Minerals Law and and the revised Hydrocarbon Law. scanned cover-page of Gazette). the revised Hydrocarbon Law (Petroleum Law) are enacted through · The government will provide the World · Evidence received. A copy of the official gazetting; and (ii) A fully-costed and Bank with a copy of the submission letter to application letter of Afghanistan for timed action plan for EITI the EITI secretariat, including the endorsed becoming an EITI candidacy country sent to implementation is endorsed by a multi- action plan of the multi-stakeholder the EITI secretariat in Oslo with all candidacy stakeholder working group and working group. The World Bank Mining requirements / evidence attached (action submitted to the EITI secretariat. Team will work closely with the plan and budget adopted by the informal government and provide advice as needed. multi-stakeholder group, including minutes of the meeting on November 17, 2009). Feedback from the EITI Secretariat is expected. a. Theme A is complemented by the automatic quantitative revenue scheme in SY1388. The quantitative scheme is based on SY1388 revenue performance, according to the previously agreed schedule. b. This will lead to a regularly monitored set of performance indicators used as: (1) a management tool, (2) a basis for comparisons, and (3) a way of measuring productivity gains, which will also provide a better basis for customs resource discussions and decisions. c. The report will be listed by customs station, for some locations there is combined reporting. d. The number of non-compliant companies (those who have not filed a required return) in both MTO and LTO reached 680 at the beginning of 1388. The Government will work with all companies, but expects to achieve the largest increase with restaurants, airlines and wedding halls. 12 ARTF Quarterly Report (December 21, 2009) Annex I Recommendations to strengthen the asset declaration implementation strategy The revised draft asset declaration implementation strategy has been received and commented on, but the World Bank notes that the strategy still remains relatively weak in the area of public disclosure. In particular, there is concern about possible delays in the public disclosure of assets. Compared to earlier versions the draft strategy has been changed and says now that after declarations are received and examined by the HOO then it will disclose the information. It is suggested that the strategy will be further clarified to include: (i) A description of the examination process conducted by HOO; and (ii) The timeframe for the examination process, starting from the time of receipt of the asset declaration (e.g. the HOO will publicly disclose the information within 1 month of receiving a declaration). Looking ahead, the strategy should include a clear vision and commitment to make the HOO independent and able to enforce the asset declaration scheme. This requires also greater clarity on the assignment of sanction power to the HOO (including, sanctions applying to the failure to submit a required asset registration form and the submission of a false or misleading declaration). It was understood that this could not be addressed yet, given that the strategy is based on the current legal framework, which would need to be adapted. The HOO role and status as an independent agency with more implementation power will be addressed during the revision of the Anti-corruption Law, currently under discussion. Annex II Further expectation for the revision of the plan on reducing losses at DABS The plan prepared by the DABS team for reduction of commercial and technical losses is well drafted and sets out the basic framework for implementation on the ground. However, it is requested that the DABS considers the following comments for a revised plan. It is expected that this revised action plan will be approved by the DABS Board and re-submitted to the ARTF Administrator by end-March 2010. The following new components are expected to be part of the plan: a) The timetable and action plan for the establishment of commercial activities and better customer service will be revised and updated. b) The plan would need to be backed by an Excel based spread sheet, providing recent information and a forecast for the next 5 years. As part of its technical support, the World Bank had provided and helped DABS staff become familiar with an excel based 'Decision Support Tool' to understand the impacts of power procurement deals. This model should help DABS prepare the Excel sheet required for this benchmark. It is recognized that the initial spreadsheet would be based on non-verified data (from erstwhile DABM planning department) and based on information for some of the provinces. However, this would be useful for monitoring the actions planned by DABS and focus on the high impact actions first. This can be updated in the next six months or before, by when better quality information would be available. The DABS team has agreed with the World Bank to provide the spreadsheet model. 13 ARTF Quarterly Report (December 21, 2009) c) It is also suggested that the plan may include the following measures, which would require small scale investments, but would help meet the objectives of this benchmark: i) Formulation and implementation of a plan to increase absorption of NEPS power in the Kabul system, with clear defined quarterly targets. ii) Formulation and implementation of a plan to maximize use of hydro resources and minimize use of diesel plants. This would require a well prepared model for forecast of water inflows under different scenarios and the optimization of water use and available storage capacity at Naghlu vis a vis expansive diesel plant operation. iii) Identify over-loaded feeders (substation and Junction stations) in Kabul and Mazar and implement measures for load balancing, with quarterly targets. d) The loss reduction forecast need to be revised by using energy (MWh) as a basis rather than demand (MW). e) It is suggested that DABS identifies a team to implement the plan with clear responsibilities for specific tasks and also create a monitoring system to review and report on progress. The World Bank team stands ready to review the template for monitoring of the intermediate and final outcome indicators. 14 ARTF Quarterly Report (December 21, 2009) IV SECTOR WIDE APPROACH ­ READINESS ASSESSMENT During the third quarter of SY1388, the World Bank and DfID led a study of the readiness of certain sectors in Afghanistan to adopt `SWAps' as part of their programming. The assessment was a response to the ARTF independent evaluation and to the ARTF Financing Strategy which seeks a more programmatic or sectoral approach to funding and financing in the ARTF. The findings of the assessment were disseminated in four sector workshops, bringing together government officials with technical experts in the international community, as well as at the ARTF quarterly donor meeting. The executive summary of the report is reproduced below. EXECUTIVE SUMMARY The background for this report is the discussions that have taken place during 2009 between the Government of Afghanistan (GoA) and donors about the possibility and suitability for applying Sector- Wide Approaches (SWAps) in development assistance to Afghanistan. Since SWAps would be a new concept in Afghanistan, it was decided to carry out a two-phased assessment of SWAp readiness: · Phase I ­ Clarification of an overall approach and general review based on discussions with the GoA and donors, and an overall assessment of eight central-level preconditions for a possible future introduction of SWAps. · Phase II ­ Detailed assessment of a number of sectors and ministries/agencies regarding their specific status based on readiness criteria, and the preparation of a generic model for preparing sectors and entities for SWAps. The assessments and activities related to Phase I were carried out in July-August 2009 and presented in a report (9 September 2009). This report comprises the findings and recommendations of Phase II of the SWAp readiness assessment, which has focused on the following four sectors and seven institutions of the GoA: · Education Sector ­ Ministry of Education (MoE), Ministry of Higher Education (MoHE) and the National Skills Development Programme (NSDP) under the Ministry of Labour, Social Affairs, Martyrs & Disabled (MoLSAMD) · Health Sector ­ Ministry of Public Health (MoPH) · Agriculture and Rural Development Sector ­ Ministry of Agriculture, Irrigation, and Livestock (MAIL) and Ministry of Reconstruction & Rural Development (MRRD). · Public Financial Management Sector ­ Ministry of Finance and (MoF) Control & Audit Office (CAO). The sectors were selected in consultations between GoA and donor representatives based on which sectors and institutions would be likely to be relatively `SWAp-ready' and which would potentially benefit the most from SWAps, including from an aid effectiveness perspective. The sector assessments are based on the study of sector documents and reviews, and extensive consultations with representatives from the GoA, donors, UN agencies and multilateral organisations as well as advisors and project consultants. Assessment Framework The assessments of the `SWAp-readiness' of sectors are based on a set of factors that encompass the aspects that influence and determine the possibilities for institutions to successfully implement and facilitate SWAps. The following six factors were selected based on international experience and best 15 ARTF Quarterly Report (December 21, 2009) practice (including based on OECD/DAC and EC guidelines) as well as taking into account the context of Afghanistan: · Sector Policy and Strategy · Institutional Framework · Sector Budget and Public Financial Management (PFM) · Sector Performance Monitoring · Sector and Donor Coordination · Donor Support Options and Harmonisation The specific assessment factors may function as preconditions, but it should be stressed that a decision about if and when to initiate SWAp processes ­ due to their nature and the possibilities they offer for developing and improving overall conditions ­ should be a matter of consideration by the government and donors, rather than based only on a technical-level decision. Although the relative importance of the factors has not been ranked, some have a more fundamental character than others and thus can constitute a minimum threshold. These fundamental factors are a functioning sector policy and strategy in place, the existence of a sector budget and basic PFM capacities, and a properly working donor coordination mechanism. Assessment of the Education Sector The assessment shows that the education sector as a whole is not currently ready for a SWAp due to the following findings: · Sector policy and strategy: The existing ANDS education sector strategy is not currently functional, but both the MoE and the MoHE are developing new ministry-level strategies, which could be used as a basis for a revised sector strategy, or for sub-sector SWAps (e.g. for the primary and secondary education sub-sector); however, there is currently no Technical and Vocational Education and Training (TVET) sub-sector strategy. · Institutional framework: The institutional frameworks of the ministries are weak with regard to internal coordination and decision-making as well as technical capacities, especially for the MoHE, but initiatives are being taken to improve their functioning. · Sector Budget and PFM: There is no sector budget and budgeting procedures are somewhat undeveloped; PFM capacities are largely reliant on TA staff in the MoE and generally very weak in the MoHE; core development budget execution rates are very low, which indicates inadequate planning and budgeting procedures, and problems with implementation capacity and procurement. · Sector performance monitoring system: There is currently no sector performance monitoring system; the M&E capacity of the MoE is weak, but is being developed, whereas M&E in the MoHE is very deficient; the results framework may eventually be used for the sector although it does not currently include the National Skills Development Program (NSDP) of the MoLSAMD. · Sector and donor coordination process: A sector coordination mechanism is not yet in place, but may emerge from the MoE-donor Education Development Board (EDB) initiative, which is well- functioning and has helped to strengthen policy dialogue and donor coordination within the MoE. · Donor support options and harmonisation: There seems to be willingness among key donors to coordinate closer with the education sector ministries in the selection of aid modalities, but this will require better strategies, more planning and mutual discipline; several donors might be able to provide sector budget support if PFM capacities and the governance environment is improved. Given these findings, the education sector as a whole is currently not deemed to be SWAp ready. This is due to the lack of a functioning education sector strategy with a corresponding budget and to the fact 16 ARTF Quarterly Report (December 21, 2009) that a sector-wide donor coordination mechanism is currently not in place. To make the education sector ready for initiating a SWAp, the following would be required: · Strategy ­ Prepare a new or revised sector strategy, including for the TVET sub-sector · Sector Budget and PFM ­ Prepare a sector budget aligned with the strategy; improve PFM capacities and functioning · Coordination ­ Create a functioning sector-wide donor coordination mechanism If these factors are properly addressed, an appropriate sector focus can develop, which would make the education sector SWAp ready. Other identified areas for improvements ­ including institutional frameworks and sector performance monitoring ­ could be addressed after a SWAp process has been initiated, which also would apply to the aspects related to donor support options and harmonisation. However, given the current situation making the whole education sector SWAp ready may be both difficult as well as inopportune (it seems likely, taking past experience into account, that it would require at least two-three years to make the full sector SWAp ready). It should therefore instead be considered to either: a) Postpone any decisions and activities for making the whole education sector SWAp ready until after the MoE and the MoHE have successfully started the implementation of their new strategies (i.e. revisit the possibilities after, say, one year); or, b) Focus on the primary and secondary education sub-sector for a SWAp since the MoE will soon have a new strategy and sub-sector budget, and already has both a well-functioning sector and donor coordination mechanism (as well as a monitoring system). Assessment of the Health Sector The assessment shows that the health sector overall is not currently SWAp ready. This is based on the following findings: · Sector policy and strategy: The health sector and the MoPH has a comprehensive sector strategy in place, although it can be improved with budgetary and costing information. · Institutional framework: The MoPH's institutional framework is well-developed with regard to senior-level management and generally has a high level of capacity; however, some organisational entities do not yet have strong capacity, and some aspects of internal budget management require significant improvements. · Sector Budget and PFM: There is a sector budget although of the funding goes through the external budget; PFM and programme budgeting capacities are generally considered high, but the applied procedures for preparing and executing the operating budget need to be significantly improved, including for procurement; core development budget execution rates have generally been low. · Sector performance monitoring system: The M&E of the MoPH is comprehensive, and is being further developed, for example, in the Provincial Public Health Offices (PPHOs). · Sector and donor coordination process: The MoPH needs to improve donor coordination to increase the effectiveness and impact of TA support and to ensure that capacity development reaches all relevant entities. · Donor support options and harmonisation: There appears to be willingness among donors to coordinate closer with the MoPH in the selection of aid modalities, but the outcome of this is likely to depend on closer and better collaboration, including improved donor coordination from the side of the MoPH. 17 ARTF Quarterly Report (December 21, 2009) The health sector is not deemed to be SWAp ready as it lacks a fully functioning donor coordination mechanism and the MoPH lacks a full overview regarding TA provision. To make the health sector ready for initiating a SWAp, the following would be required: · Coordination ­ Create a fully functioning donor coordination mechanism Since the MoPH has a comprehensive strategic framework in place and generally is otherwise well- functioning, it should be possible for the MoPH to establish fully functioning donor coordination within a relatively short period of time. Other aspects that also require improvements ­ e.g. the operating budget management and core development budget execution as well as the involvement of the PPHOs in M&E ­ can be taken forward as part of a SWAp process. Assessment of the Agriculture and Rural Development Sector The assessment shows that the agriculture and rural development sector is not currently ready for a SWAp. This is based on the following findings: · Sector policy and strategy: The agriculture and rural development sector does not yet have a functioning comprehensive sector strategy. · Institutional framework: The institutional frameworks of the MAIL and the MRRD differ very significantly. That of the MRRD is generally well-functioning, while the MAIL has initiated reform initiatives that over time should lead to a better institutional functioning. · Sector Budget and PFM: There is no sector budget that covers the whole agriculture and rural development sector; the MRRD has a high level of PFM and budgeting capacity, whereas MAIL's capacity in this area is weak and requires support; the development budget execution rates of both ministries are very low which suggest planning, budgeting and procurement problems. · Sector performance monitoring system: There is no sector-wide monitoring system in place although the sector results framework may provide a basis for this in the future; the MRRD has a central M&E function in place although it to some extent overlaps with those of projects and programmes; MAIL's M&E is very weak, but being developed. · Sector and donor coordination process: There is no functioning sector-wide donor coordination mechanism in place, and the existing approaches of the MAIL and MRRD function very differently. Both are well-functioning although that of MAIL still needs to be fully institutionalised. · Donor support options and harmonisation: Donors are prepared to engage with the ministries in discussions about aid modalities and other aspects related to their support; however, views on whether SWAp should apply to one or both ministries differ among donors and GoA representatives. Given these findings, the agriculture and rural development sector as a whole is currently not deemed to be SWAp ready. This is due to the lack of a functioning sector strategy with a corresponding budget and the absence of a sector-wide donor coordination mechanism. To make the agriculture and rural development sector ready for initiating a SWAp, the following would be required: · Strategy ­ Prepare a new or revised sector strategy · Sector Budget and PFM ­ Prepare a sector budget aligned with the strategy; improve PFM capacities and functioning in MAIL · Coordination ­ Create a sector-wide donor coordination mechanism If these aspects were addressed, the agriculture and rural development sector could thus become SWAp ready. However, given that at present there are significant differences between the specific SWAp readiness of the two ministries (in terms of capacity, staffing, internal functioning, systems set-up, etc.) 18 ARTF Quarterly Report (December 21, 2009) and ­ more importantly ­ that the MAIL and the MRRD cover fundamentally different areas and have different approaches to development,, it is questionable whether the two ministries should be considered together for one inclusive SWAp. The MRRD is already a successful ministry with relatively high capacity, a capacity development approach that has showed good results in terms of transferring tasks to national consultants an to civil servants, and the MRRD has a good track-record in terms of service delivery. A SWAp process would therefore seem to have limited value-addition for the MRRD, and may in fact only lead to the complication of an otherwise well-functioning structure. However, a SWAp process could support the implementation of the MRRD's planned change management process, and the two could therefore potentially be mutually reinforcing. In contrast, the MAIL appears to be a much more relevant candidate for a SWAp given its new strategic approach, need for capacity strengthening, and (until recently) lack of donor support. This means that a sub-sector SWAp for the agriculture sub-sector could be considered. However, the MAIL is not currently SWAp ready ­ it is in a transformation process where its strategic framework is still being developed and implemented, and new donor coordination mechanisms and approaches are yet to be institutionalised ­ and pursuing becoming SWAp ready may therefore may therefore add an additional workload that the MAIL is currently not be ready to undertake. Instead, the MAIL and donors should continue with the ambitious change management process and other new activities, and then reassess the possibilities and readiness for a sub-sector SWAp at a later stage (say, after one-two years) when conditions may be more conducive. The Public Financial Management Sector It must be noted that the PFM sector is different from the other three sectors and therefore has been assessed differently. This is because the MoF is part of the executive structure and the CAO should function as an independent external audit institution. A SWAp ­ with an overall and inclusive sector strategy and one sector budget ­ would therefore not be practicable for the sector or the institutions. The PFM sector was therefore instead assessed with a focus on each of the two institutions separately, but also with a view to identify areas where coordination could be useful. The assessment showed that within the PFM sector neither the MoF nor the CAO is currently ready for a SWAp. This is based on the following findings: · Sector policy and strategy: Both the MoF and the CAO have developed institutional strategies, which for the MoF needs to be applied as a management tool and for CAO needs to be operationalised in a work plan. · Institutional framework: The institutional frameworks are relatively well-developed, especially for the MoF, but both institutions require improvements and further development, esp. CAO. The MoF has set up a task force and working groups to address some shortcomings and problems for the functioning of the Revenue and Customs Departments. · Sector Budget and PFM: The MoF has good PFM capacity, but its internal budget procedures need to be revised, and both institutions must improve their execution rates. · Sector performance monitoring system: The MoF undertakes regular monitoring, but does not have a formal performance assessment framework; the CAO collects activity data, but needs to measure performance on the basis of an operationalised strategic plan. · Sector and donor coordination process: There is currently no overall donor coordination mechanism in place for the PFM sector, but this could be advantageous for both institutions and donors as a means to discuss and coordinate policy recommendations. Donor coordination would be 19 ARTF Quarterly Report (December 21, 2009) especially relevant for the MoF, which currently has nine donors, while it ­ in itself ­ would not be required for the CAO, which is currently supported mainly by the World Bank. · Donor support options and harmonisation: Improved coordination and interaction between the MoF and donors could lead to more focused and effective support in line with GoA priorities. The MoF would not currently be ready for a sub-sector SWAp since it does not have a donor coordination mechanism, which would thus first need to be established and institutionalised. However, it does not appear that a SWAp would be necessary for the MoF since the issues related to donor coordination and the sustainability of operations in some departments could be addressed within the context of a donor coordination mechanism. It is instead recommended to consider setting up a pooled funding mechanism for TA support to the MoF, which could help to increase MoF's ownership and management control, lead to a more effective allocation of TA resource across the MoF and make the MoF more accountable to donors for the activities and results of TA staff. For the CAO, a sub-sector SWAp is not currently relevant since it has only one donor, which means that a SWAp process would not be an appropriate process to apply for addressing its development needs. However, the issues and challenges that the CAO currently faces ­ operationalisation of the strategic plan, capacity building of staff and the development of a formal M&E system ­ should be addressed and would likely gain from an increased level of donor support. For the PFM sector as a whole, it would seem both relevant and beneficial if the MoF and the CAO (and possibly also the Ministry of Economy (MoEc) if it continues to be responsible for M&E related to the ANDS) together with their donors were to consider establishing a sector-wide coordination mechanism ­ e.g. in the form of a "PFM Advisory Group". Such a mechanism could also be used to ensure discussion of ­ and, in particular, follow-up on ­ the implementation of policy recommendations in the PFM sector as well as more general considerations regarding the professionalisation of relevant professions (e.g. for accountants and auditors). Recommendations for the Piloting of SWAps and Next Steps Based on the assessments, it is recommended that one or both of the following two areas are considered for the piloting of SWAps: · The health sector (MoPH) · The primary and secondary education sub-sector (MoE) Both ministries and key donors have during the consultations and the debriefing meetings confirmed their interest in undertaking the piloting of a SWAp for their respective area. If the GoA and donors prefer to select only one sector/sub-sector for the piloting of a SWAp, some guiding principles for selection should be considered, e.g. based on which ministry is most likely to deliver a successful implementation and facilitation process (this and other guiding principles are further discussed in chapter 9 below). While having two pilots would benefit two ministries, the resource constraints should also be taken into account and could be an argument for selecting only one sector/sub-sector. If it is decided to initiate a SWAp, a Memorandum of Understanding should be signed by the GoA and the participating donors, which outlines the general agreement about the process. On this basis a detailed roadmap must be prepared as a reference document for both the GoA and the involved donors ­ both for making the sector/sub-sector SWAp ready and for the actual SWAp implementation process 20 ARTF Quarterly Report (December 21, 2009) afterwards. The roadmap should outline how the work will be organised, its specific activities and the necessary resources to support the SWAp process, including for a dedicated SWAp project team (to be funded by donors). The roadmap would serve as the design of the SWAp process and thus be the basic project document and implementation plan. The specific formats as well as examples of the technical content and focus of roadmaps for the MoPH and the MoE are provided in chapter 9. Within the context of SWAp planning it should be considered how ­ in the longer term ­ the ARTF can develop and evolve into an integrated funding mechanism to support and further SWAps. The starting point could be to: 1) review the relevant existing ARTF-funded project of the relevant sector/sub-sector in terms of the areas that it supports, 2) discuss coordination among supporting donors and how the support could be broadened in alignment with the relevant strategy, and 3) under which conditions more donors will provide more funding to the project. The next steps could then be considered as follows: · Assessing and planning how to move from investment (capital cost) funding towards broader thematic `packages' by using a mechanism that would likewise fund recurrent expenditures (maintenance and operations). · Identifying a practical method that would help to avoid double-funding for recurrent funding (since a share of the GoA's recurrent budget is already funded through the ARTF's recurrent window). · Considering how to move from the existing input-based budgeting to a results-oriented (output- and outcome-based) budgeting framework. The latter aspect would, however, be a fundamental shift that will only be possible in the longer term given that ­ to give up direct control of funding (e.g. through existing special accounts and related procedures) and over procurement (e.g. by the current application of donor procurement procedures ­ donors are likely to expect further improvements in government's systems, procedures and capacities. The different findings and elements would then need to be combined into a new ARTF funding mechanism and be formalised in a programme document with a detailed outline of the implementation arrangements, which would be presented to and approved by the ARTF Management Committee. In terms of timing it should be noted a new ARTF funding mechanism for SWAps could not practically start operations before the fiscal year 2011/12 (SY1390). It is overall recommended that the GoA and the donors first of all discuss whether or not they in principle agree to initiate a SWAp process on a pilot-basis, and if so then to identify the target sector(s) and/or sub-sector(s). This should, as outlined above, be followed by the signing of a general agreement in the form of a Memorandum of Understanding and the preparation of a detailed and sector-specific roadmap to initiate the SWAp process. ARTF donors have formed a technical working group with the government to review the findings and recommendations of the study and to propose a way forward at the next quarterly ARTF donor meeting in April 2010. 21 ARTF Quarterly Report (December 21, 2009) IV. ARTF Recurrent Cost Financing 1. Introduction This section of the report provides a summary of the details of recurrent cost financing, as monitored by the Monitoring Agent, under World Bank supervision. The ARTF, through recurrent cost financing, helps finance salaries and wages of over 260,000 non- uniformed civil servants (approximately 70 percent of whom are working outside Kabul), and government's operating and maintenance (O&M) expenditures outside of the security sector. As of December 21, 2009, a total of US$1.9 billion had been made available to the government over seven and a half years for recurrent cost financing. Of this, US$1.86 billion has been disbursed. As noted in Section I, US$290 million will be assigned to the government for recurrent cost funding in SY1388. This ceiling includes US$40 million for meeting the SY1388 ARTF Incentive Program benchmarks. As of December 21, 2009, US$145.0 million has been committed and US$143.1 million has been disbursed. 2. SY1387 & SY1388 Operating Budget Execution Table 3 presents budgeted and actual operating expenditures for SY1387 and for SY1388 (as of December 21 2009). The table is adjusted to exclude those ministries ineligible for ARTF financing. The eligible budgeted and actual expenditures are reflected in bold text below. Table 3: Budget versus Actual Expenditures Payroll O&M SY1388 SY1387 AFN m AFN m AFN m AFN m Initial Budget SY1388 (1) 65,091 28,862 93,953 65,359 Add: Mid year budget review (2) 0 0 0 8,470 Defense, Interior, National Security, Presidential -37,053 -10,627 -47,680 -28,139 Protection Services Budget Ministries qualified for financing 28,038 18,235 46,273 45,691 Actual expenditures for year 42,254 14,402 56,656 69,026 Defense, Interior, National Security, Presidential -23,820 -2,366 -26,186 -31,985 Protection Services Advances and other unqualified codes -861 -2,882 -3,743 -2,285 Expenditures Ministries qualified for financing 17,573 9,154 26,727 34,756 Actual expenditures in percentage of adjusted 62.7% 50.2% 57.8% 76.1% budgeted expenditures Remaining budget 10,465 9,081 19,546 10,935 Remaining budget in percentage of initial budget 37.3% 49.8% 42.2% 23.9% (1) Ordinary budget for the SY1388 rd Source: Monitoring Agent 3 Quarter SY1388 Report 22 ARTF Quarterly Report (December 21, 2009) 3. SY1388 Distribution among Cost Categories Figure 6 presents the distribution of AFN 26,727 million (US$552 million) in eligible expenditure for SY1388 among the four cost categories financed by the ARTF. Payroll expenditures are divided into Payroll-based salary expenditure (PBSE) comprising all payroll based salary expenditures including gross salary, food allowance, education level allowance, Priority Reform and Restructuring (PRR) payment and bonus payrolls. Non-payroll-based salary expenditure (NPBSE) comprises all expenditures classified in AFMIS as wages and payroll but supported by documents other than payroll, such as assistance payments to employees and transportation expenses. O&M expenditures are broken into O&M expenditure excluding pensions (OM-P) comprising all recurrent expenditures recorded in AFMIS not included in one of the other categories, and Pensions (P) comprising pension payments by the Pension Department and Martyrs and Disabled Department of the Ministry of Labor and Social Affairs. Figure 6: SY1388 Non-security Expenditures by main category (US$m) Pension $40 7% O&M excluding pension Payroll-based $149 salary 27% $346 63% Non payroll- based salary $16 3% rd Source: Monitoring Agent 3 Quarter SY1388 Report 4. Recurrent Costs by Line Ministry As of December 21, 2009, 68 percent of total disbursements of payroll and O&M expenditures were related to 6 out of 49 line ministries and independent budget agencies as shown in Figure 7 below. The Ministry of Education accounted for 37 percent of non-security spending, mainly for teachers' salaries. Teachers represent almost half of all Afghan civil servants. Figure 7: SY1388 Disbursements by Ministry 4.5% 4.6% Ministry of Education Ministry of Martyrs, Disabled 5.7% and Social Affairs Administrative Affairs 6.3% Ministry of Public Health 36.9% Ministry of Higher Education Ministry of Foreign Affairs 10.1% rd Source: Monitoring Agent 3 Quarter SY1388 Report 23 ARTF Quarterly Report (December 21, 2009) 5. Eligibility of Expenditures ARTF finances recurrent cost expenditures which meet the criteria set by the government, the ARTF Grant Agreement and the Fiduciary Standards (additional requirements agreed to by the Ministry of Finance and the Administrator). Criteria for eligibility are set out in the box below. ARTF Eligibility Criteria Government Regulations The Annual Budget Decree: Since ARTF provides budget support to the government, expenditures can be found eligible only if they are included in the yearly budget; ARTF's share of financing for the yearly budget was approved by the ARTF Management Committee. Other. All goods and services must be procured and accounted for in accordance with government law and regulations. If expenditure does not comply with local regulations it will not be considered to be eligible for financing by ARTF. It is important to note that the Afghan procurement law allows for procurement to conform to donor requirements (article 50 sub 1). ARTF Grant Agreement All military and security related expenditures are ineligible for financing. Procurement. Capitalized goods and works need to be procured in accordance with the World Bank procurement guidelines. Fiduciary Standards Fiduciary Standards (revised as at 20 December 2004). In addition to the Afghan laws and regulations, an additional set of requirements was agreed on the timeliness of reporting and efficiency of cash management of eligible expenditures. 6. Eligibility Performance For each category of recurrent cost, Table 4 presents comparative data on submitted expenditures and actual approved expenditures, over the life of the ARTF. Payments are deemed ineligible according to the criteria described in the box above. The expenditure and eligibility figures for SY1384 and SY1385 were restated taking into account the final deductions based on the auditors' findings for these years. Audit findings for SY1386 are not yet reflected in the SY1386 eligibility ratios. 4 Payroll eligibilities for the last three years were 92.5 percent (SY1385), 89.2 percent (SY1386) and 88.4 percent (SY1387). Reporting on O&M and non payroll-based compensation eligibility in SY1387 presents a challenge. Amendments made to the public procurement law in July 2008 rendered it inadequate as a basis for eligibility of O&M and non payroll-based compensation under the ARTF. As a result ARTF reimbursed no O&M expenditure and no non-payroll based compensation in SY1387. Although acceptable provisions were restored in December 2008 the Administrator decided not to reimburse O&M expenditures through the end of SY1387 in order to minimize the risk of reimbursing and ineligible expenditures. This explains the low approval ratios of 15.3 percent for O&M and 88.4 percent for payroll presented in Table 4. 4 See Annex 2 on Audit. 24 ARTF Quarterly Report (December 21, 2009) ytd Table 4: SY1381-88 Summary of Statements of Expenditure: Submissions and Approvals (US$ thousands) Submitted by MoF to MA Approved by MA and by WB O&M Payroll Total O&M Payroll Total O&M Payroll Total USD USD USD USD USD USD % % % 1381 Total 42,239 87,917 130,157 27,318 87,690 115,007 64.7% 99.7% 88.4% 1382 Total 300,478 120,204 420,682 41,737 111,241 152,978 13.9% 92.5% 36.4% 1383 Total 82,164 202,038 284,202 61,433 186,199 247,633 74.8% 92.2% 87.1% 1384 Total 104,100 227,858 331,958 75,014 193,520 268,533 72.1% 84.9% 80.9% Q1 13,704 35,961 49,665 13,290 35,961 49,251 97.0% 100.0% 99.2% Q2 41,219 80,727 121,945 36,403 77,039 113,442 88.3% 95.4% 93.0% 1385 Q3 35,089 69,162 104,251 25,971 62,973 88,944 74.0% 91.1% 85.3% Q4 58,172 94,453 152,626 20,024 83,342 103,366 34.4% 88.2% 67.7% Total 148,184 280,303 428,487 95,688 259,315 355,003 64.6% 92.5% 82.9% Q1 18,415 40,710 59,125 18,415 40,710 59,125 100.0% 100.0% 100.0% Q2 41,315 91,544 132,859 33,853 87,857 121,711 81.9% 96.0% 91.6% 1386 Q3 45,135 88,293 133,428 38,437 74,757 113,194 85.2% 84.7% 84.8% Q4 73,912 103,397 177,309 20,150 85,644 105,795 27.3% 82.8% 59.7% Total 178,777 323,943 502,721 110,855 288,969 399,824 62.0% 89.2% 79.5% Q1 43,555 79,741 123,296 43,555 79,741 123,296 100.0% 100.0% 100.0% Q2 55,595 93,281 148,876 -24,055 83,710 59,655 -43.3% 89.7% 40.1% 1387 Q3 64,103 104,096 168,199 10,958 99,038 109,995 17.1% 95.1% 65.4% Q4 98,692 135,796 234,488 9,619 102,555 112,174 9.7% 75.5% 47.8% Total 261,946 412,914 674,859 40,076 365,044 405,121 15.3% 88.4% 60.0% Q1 41,001 96,174 137,175 41,001 96,174 137,175 100.0% 100.0% 100.0% Q2 0 0 0 0 0 0 0.0% 0.0% 0.0% 1388 Q3 37,040 46,829 83,869 0 0 0 n.a. n.a. n.a. Total 78,041 143,003 221,043 41,001 96,174 137,175 n.a. n.a. n.a. Grand total 1,195,929 1,798,179 2,994,108 493,123 1,588,151 2,081,274 41.2% 88.3% 69.5% Source: SoE submitted to World Bank Table excluding deductions for reaching the yearly budget cap as agreed between donors and GIRA. Source: SoEs submitted to the World Bank Notes: 1. Table excluding deductions for reaching the yearly budget cap as agreed between donors and GIRA. 2. Negative figure for O&M in the second quarter of SY1387 is the result of recovery of expenditures reimbursed in the first quarter. Due to changes in procurement law O&M expenditure relating to SY1387 is not reimbursable. The net figure USD 36.5m for O&M comprises expenditures on pensions. 3. SY1387 figures do not currently reflect eligibility ratios consistent with prior years since all O&M and non payroll based compensation were not qualified for reimbursement under ARTF due to amendments made to public procurement law which made it not acceptable. This is explained in detail above. It should be noted that if the basis for eligibility were calculated as compliance with the existing laws (despite their weakness as mentioned above) then the eligibility ratio would in fact be higher. This calculation would be the ratio of ineligible expenditures (based on monitoring activities) to total O&M and non payroll-based compensation submitted by the MoF to the Monitoring Agent. According to this alternative basis of calculation, the eligibility ratio in SY1387 would be 75.6 percent (for both Payroll and O&M) compared to 60.0 percent as currently presented in Table 4. 25 ARTF Quarterly Report (December 21, 2009) For payroll related expenditures the main cause of ineligibility in SY1387 was non-compliance with government regulations and the Fiduciary Standards. A lack of adequate supporting documents for expenditures associated with the Ministry of Foreign Affairs' embassies was one of the major causes of ineligibility. In O&M expenditure, non-compliance with local regulations was the major cause of ineligibility in SY1387. Most line ministries make direct purchases from state enterprises; this is not permitted under the local law. While monitoring for SY1388 is still underway, a unique transaction significantly influences the O&M ineligibility figure in Table 5. AFN 850 million recorded at the Ministry of Agriculture related to a transfer to the Agriculture Cooperative of the Ministry of Agriculture for the purchase of an estimated 100,000 tons of wheat from local farmers. This is an ineligible expenditure and is the main cause of increase in ineligibility to AFN 1,552 million, an increase of 120 percent compared to the corresponding quarter in the previous year. The difference in ineligible amounts between data presented in Table 4 and Table 5 below is due to the fact that the ineligibilities identified in Table 5 are based on site visits and the ineligibilities due to statistical sampling. These are not yet fully reflected in Table 4. The final results of monitoring for a particular year are usually available in the second quarter's report of the following solar year. Table 5: SY1388 Ineligibility by main cause and category of expenditure on alternative basis AFN million GIRA ARTF FS Total PBSE 132.7 0.0 0.0 132.7 NPBSE 73.6 0.0 56.8 130.4 Payroll 206.3 0.0 56.8 263.1 O&M ­ Pension 919.7 625.7 7.3 1,552.7 Pension 0.0 0.0 0.0 0.0 O&M 919.7 625.7 7.3 1,552.7 Total 1,126.0 625.7 64.1 1,815.8 % 62.0% 34.5% 3.5% rd Source: Monitoring Agent 3 Quarter SY1388 Report Figure 8: SY1388 ineligibility by cause Figure 9: SY1388 ineligibility by category of expenditure Government regulations ARTF Grant Agreement O&M excluding pension Payroll-based salary Fiduciary Standards rd Source: Monitoring Agent 3 Quarter SY1388 Report 26 ARTF Quarterly Report (December 21, 2009) VI. ARTF Fiduciary Framework Section VI provides a summary of the fiduciary framework for ARTF funds. This note was circulated to donors as part of the preparation for the London ARTF meeting in January 2010. Further details are provided in Annex II. 1. Introduction The advance of public financial management (PFM) reforms and the performance of the PFM arrangements in Afghanistan have been widely analyzed and reported. Achievements include control of the broad fiscal aggregates as well as establishing effective systems and processes. The Government's commitment to transparency and fiscal discipline drove the institutional improvements and capacity development which together with positive public expenditure outcomes provided confidence to donors resulting in the mobilization of high levels of external support for the national budget, particularly through the Afghanistan Reconstruction Trust Fund (ARTF). According to the 2008 PEFA-led assessment 5, Afghanistan's PFM performance compares very favorably to the experience in other post- conflict countries. Afghanistan's ratings are better than the average of a sample of other low-income countries and in some areas, better than the average of a sample of middle-income countries. As depicted in the graph below, policy-based budgeting, predictability and control in budget execution, accounting, recording and reporting as well as external scrutiny and audit perform particularly well with low and middle income countries. 2. Corruption Risk Notwithstanding these achievements, the Transparency International 2009 Report rated Afghanistan as the second most corrupt country in the world. This perception of a high incidence of corruption is supported by media reports, the Government's own acknowledgement that corruption is a major 5 See more details in "Afghanistan Public Financial Management Performance Assessment" World Bank and DFID, June 2008. 27 ARTF Quarterly Report (December 21, 2009) problem and most recently by the UNODC report on corruption in Afghanistan 6. The World Bank's own diagnostics recognize that corruption is widespread, even pervasive and concludes that Afghanistan's legal framework for fighting corruption is imperfect, enforcement has been lacking, and the institutional arrangements for anti-corruption face problems. This situation seems to clash with the good results of the PEFA study and the assurances which the World Bank, as administrator of the ARTF, provides the 31 donors on appropriate use of their contributions which flow through the government accounts both for investment operations and for reimbursement of recurrent costs. This seeming gap -- that corruption is a major issue but that donor funds on budget are used only for appropriate purposes -- can be bridged through an explanation of: i) the forms of corruption occurring in Afghanistan and ii) the targeted fiduciary framework that focuses on protecting against the misuse of ARTF funds. The link to the forms of corruption is made because while perception of corruption arises from the public's interaction with public officials, such abuses of power may or may not involve public funds. Moreover, where public funds are involved these may not relate to operations which are under the national budget since two-thirds of official assistance are off-budget. The link to the fiduciary framework is made because those public expenditures which are on-budget are subject to the government-wide PFM controls which were assessed under the PEFA study. ARTF funds, which are a subset of the on- budget funds, are subject to additional fiduciary oversight by the World Bank and its agents. 3. Forms of Corruption The kind of corruption that tends to be most visible to citizens in their daily lives is petty corruption, in the form of bribery as well as extortion which involves payments for benefits or favors received by a corrupt person or entity to either not apply the rules (selective law enforcement) or to apply the rules (gain access to utilities and social services). While prevalent in Afghanistan, this does not directly threaten on-budget donor funds since it is directed at the funds of private citizens or firms. Although funds are not misused, petty corruption can adversely affect outcomes achieved with donor funds and therefore remains a concern. Grand corruption is a term often used to characterize the acts of the political elite to exploit their power to make economic policies, including for certain interests (economic, criminal) to effectively "capture" the state and make policies, or otherwise run the government, to their benefit. This could involve non- transparent allocation of contracts (procurement corruption); non-transparent licensing of underground resources (such as mining, oil, and gas); non-transparent sale of other state assets (such as State-Owned Enterprises, telecom licenses); and non-transparent appointment of senior officials. Among these, only procurement corruption would affect the use of donor funds, although grand corruption has major adverse effects on the broader state-building and reconstruction agenda. A form of corruption that may involve outright purchase of public positions is patronage. While this is not a direct attack on public wealth it does lead to further corruption threats as public officials may try to recover the cost of their investment through procurement corruption or financial leakages. This could represent a direct threat to donors funds entrusted to Government. Procurement corruption can take place in each step in the procurement process which extends from the identification of the needs up to contract award/acceptance/payments. In the case of works contracts, 6 UNODC, "Corruption in Afghanistan, Bribery as reported by victims", January 2010 28 ARTF Quarterly Report (December 21, 2009) the implementation stage is particularly vulnerable. This corruption can take the form of bribery to subvert the procurement process, favoritism on the part of the contracting entity and fraudulent practices to award contracts to pre-identified contractors and to conceal the true basis for the award. In addition, corruption can be perpetrated by collusive bidding (agreements among bidders to fix high prices and exclude competitors). All of these may involve inappropriate use of donor funds since the price of inputs paid for with donor funds may not be market price, and/or the quality of what is delivered may be inadequate. Leakages of public funds comprise the misappropriation of funds or others assets and concealment of the loss by misreporting. This may occur through either deviation of revenue which is due to the state or the misuse of funds or assets already under the control of the state. Donor payments to the Government which are not properly tracked and recorded or the subsequent uses of these receipts for purposes other than those intended in the donor agreements would be such leakages. 4. Fiduciary Framework To speak to the corruption risk to ARTF funds from procurement and leakages of public funds, the forms of ARTF financing, which include reimbursement of recurrent costs and investment projects, must be distinguished from other budget sources like domestic revenue. This is because there are controls which apply to ARTF financing which do not apply to the domestic sources. Domestic sources are funds available to the Government to finance the overall deficit and are not tied to any specific inputs and consequently cannot be monitored or audited as a subset of the budget operations. On the other hand, ARTF and LOTFA (the Law and Order Trust Fund for Afghanistan) reimbursement of recurrent costs and investment operations finance only specific inputs which have been determined to be eligible under the financing. The related transactions, therefore, can be isolated for review both before and after completion. The first level of control in the fiduciary framework is the set of government-wide arrangements that were assessed by the PEFA studies of 2008 7 and apply to all on-budget funds - both domestic and ARTF sources. These arrangements comprise of a framework in which all public funds in the central government sector are controlled through a single budget which is prepared in an orderly and transparent manner, approved by Parliament, and under which all uses are permitted only against due approvals of the appropriation holder. Accounting and payments for all transactions under the budget are concentrated in the Treasury Department of the Ministry of Finance which has contributed to sound financial reporting. This reporting is subject to oversight by the Parliament and the external auditor. Moreover, payroll costs are controlled through the use of the head count caps established in the budget, the head count data base which tracks the actual number of staff and payroll costs for comparison with the budgeted caps, and the verified payroll program which ties payroll payments to verified lists of staff. The operation of this framework is aided by the work of international consultant firms contracted by the government principally in the areas of: budget policy and formulation, the operation of the integrated financial management system and all financial reporting, and the facilitation and determination of legal compliance of all procurement in the non-security sector. Shortcomings in the government-wide controls, however, include the absence of effective internal audit across government, external audit not conducted to an acceptable standard for non-donor funds, low capacity in procurement in spending ministries, and frequent lack of compliance with the public finance and procurement legal framework. 7 See more details in "Afghanistan: Public Financial Management Performance Assessment" (World Bank and DfID, June 2008). 29 ARTF Quarterly Report (December 21, 2009) Both ARTF recurrent cost reimbursement and investment operations are supported by the government­ wide controls. However, because donors require greater assurance on the use of their specific funds, additional arrangements have been put in place to complete the government-wide control framework over these operations and compensate for the shortcomings mentioned above. 5. Mitigation of Corruption Risks for Donor Funds Procurement. The key remedies against procurement failures include: a regulatory framework with clear and transparent rules and processes; transparent reporting (at the invitation of bids and at the award stage); strengthened capacity (in public and private sectors); and adequate external oversight. In Afghanistan, the legal framework for fair and transparent procurement with donor funds has always been clear since is specified in donor agreements which may allow the use of national procurement procedures. Transparency in procurement financed by donors funds is promoted both by donor intervention in supervising procurement and by the centralized procurement facilitating advisors (RITES 8) under the Afghanistan Reconstruction Development Services (ARDS), who participate in the review of all non-security sector procurement over $200,000 for goods and services and $500,000 for works. In addition, ARDS maintains a web-site where all calls for bids and awards for this procurement is published. An assumption underlying these controls is that fair and open competition will lead to economic procurement. The framework does not extend to the control of how the contractor should invest to obtain the results as long as the bid is responsive to requirements and compares to market price. Financial Leakages. Financial leakages of donor funds are constrained first by Treasury Department's government-wide controls whereby all income and expenditures are subject to recording in an integrated financial management system and reconciled with DAB bank statements and donor statements of contributions. In addition to these government-wide controls, a Monitoring Agent is hired by the World Bank (as Administrator of the ARTF) and mandated to review government submissions for reimbursement of all non-security recurrent costs. The Monitoring Agent review compensates for the lack of an internal audit function. The Monitoring Agent assesses the controls on the transactions, performs tests on a sample of these transactions, determines the eligibility of the expenses submitted, and prepares monthly reports on their work and the results of testing. World Bank supervision of investment operations includes prior review of all contracts over a modest threshold and after the fact review of client and contractor reports as well as other documentation. In addition, semi-annual project assessments are made which include visits to the projects and discussions with the implementing entities to establish: (i) the correspondence of physical progress of operations with the use of funds, (ii) the application of the agreed implementation arrangements and (iii) progress toward project objectives. It is worth noting, however, that physical verification of operations as part of the supervision missions has been limited recently in some locations due to security problems which affects the adequacy of monitoring and obtaining assurance that project deliverables are met as claimed. All transactions under the National Budget, for both recurrent and development, are recorded against appropriations and allotments in the integrated financial management system (AFMIS) which is accessible on-line by all budgetary units in all the head offices of Ministries and 18 provinces. The 8 Railways of India Technical Services 30 ARTF Quarterly Report (December 21, 2009) recurrent costs reimbursed under LOTFA and ARTF, as well as the spending under donor investment projects, are recorded in AFMIS so are easily identified and can be reported in dedicated financial statements. This enables the Control and Audit Office (Afghanistan's external audit agency), with the support of an internationally recruited firm of public accountants, to carry out annual audits of these statements that later go to the World Bank for assessment and follow-up. Wherever it is found that funds have not been used in strict adherence to the donor agreements, Government is required to reimburse the amount. 6. Concerns The arrangements described above need periodic revision to address new developments. Currently two issues are under discussion with Government. The first issue is the rising amount of non-security expenditures failing the eligibility criteria of the ARTF Recurrent Cost Trust Fund. While these `ineligibles' are not reimbursed, this tendency represents a weakness in the application of the PFM framework. This trend is a concern given that the goal of the recurrent cost trust fund is not only to help Government meet legitimate costs, but also to encourage a high level of transparency and compliance with the PFM framework in overall budget operations. Responses could include making future reimbursement sensitive to the overall eligibility ratio. The second issue involves access by the oversight bodies to insecure areas. The ARTF Monitoring Agent and the external auditors visited under 20 percent of the provinces in each of the last two years. While alternative means are used to review operations, there is no real substitute for in-situ review. Collaboration with the Government internal auditors and civil society organizations, among other alternatives, are being discussed. 7. Caveats The arrangements over the use and reporting of on-budget donor funds presented above are not designed to constrain or correct bribe-taking by officials for the release of payment to contractors or for payroll, for granting of budget access or for other internal processes. To constrain these types of abuses, a broad educational and institutional program is required both to instill a different attitude toward corruption and to build a strong enforcement regime. It must also be accepted that while prudent measures have been developed and their application is monitored regularly, as is the case with all control frameworks, there is no absolute certainty that abuses will not occur or that if they occur that they will be detected. 8. Conclusion As set out above, ARTF funds are first subject to government-wide controls and then, because these funds can be tied to specific inputs, are additionally subject to a set of anti-corruption constraints which focus on prevention rather than on punitive measures. This approach is in line with the current limited capacities of Afghanistan where enforcement agencies do not yet represent a strong deterrent to corrupt practices. Other on-budget funds may not benefit from these additional controls and therefore carry a higher corruption risk. 31 ARTF Quarterly Report (December 21, 2009) ANNEX 1: STATUS OF ARTF INVESTMENT PROJECTS 32 ARTF Quarterly Report (December 21, 2009) Status and Ratings of Active and Disbursing ARTF Investment Projects (Amounts in US$ million) Approved Amount Amount Start Date Closing Achievement Implemen- Grant Disbursed Available Date of Grant tation Amount Objectives Civil Service Capacity Building 13.0 12.9 0.1 06/15/2005 02/28/2010 MS S (TF053940) Management Capacity Program 15.0 2.5 12.5 10/17/2007 12/31/2011 NA NA (TF090077) TA and Feasibility Study Project 18.5 17.0 1.5 03/08/2003 02/28/2010 MS MU (TF050970) Micro-finance Support for Poverty 183.3 163.9 19.4 07/10/2003 06/30/2010 S S Reduction (TF052452) National Solidarity Program II 449.5 403.2 46.3 05/27/2007 09/30/2011 S S (TF090205) Rehabilitation of Naghlu Hydropower 20.0 6.4 13.6 02/13/2005 06/30/2010 MS MS Plant (TF54718) Urban Water and Sanitation (TF054729) 41.0 25.7 15.3 02/21/2005 12/31/2010 MU U Rural Water Supply and Sanitation 7.7 5.0 2.7 2/26/2006 12/31/2009 S S (TF055447) Kabul-Aybak/Mazar-e-Sharif Power 57.0 28.9 28.1 12/26/2007 09/30/2011 S S Project (TF091120) Horticulture and Livestock Program 11.0 4.0 7.0 05/26/2008 12/31/2011 U U (TF091885) Kabul Urban Reconstruction Project 5.6 1.0 4.6 05/13/2008 03/31/2010 NA MS (TF092073) Justice Sector Reform Project 27.8 1.2 26.6 07/15/2008 06/30/2011 S MS (TF092160) Strengthening Higher Education Project 5.0 1.0 4.0 08/05/2008 12/31/2012 S S (TF092544) Kabul Urban Roads Improvement 18.0 3.3 14.7 02/25/2009 12/31/2010 U U Project (TF093632) Power System Development Project 35.0 5.2 29.8 03/19/2009 07/31/2012 NA MS (TF093513) Water Resources Development 5.5 1.0 4.5 03/23/2009 03/31/2011 NA S Technical Assis. Project (TF093637) Skills Development Project (TF093854) 9.0 2.2 6.8 04/14/2009 02/28/2013 NA S Education Quality Improvement 35.0 25.6 9.4 04/14/2009 09/01/2012 NA NA Program II (TF093962) National Emergency Rural Access 30.0 16.0 14.0 10/20/2009 12/31/2011 S MS Project (TF095297) (S: Satisfactory MS: Moderately Satisfactory, MU: Moderately Unsatisfactory, U: Unsatisfactory) 33 ARTF Quarterly Report (December 21, 2009) Rating Definitions Highly Satisfactory (HS) There are likely to be no shortcomings in the project's achievement of its objectives, in its efficiency or in its relevance. Satisfactory (S) There are likely to be minor shortcomings in the project's achievement of its objectives, in its efficiency, or in its relevance. Moderately Satisfactory (MS) There are likely to be moderate shortcomings in the project's achievement of its objectives, in its efficiency, or in its relevance. Moderately Unsatisfactory There are likely to be significant shortcomings in the project's achievement of its (MU) objectives, in its efficiency, or in its relevance. Unsatisfactory (U) There are likely to be major shortcomings in the project's achievement of its objectives, in its efficiency, or in its relevance. Highly Unsatisfactory (HU) There are likely to be severe shortcomings in the project's achievement of its objectives, in its efficiency, or in its relevance. 34 ARTF Quarterly Report (December 21, 2009) Contact: 1. CIVIL SERVICE CAPACITY BUILDING PROJECT (TF053940) Ms. Monali Chowdhurie-Aziz Approved: 02-May-05 Effective: 15-Jun-05 Closing: 28-Feb-10 mchowdhurieaziz@worldbank.org Allocated: US$13.0 million Disbursed: US$12.9 million Available: US$0.1 million Objective: To meet the short-term capacity needs of the Afghan Civil Service through two inter-related programs: the Afghanistan Expatriate Program (AEP) and the Lateral Entry Program (LEP). Component 1: The Afghan Expatriates Program (US$10 million) The "Afghan Expatriates" component enabled exceptionally well-qualified Afghan experts residing abroad to work as senior advisers to help key line ministries and apex agencies with institutional reforms, human resources development, and formulation and management of priority development programs. Component 2: The Lateral Entry Program (US$3 million) As an alternative to the continued extensive use of technical assistance and consultants, this program aims to recruit a significant number of qualified Afghan professionals to `act' in line civil service positions. The two year positions are between grades 2 and 4, are on a scale of up to US$2,000. The position aim to: · provide short to medium term capacity to ministries primarily where the Priority Reform and Restructuring (PRR) process has been slow to take off; · lay the foundation for the reform process in ministries and government agencies which are currently not under the PRR process; · train, mentor and motivate regular post holders to work more efficiently and effectively. Implementation Progress: The CSCB project funds are fully committed and the project is now being phased out and the remaining contracts expired in December 2009. The project is scheduled to close on 28 Feb, 2010. (AEP): To date, 98 positions (including 3 women) have been filled through the AEP in over 20 ministries and agencies. (LEP): To date 139 lateral entrants (including 4 women) have been recruited to work in over 22 ministries and agencies. Issues and Actions: Independent evaluations were conducted of the AEP and LEP. The results of the two reviews and subsequent discussions with government (MoF and the IARCSC) identified a new, unified program with a single set of criteria for identifying needs, recruitment, remuneration and supervision. The new Management Capacity Program (MCP) has significant advantages over maintaining two separate programs to respond to the short to medium-term management capacity needs of ministries and is described in project 2 below. Please visit the Afghanistan Expatriate Program website: http://www.artfexpat.gov.af/about.html 35 ARTF Quarterly Report (December 21, 2009) $14.00 Achievement of Moderately Objectives: Satisfactory $12.00 Disbursement $10.00 Rate: 100% $8.00 Million $6.00 Implementation: Satisfactory $4.00 $2.00 $0.00 36 ARTF Quarterly Report (December 21, 2009) Contact: 2. MANAGEMENT CAPACITY PROGRAM (TF090077) Ms. Monali Chowdhurie-Aziz Approved: 30-June-07 Effective: 17-Oct-07 Closing: 31-Dec-11 mchowdhurieaziz@worldbank.org Allocated: US$15.0 million Disbursed: US$2.5 million Available: US$12.5 million Objective: To achieve sustained improved performance in the management capacity of key departments dealing with financial management, human resource management, policy and regulatory design and administration. Improved management in the core functions should result in improved utilization and cost effectiveness of budgetary resources and faster and better development results on the ground. The Management Capacity Program (MCP) provides the means of bringing in critical Afghan management to line ministries as a complement to donor provided technical assistance. MCP hires skilled Afghans through a transparent, merit-based process led by the Independent Administrative Reform and Civil Service Commission (IARCSC). MCP hires are paid at a more competitive salary scale. This is an interim solution to address the challenges of a small pool of Afghan professionals, competing demands from UN agencies and bilateral donors who continue to implement projects outside the government systems, and the ongoing distortions in the remuneration levels for skilled manpower. Implementation Progress: Despite initial delays, MCP implementation has gained momentum and the original grant of US$10 million has been committed. The MCP should finance 241 staff positions with an indicative funding requirement of US$ 30 million. The project currently supports 25 line ministries. 119 positions have been advertised of which 89 have been contracted using the salary scale agreed with the Bank. Demand from ministries far exceeds available funding. In June 2009, the Management Committee approved an expansion of MCP's scope to include a new component to support the monitoring and oversight of ANDS implementation. As a result, the project cost increased from US$30 million to US$35 million. The additional US$5 million will finance 65 ANDS support positions over the period of 3 years and related program management costs. The Independent Administrative Reform & Civil Service Commission (IARCSC) has recruited the consultancy services of Adam Smith International (ASI) to provide project management support. A full time HR Specialist (providing support to CDS in quality assurance for procurement/recruitment), an M&E specialist and a short-term specialist on Outreach and Communications have been hired. Utilization of the technical assistance (TA) by Capacity Development Secretariat (CDS) has thus far focused on system development, improving standards, responding to gaps in implementation and developing an M&E system. Issues and Actions: International technical assistance is supporting the Capacity Development Secretariat improve quality assurance and develop an outreach strategy. 37 ARTF Quarterly Report (December 21, 2009) Achievement of NA $16.00 Objectives: $14.00 $12.00 Disbursement Rate: 17% $10.00 Million $8.00 Implementation: NA $6.00 $4.00 $2.00 $0.00 38 ARTF Quarterly Report (December 21, 2009) 4. TECHNICAL ASSISTANCE AND FEASIBILITY STUDIES FACILITY Contact: Mr. Hugh Riddell (TF050970) Approved: 08-Mar-03 Effective: 08-Mar-03 Closing: 28-Feb-10 hriddell@worldbank.org Allocated: US$18.5 million Disbursed: US$17.0 million Available: US$1.5 million Objective: To build capacity of government by providing expertise to line ministries and developing local technical and professional capacity to define reconstruction and development projects. Component 1: Feasibility Studies and Implementation Support: Aims to identify and prepare projects for financing and implementation. This component supports the recruitment of specialized firms to undertake the feasibility studies and provide management support in the implementation of IDA and ARTF funded projects in line ministries. Component 2: Recruitment of Individual Consultants: Aims at recruiting specialists to guide the preparation and supervision of reconstruction and development activities and supervise feasibility studies on behalf of the government. Implementation Progress: The project is no longer taking on new projects and will close February 28, 2010. An Implementation Completion Report will be undertaken within 6 months of project closure. Component 1: A total of ten contracts have been awarded to consulting firms during the life of the project, which were mostly used for activities to support the Ministry of Mines, Ministry of Urban Reconstruction and Development, Kabul Municipality, and Ministry of Energy and Water, for a total commitment of US$18.5 million. The cumulative committed amount is almost fully disbursed, with only one contract remaining to be implemented and paid by the end of September 2008 (SMEC - Consulting Services for MUDH). Component 2: There are no individual experts currently working in the line ministries. Due to the changes in the circumstances and availability of funds directly related to the underlying sector interventions, individual TA support is being provided by the respective sector operations, both IDA and ARTF funded. Date Type US$ Contractor Country Status Million Baghdara Hydro Power Plant Fichtner Phase I completed Jun-05 3.8 Germany Feasibility Study for MEW GmBH& CoKG under TAFS* Consulting Services for MUDH Dec-05 2.6 SMEC Australia On-going (Urban Plan) FM Consulting Services for Kabul Mar-06 0.3 IPE India Completed Municipality (Urban Plan) Aynak Copper Deposit Transaction Gustavson Completed under Jul-06 0.9 USA Advisor Associates TAFS** * Phase 2, amendment for which is being negotiated, would be planned to be financed under other funding sources to MEW, if the project is identified in the first set of priority water infrastructure projects. ** TAFS financed portion of contract completed, Addendum 2 to the contract is under the IDA Natural Resources Management Project. 39 ARTF Quarterly Report (December 21, 2009) Issues and Actions: Judging by the activities implemented, the project has had a lower than expected impact in terms of feasibility studies and its contribution to the preparation of the public investment pipeline. In many cases, individual consultants were employed for short term assignments. To what extent the engagements of individual consultants have contributed toward capacity building in Afghanistan is difficult to assess but the impact is likely to be limited. Some of the consulting firms engaged, on the other hand, have provided a sound contribution to the design and management of the projects that they were supporting. For example, Gustavson Associate's work has been instrumental in the preparation of a transparent and efficient tender process for the Aynak copper deposit. The contract has been amended to include the support to the Ministry of Mines in the negotiations with the winning bidder, however additional scope of work is being financed under the IDA project. Achievement of Moderately $21.00 Objectives: Satisfactory $18.00 Disbursement $15.00 Rate: 92% $12.00 Million $9.00 Implementation: Moderately $6.00 Unsatisfactory $3.00 $0.00 40 ARTF Quarterly Report (December 21, 2009) Contact: Mr. Henry Bagazonzya, 4. MICROFINANCE SUPPORT FOR POVERTY REDUCTION (TF052452) Mr. Stephen F. Rasmussen hbagazonzya@worldbank.org Approved: 10-July-03 Effective: 10-July-03 Closing: 30-June-10 srasmussen@worldbank.org Allocated: US$183.3 million Disbursed: US$163.9 million Undisbursed: US$19.4 million Objective: To use microfinance as a tool to improve livelihoods by supporting entrepreneurial spirit and skills. This helps individuals transition from dependence on humanitarian assistance to economic independence and empowerment. Component 1: Microfinance Fund (Loan fund) Component 2: Capacity-building/training of Microfinance Providers Component 3: Implementation Support to MISFA (Afghanistan's apex body for the sector) and microfinance institutions (MFIs) Implementation Progress: Geographic Coverage: MISFA's partners have 301 branches across 26 provinces. Going forward, the focus will be on deepening outreach within the provinces where microfinance is currently available. MFIs are intending to consolidate their operations during 1388. In some provinces, the lending activity is likely also to be severely constrained due to security issues. Program Implementation Update: As of November 2009, MFI partners had a total of 438,508 active clients out of which over 308,000 are active borrowers with an outstanding gross loan portfolio of just under US$108 million. Cumulatively over 1.5 million loans have been given, accounting for an amount of more than US$713 million since the start of the program. The average loan outstanding is US$350. The current repayment rate is 94 percent. MFIs have also collected approximately US$18 million in small savings deposits. Gender / Special Clients: As of November 2009, there were over 264,260 female clients, 60 per cent of the total. Some of the MFIs specifically cater to women clients. They employ 4,100 staff, of which 38 per cent are female. MISFA has trained over 700 Afghans in microfinance. Projections: It is expected that growth in portfolio and number of clients will continue to slow as the sector consolidates to improve portfolio quality and security concerns limit operations in certain areas. Issues and Actions: While actively engaged with partners in the consolidation phase, MISFA is also working with its other partners to solidify their operations and create the conditions for future growth on a solid foundation. MISFA's support will comprise of grants, subordinated debt, on-lending funds and technical assistance. For more information on Microfinance in Afghanistan, please visit www.misfa.org.af. 41 ARTF Quarterly Report (December 21, 2009) Achievement of Satisfactory $210.00 Objectives: $180.00 Disbursement $150.00 Rate: 89% $120.00 Million $90.00 Implementation: Satisfactory $60.00 $30.00 $0.00 42 ARTF Quarterly Report (December 21, 2009) 5. NATIONAL SOLIDARITY PROGRAM II (NSP II) TF090205 Contact: Mr. Qazi Azmat Isa Approved: 07-Dec-06 Effective: 27-May-07 Closing: 30-Sep-11 qisa@worldbank.org Allocated: US$449.5 million Disbursed: US$403.2 million Available: US$46.3 million Objective: To lay the foundations for strengthened community level governance, and to support community reconstruction and development projects that improve the access of rural communities in Afghanistan to social and productive infrastructure and services. Component 1: Block grants for communities to implement reconstruction and development sub-projects Component 2: Community facilitation and capacity building Component 3: Program implementation management support, monitoring and evaluation Implementation Progress: As of January 2, 2010, the program (NSP I and NSP II) has mobilized approximately 22,480 communities, of which 22,202 have elected Community Development Councils (CDCs) and 22,080 have prepared Community Development Plans (CDPs). 50,740 subproject proposals were submitted and approved. 34,812 of these subprojects have been completed. These include water supply and sanitation (24 percent), rural roads (24 percent), irrigation (17 percent), village electrification (14 percent), and others (21%). A supervision mission for the project took place from 25 October to 23 November 2009. This mission reviewed overall project progress and looked closely at facilitating partner (FP) contract management issues, the quality of technical support to infrastructure projects and NSP financial management. The mission found that NSP continues to meet its development objectives and to make good progress on agreed actions from previous supervision reports. Some key achievements include: · Since May 2 2009, NSP has disbursed US$130.5 million in block grants to communities. An additional 5,800 subprojects have been completed and an additional 4,100 communities have fully utilized their block grants. · The modality to achieve national roll-out of NSP to the remaining 9,740 communities has been agreed. Contracting of Facilitating Partners for these remaining communities is in process. Selection of FPs will be based on past-performance using both quantitative and qualitative criteria. · The M&E department has been strengthened to conduct both implementation monitoring and post implementation monitoring on a regular basis. The first post implementation monitoring report has been released. · The Financial Management Information System (FMIS) has been set up and is providing regular budgeting and financial reporting. · Hiring of a Financial Management Agent (FMA) to replace the current Management Support Consultant is near completion and agreement has been reached for a three-month handover from the existing firm. 43 ARTF Quarterly Report (December 21, 2009) Issues and Actions: · ARTF allocation for SY1388: In SY1388, US$100 million was allocated for NSP in the national budget which has been fully released by the Management Committee (MC) as of August 11, 2009. In the mid-year budget review, an additional US$ 100 million was allocated for NSP. · Funding Scenario: The rollout to the remaining 9,740 communities will cost approximately US$424 million based on US$ 30,000 per community (average size of block grant per community) and approximately US$ 130 million for costs of facilitation and NSP management. Although the cash flow situation for NSP II has eased somewhat with the recently approved US$ 75 million from IDA and US$ 200 million from ARTF for SY1388, there is still a shortfall of approximately US$ 200 million to meet the requirements for the new rollout. · Utilization of Block Grants in NSP I communities: As of December 2009, 72 percent of Year 1 and 58 percent of Year 2 communities have fully utilized their block grants. It is necessary to ensure the remaining communities from Year 1 and 2 fully utilize block grants within the next year. · Facilitation Cycle: It has become evident that a two year facilitation cycle in each community is too short given that no FP with NSP II contracts was able to achieve their contractual targets within two years. For all new NSP II contracts, and in the future phase of NSP, a facilitation cycle of at least 3 years will be introduced. · Future of CDCs: The preparation mission for the next phase of NSP (NSP III) took place in December 2009. This mission followed up on actions agreed during the identification mission for NSP III in May-June 2009 and further refined the design of the next phase. The findings and agreements from this mission will be presented in the mission aide memoire. Achievement of Satisfactory $490.00 Objectives: $420.00 Disbursement $350.00 Rate: 90% $280.00 Million $210.00 Implementation: Satisfactory $140.00 $70.00 $0.00 44 ARTF Quarterly Report (December 21, 2009) 6. EMERGENCY POWER REHABILITATION PROJECT (Naghlu HPP) Contact: Mr. Sunil Khosla (TF054718) Approved: 13-Feb-05 Effective: 13-Feb-05 Closing: 30-Jun-10 skhosla1@worldbank.org Allocated: US$20.0 million Disbursed: US$6.4 million Available: US$13.6 million Objective: To improve reliability of the power supply in Kabul. Component 1: Rehabilitation of 100 MW Naghlu hydropower plant in Laghman province (US$18.9 million) Component 2: Supervisory engineer for rehabilitation of Naghlu hydropower plant (US$1.1 million) Implementation Progress: The rehabilitation work is estimated to be 15 months behind schedule. Based on a review of work on the first unit to be rehabilitated, a proposal to extend the current project, or to continue works under a new project will be prepared. The contract for the rehabilitation of the Naghlu Hydropower Station with Technopromexport (TPE), co- financed with IDA, was signed on August 30, 2006 and became effective on December 28, 2006. The contract for the supervision consultant (Fichtner) was signed on September 18, 2006 and the team started full time at the site from July 1, 2008. However the team was forced to leave the site shortly after due to security concerns. Subsequently, MEW terminated the contract with Fichtner in April 2009 and has asked SMEC to provide supervision until final arrangements are concluded. The camp site has been constructed and most of the equipment for Unit 1 (Generator, excitation system, turbine, inlet valve, transformer etc.) has been designed, manufactured and supplied. The operational acceptance test for the first unit (25 MW) will be carried out in early 2010, to be followed by other work. Further payments under the letter of credit will be made only against achieving milestones for the commissioning of those units. Issues and Actions: · TPE continues to submit a substantial number of proposals to change the scope and/or cost of works. Only two have been approved by MEW. · The security situation continues to be a key concern. The risk of force majeure remains high. MEW needs to consider approving additional security arrangements. 45 ARTF Quarterly Report (December 21, 2009) Achievement of Moderately $24.00 Objectives: Satisfactory $20.00 Disbursement $16.00 Rate: 32% $12.00 Million Implementation: Moderately $8.00 Satisfactory $4.00 $0.00 46 ARTF Quarterly Report (December 21, 2009) 7. URBAN WATER SUPPLY AND SANITATION (TF054729) Contact: Mr. Shyamal Sarkar Approved: 21-Feb-05 Effective: 21-Feb-05 Closing: 31-Dec-10 ssarkar@worldbank.org Allocated: US$41.0 million Disbursed: US$25.7 million Available: US$15.3 million Objective: To provide urban areas sustainable, improved water supply and sanitation services and to strengthen the sector's technical and institutional foundations for the medium term. Component 1: Kabul Water Supply ­ Upper Kabul River Well-field, Transmission Mains and Distribution Networks. Component 2: Kabul Sanitation ­ Construction of New Facilities for On-site Sanitation and Municipal Solid Waste. Component 3: Provincial Towns Water Supply/Sanitation ­ Rehabilitation and Extension of Systems in 13 Provincial Towns. Component 4: Engineering Support and Technical Assistance to Central Authority for Water Supply and Sewerage (CAWSS) and Kabul Municipality. Component 5: Financial Support to the government's Central Authority for Water Supply and Sewerage (CAWSS) Operations. Implementation Progress: Component 1: Kabul Water Supply ­ Upper Kabul River Well-field, Transmission Mains and Distribution Networks. The construction of boreholes in the Kabul River well-field has been completed at a cost of about US$0.8 million. Estimated costs of the works envisaged under this component increased from US$15 million to US$48.8 million ­ however the scope of this component will be revised by project restructuring to contain only the construction of boreholes, and will not cover the full cost. Equipment, pumping stations, transmission and distribution networks will be financed from other sources. Contracts for construction of pipelines and installation of equipment for well fields and pumping stations, construction of collector pipes and transmission mains are under implementation with KfW financing. Component 2: Kabul Sanitation ­ Construction of New Facilities for On-site Sanitation and Municipal Solid Waste. The contract for the rehabilitation of the Chamtala dumpsite which was signed by Kabul Municipality on April 2, 2009 is nearing completion. Consultancies to assist Kabul Municipality in implementing the relevant sanitation projects were mobilized. Consultant supported activities to provide Operations Support to the Department of Sanitation were completed. Component 3: Provincial Towns Water Supply/Sanitation ­ Rehabilitation and Extension of Systems in 12 Provincial Towns. This project component covers water supply in Sheberghan, Mazar-i-Sharif, Taloqan, Charikar, Jalalabad, Metherlam, Gardez, Ghazni, Kandahar, Qalat and Maimana, and Pul-i- Khumri. Goods worth US$10 million for water supply in provincial towns have been procured. But some additional goods will be required to complete construction of the distribution networks in the respective towns. New water sources have been created in Taloqan, Maimana and Pul-i-Khumri and existing water sources have been strengthened in Shebergan and Metherlam. All contracts for pipe-laying in 12 towns and 4 reservoirs have been awarded. With the completion of the above works, water production capacity of 311 liters per second will be added in five towns, 5,410 cum storage reservoir capacity will be built in four towns, water distribution improvement and access will be improved in 12 towns by adding 300 km mains, 88 km pipeline for service connections, about 15,100 new service connections and improving 6,200 existing service connections, at a 47 ARTF Quarterly Report (December 21, 2009) total cost of about US$26 million. Component 4: Engineering Support and Technical Assistance to the Central Authority for Water Supply and Sewerage (CAWSS) and the Kabul Municipality. A General Manager has been recruited and recruitment of senior management staff is underway. The new corporation became operational in May 2009 beginning with the operation of water supply in Kabul. CAWSS was liquidated in December 2009. AUWSSC has taken over operations in Kabul, Charikar, Herat, Pul-i-Khumri, Kunduz, Taloqan, Mazhar-i- Sharif, Shebergan, Metherlam and Jalalabad. Contracts with a total of seven individual advisors for MoUD, CAWSS and Kabul Municipality and nine individual consultants were funded under this project. This technical support has enabled the government to prepare a follow-on operation for urban waste management though funding is not yet secured. Implementation supervision support is ongoing for the construction of water supply works in the provincial towns. Component 5: Financial Support to the government's Central Authority for Water Supply and Sewerage (CAWSS) Operations. Activities have been completed. This support contributed significantly to improving the management capacity of all 14 units of CAWSS and generated detailed technical, financial and commercial data for the first time. Issues and Actions: · Due to lack of available funding under the ARTF grant, the scope of Component 1 of the Project is to be revised. A request for project restructuring has been received from the government. Restructuring of the IDA financed Urban Water Sector Project (P087860) and this Project (P092162) is being processed. · Several activities of the project have been dropped due to lack of resources. 48 ARTF Quarterly Report (December 21, 2009) Achievement of Moderately $49.00 Objectives: Unsatisfactory $42.00 Disbursement $35.00 Rate: 63% $28.00 Million $21.00 Implementation: Unsatisfactory $14.00 $7.00 $0.00 49 ARTF Quarterly Report (December 21, 2009) 8. RURAL WATER SUPPLY AND SANITATION (TF055447) Contact: Mr. Srinivasa Podipireddy Approved: 15-Dec-05 Effective: 26-Feb-06 Closing: 31-Dec-09 spodipireddy@worldbank.org Allocated: US$7.7 million Disbursed: US$5.0 million Available: US$2.7 million Objective: To improve the health of rural communities by increasing awareness through integration of health and hygiene education with the provision of safe and sustainable water supply and sanitation services in eight provinces (Baghlan, Takhar, Kunduz, Kabul, Badghis, Samangan, Jawzjan, and Sari Pul); to strengthen and build the capacities of government (central and provincial) for sector development; support NGOs, the private sector and the communities to scale up provision of safe and sustainable water supply and sanitation services. Component 1: Strengthening Capacity of Entities and Communities Component 2: Construction of Water Points and Sanitary Latrines in Rural Areas Component 3: Carrying out Studies for Developing Service Delivery Mechanism The project closed on December 31, 2009 with physical achievements close to 100%. Project Achievements Summary: To implement this project, the Ministry of Rural Rehabilitation and Development (MRRD) established a Project Implementation Unit (PIU) headed by a Project Manager in its WatSan department. Support Organizations (NGOs) were mobilized in February 2007 in all the eight provinces. The Support Organizations have moved into supervision of construction activities during the winter of 2008. Hygiene and sanitation promotion and O&M training efforts have taken place in all the project villages through mobilization of hygiene promoters, visits to households and identification, training water point's caretakers. Under the original grant (US$5.0 million) 760 water points were completed against a target of 765; 2,731 demonstration latrines were completed against a target of 3,000; and about 43,134 families received hygiene education against an original target of 31,777. In addition, a total 948 hygiene education promoters were trained; 779 hand pump caretakers were nominated against a target of 823 and 10 out of 13 piped water schemes were completed. Under the additional funding (US$2.65 million) approved by the MC in August 2008, 420 water points out of 420 (100 percent) and 1,260 demonstration (100 percent) latrines were completed. 16,250 families received hygiene education against a target of 11,305. All 168 hygiene promoters and 420 hand-pump care-takers are in place. The activities taken up under additional grant exceeded 100% achievement. 50 ARTF Quarterly Report (December 21, 2009) Issues and Actions: An independent study that looked into different implementation models/ optimal approach to RWSS, institutional arrangements and sector development planning delivered its final report which flagged issues of project sustainability. MRRD has commissioned a consultant to design a follow-on project aiming at developing strategies to address these issues and also to look into possibility to work closely or align with NSP. The draft consultant report has been submitted. The Bank has reviewed the draft follow-on report and has given an in-principle agreement to fund a follow-on project as requested while highlighting the need to further review institutional arrangements and project design to work with decentralized institutional mechanisms and deliver through those working closely with the CDCs. 51 ARTF Quarterly Report (December 21, 2009) Achievement of Satisfactory $8.00 Objectives: $7.00 Disbursement $6.00 Rate: 65% $5.00 Million $4.00 $3.00 Implementation: Satisfactory $2.00 $1.00 $0.00 52 ARTF Quarterly Report (December 21, 2009) 9. KABUL/AYBAK/MAZAR-e-SHARIF POWER PROJECT (TF091120) Contact: Mr. Sunil Khosla Approved: 26-Dec-07 Effective: 26-Dec-07 Closing: 30-Sept-11 skholsa1@worldbank.org Allocated: US$57.0 million Disbursed: US$28.9 million Available: US$28.1 million Objective: To provide reliable and quality power to the consumers in the target areas of the cities of Kabul, Aybak and Mazar-e-Sharif. Component 1: Distribution System Rehabilitation of part of Kabul City network. Component 2: 220 kV Substation at Aybak and interconnection with medium voltage system Component 3: Power System Rehabilitation for Mazar-e-Sharif Component 4: Institutional capacity building / support Implementation Progress: All three major supply and installation contracts have been finalized. The contractors for Mazar and Kabul distribution works have been mobilized. Site offices have opened; design and survey work is completed and major supplies have been received on site. Late delivery of concrete poles has delayed work. The contractor for Aybak and the Mazar transmission substation augmentation has commenced work. Design work is in progress and design reviews are proceeding. The equipment for testing the presence of hazardous polychlorinated biphenyls (PCB) has been dispatched and training provided to DABM staff. The bidding process for the procurement of single and three phase energy meters is completed and the contract has been awarded. SMEC is reviewing quotations from various contractors to construct a customer care building. ESS workshop has been organized at Mazar-e-Sharif with all stakeholders to disseminate information about the project and to seek local agencies' involvement and implementation support. Issues and Actions: In consultation with DABS and MEW, the metering strategy for the distribution system for these areas has been finalized. MEW and the project management consultants are working to expedite equipment supply. 53 ARTF Quarterly Report (December 21, 2009) Achievement of Satisfactory $60.00 Objectives: $50.00 Disbursement $40.00 Rate: 51% Million $30.00 Implementation: Satisfactory $20.00 $10.00 $0.00 54 ARTF Quarterly Report (December 21, 2009) 10. HORTICULTURE AND LIVESTOCK PRODUCTIVITY PROJECT Contact: Mr. Usman Qamar (TF091885) Approved: 26-May-08 Effective: 26-May-08 Closing: 31-Dec-11 uqamar@worldbank.org Allocated: US$11 million Disbursed: US$4.0 million Available: US$7.0 million Objective: To assist producer households in adopting improved practices so as to increase horticulture and livestock productivity and production in focus areas. Component 1: Increasing Productivity and Marketable Output of Perennial Horticulture; Component 2: Increasing Output and Productivity of Livestock; Component 3: Capacity Building, and Monitoring and Evaluation Support Implementation Progress: A restructuring of the project was approved by the Bank's Board of Executive Directors on 9 December 2009 and by the ARTF MC on 21 December 2009. The restructured project has a revised closing date of December 31, 2011. Key changes in the restructured project include: - a modified project objective to focus more directly on horticulture and livestock productivity - revised project outcomes: (i) increase in the productivity and production of horticulture and poultry, and (ii) reduced mortality in large and small ruminants in the project focus areas - focused project activities in 11 districts - a modified project scope and targets to ensure they are in line with available capacity Project progress has continued to improve steadily. Below are the key developments in both the horticulture and livestock components in the last quarter: Horticulture · A preliminary adoption survey among farmers was carried out. The survey shows an increasing trend among farmers towards adoption of HLP orchard management and integrated pest management practices. · The Sapling Survival Monitoring survey was completed showing that overall 85 percent of the planted saplings are surviving while many grape vineyards have 100% survival rate. · During the autumn 2009 planting season, new orchards were established in 425 hectares amounting to a total area of 1,130 hectares as of December 2009. Livestock · A comprehensive feasibility study of dairy development was completed. · 7,000 households have received 15 eight week old pullets, 25 kg grower feed plus poultry equipment. Egg production started in mid September and as of December 2009 the 100,500 pullets produced 4.51 million eggs which were marketed at a competitive price through Village Group Leaders (VGLs). · 114 government clinics have now been privatized and the remaining 6 out of 120 are underway. All veterinarians working in these 120 clinics have received refresher training courses. Issues and Actions: · Financing: The project will be requesting the allocation of US$9 million under the previously approved blanket. Even if this is approved, HLP will still have a financing gap of US$ 14.3 million for which ARTF funding support will be sought. · Contract Adjustments: Contracts for FPs and individual consultants need to be extended without delay to match the revised closing date. 55 ARTF Quarterly Report (December 21, 2009) Achievement of Unsatisfactory $12.00 Objectives: $10.00 Disbursement $8.00 Rate: 37% Million $6.00 Implementation: Unsatisfactory $4.00 $2.00 $0.00 56 ARTF Quarterly Report (December 21, 2009) 11. KABUL URBAN RECONSTRUCTION PROJECT (TF092073) Contact: Ms. Rosanna Nitti Approved: 13-May-08 Effective: 13-May-08 Closing: 31-Mar-10 rnitti@worldbank.org Allocated: US$5.6 million Disbursed: US$1.0 million Available: US$4.6 million Objective: The project aims to provide improved delivery of basic urban services in vulnerable communities in Kabul through the upgrading of urban infrastructure and through enhancing the managerial capacity of Ministry of Urban Development (MoUD) and Kabul Municipality (KM). Component 1: Area Upgrading in Darwaze Lahori, Deh Afghanan, Andrabi, Murad Khanna in Kabul (US$3.6 million) Component 2: Engineering and Project Management Support (US$1.76 million) Component 3: Support on Cultural Heritage (US$0.24 million) Implementation Progress: The project is at an early stage of implementation with no outputs as yet. The procurement process is nevertheless underway, as follows: · Murad Khanna contract has been awarded, but works cannot start due to difficulties faced by the Turquoise Mountain Foundation (TMF) to mobilize land for the works; · Bids for Darwazay Lahori and Deh Afghanan tenders are re-advertised due to the lack of responsive bidders. · The bid for Andarabi is at evaluation stage. · Drain in Joy Shear­ not yet launched. Issues and Actions: For Murad Khanna, TMF (selected to prepare the design, supervise the works and mobilize communities) is revising the technical specifications and finalizing the mobilization of land. The PMU is working with the TMF and consulting with the Bank team to find a solution to use the mobilized contractor to launch the works. If this is not possible, the contract will have to be terminated and the new bid re-advertised. 57 ARTF Quarterly Report (December 21, 2009) Achievement of NA $6.00 Objectives: $5.00 Disbursement $4.00 Rate: 18% Million $3.00 Implementation: Moderately $2.00 Satisfactory $1.00 $0.00 58 ARTF Quarterly Report (December 21, 2009) Contact: Ms. Lubomira 12. JUDICIAL REFORM PROJECT (TF092160) Beardsley Approved: 15-Jul-08 Effective: 15-Jul-08 Closing: 30-Jun-11 Lbeardsley@worldbank.org Allocated: US$27.8 million Disbursed: US$1.2 million Available: US$26.6 million Objective: To strengthen the centralized state justice system in Afghanistan and increase access to justice for the Afghan people. Component 1: Enhancing Capacity of Justice Institutions ($US23.6 million) Component 2: Empowering the People (US$2.4 million) Component 3: Strengthening Implementation Capacity (US$1.75 million) Implementation Progress: Implementation of the program is slower than expected. The reasons are documented in the issues and actions section below. Progress to date is summarized as follows: Component 1: Enhancing Capacity of Justice Institutions. The procurement of vehicles for MoJ, SC and AGO is now complete. Furniture, equipment and ICT were delivered in December 2009. A series of training sessions for MoJ staff in 21 provinces (including English language, management, and computer literacy) have been completed; 139 training manuals and 500 procurement and financial management manuals have been developed and disseminated. The SC and AGO are in the process of developing their training and training management proposals. The proposal for libraries in the HQs and provinces has been agreed and all institutions are proceeding with the hiring of librarians, acquisition of books and law journals. The procurement of a Capital Investment Plan and a Courts Design Standards is advanced and work of consultants is likely to assume in February. Procurement of JI's HQs and provincial facilities is also well advanced. The TOR for INLTC has been advertised. Each institution hired two architects and engineers and one senior engineer and are now finalizing the hiring process of one translator/interpreter per each institution. The RIMU proposals for AGO and SC staff are under preparation. The first printing package of laws has been advertised for printing. Component 2: Empowering the People. Almost all positions for legal aid lawyers and administrative assistants have been filled so legal aid offices are operational as of December 2009. The procurement of cars, furniture and equipment for legal aid and legal outreach offices is in progress. Component 3: Strengthening Implementation Capacity. The Project Oversight Committee (POC) meets regularly. However, recruitment is pending for a new Project Director, the Project Coordinator, an M&E Specialist and international procurement specialists. Issues and Actions: The implementation progress of the Project has been slower than originally planned. Project start-up was delayed as the grant only became effective on July 15, 2008, four months after the ARTF Management Committee approval. The implementation plans were prepared on the assumption of timely effectiveness. The additional delays in implementation can be attributed to two factors. The first factor is lack of implementation capacity in the three implementing agencies and their lack of familiarity with Bank procurement procedures. This is aggravated by difficulties in the staffing of the Program Support Unit (PSU). The second factor pertains to a lack of understanding, ownership and commitment to some of the human resources management (HRM) reforms under Component 1 of the 59 ARTF Quarterly Report (December 21, 2009) project. The team believes that with more sustained on the ground presence of the World Bank task team, the above challenges can be overcome. The World Bank undertook a mid-term review (MTR) of the project in October 2009. Based on the findings of the MTR, the government (through the Project Oversight Committee and the Project Support Unit) has agreed on a specific Action Plan to speed up the implementation of the Project. The Bank team, together with the government, assessed that project-supported activities excluding civil works, are expected to reach completion by end 2010. With the exception of the construction of the Attorney General's Office HQ, project-supported civil works are expected to be completed by June 2011. It is estimated that the completion of the AGO HQ will require an additional 10 months, and it was agreed in principle that this item be implemented in a later phase. To date, approximately US$406,525 has been disbursed from the Grant (1.46% percent). As of the date of the MTR, approximately US$6 million has been committed for contracts for goods and services and contracts with value of approximately US$ 2 million are under negotiation. The following actions have been taken on order to address the underlining causes of the delays: · Staffing of PSU: it has been agreed with the three Justice Institutions (JIs) that a Project Director will be hired by February 2010 (through SSS); a Project Coordinator/M&E Specialist (a local consultant) will be hired by January 15, 2010 (through SSS); an International M&E Specialist will hired by April 2010; and an International Procurement Specialist will be hired by February 2010 (through SSS). · Upon hiring M&E experts, the Project M&E Framework will be updated. In addition, the project has been extended through July 2011. Achievement of Satisfactory $30.00 Objectives: $25.00 Disbursement $20.00 Rate: 4% Million $15.00 Implementation: Moderately $10.00 Satisfactory $5.00 $0.00 60 ARTF Quarterly Report (December 21, 2009) Contact: Mr.Joel E. Reyes, 13. STRENGTHENING HIGHER EDUCATION PROGRAM (TF092544) Mr. Mostaeen Jouya jreyes@worldbank.org Approved: 05-Aug-08 Effective: 05-Aug-08 Closing: 31-Dec-12 mjouya@worldbank.org Allocated: US$5.0 million Disbursed: U$1.0 million Available: US$4.0 million Objective: The development objective of the program is to progressively restore basic operational performance at a group of core universities in Afghanistan, which will provide an institutional base for an agenda focusing on tertiary education development, capacity building and reform. Component 1: University Partnership Program Component 2: Block Grants to Universities and Faculties Component 3: Support for a new Higher Education Governance System Implementation Progress: ARTF resources are supporting components 1 and 2 of the Strengthening Higher Education Program, in four universities of Afghanistan: Balkh University, Kandahar University, Kabul Polytechnic University and Nangahar University. The ARTF Grant Agreement was signed in the summer of 2008, and the US$5 million provided for university partnerships and grants has been committed, and procurement of works, goods and services are progressing. As of now, the design and construction supervision for Balkh, Nangarhar, & Kandahar Universities master plan and buildings have been contracted out and these contracts are under execution. Rehabilitation of Kabul Polytechnic (KPU) buildings is underway and procurement of class-room furniture for the KPU is complete. Construction of the boundary wall for Nangarhar University campus is progressing. The program to build the capacity of Kandahar University faculty by providing three study scholarships for the Asian Institute of Technology in Thailand commenced in August 2009. A similar program in Tajikistan for the faculty of literature and law at Balkh university also commenced in August 2009. The Program is putting into action the recommendations of the mid-term evaluation. These key actions include: (i) improve the integration of partnerships and block grants at university level; (ii) identify the lessons-learned from implementation to date, and incorporate them in the second phase; and (iii) improve support to the Ministry of Higher Education (MoHE) for strategic development of the higher education sector, and its management capacity and efficiency. As part of the strategic support to beneficiary universities, the MoHE, and the overall Higher Education Sector, a series of consultations have taken place with Chancellors, Deans, and students of various universities in Afghanistan. The last several months of project supervision and technical assistance were focused on supporting the MoHE to revitalize its sector-wide strategic planning process. The World Bank and UNESCO formed an alliance to support the MoHE in updating its sector assessment; define with other higher education stakeholders the main areas of strategic development; the MoHE was able to complete and formally launch the updated Strategic Plan on the 3rd December, 2009. Issues and Actions: Education quality and management lessons learned from the university level implementation of partnerships and block grants investments will be documented and fed back to the general sector strategy. Consultations with Chancellors, Deans, Teachers and Students will provide local feedback to the sector wide reforms to be defined. Participating international universities, as partners to Afghan Universities, have also pledged their support to the broader Higher Education sector reforms and improved policy development and quality 61 ARTF Quarterly Report (December 21, 2009) monitoring capacity of the MoHE. The next step will be to continue supporting and going in line with the strategic planning of the higher education sector. Sustainable improvements in project management and integrating the lessons-learned from partnerships at the university level will continue to be supported. The M&E framework of SHEP will be improved. The World Bank and UNESCO will lead discussions around possible additional donor support for higher education. Achievement of Satisfactory $5.00 Objectives: Disbursement $4.00 Rate: 20% $3.00 Million Implementation: Satisfactory $2.00 $1.00 $0.00 62 ARTF Quarterly Report (December 21, 2009) Contact: 14. KABUL URBAN ROADS IMPROVEMENT PROJECT (TF093632) Mr Mesfin Wodajo Jijo, Mr. Zafar Iqbal Raja mjijo@worldbank.org Approved: 19-Dec-08 Effective: 25-Feb-09 Closing: 31-Dec-10 zraja@worldbank.org Allocated: US$18.0 million Disbursed: US$3.3 million Available: US$14.7 million Objective: The Development Objective of the Project is to improve traffic flow on priority corridors or segments of the main urban roads in Kabul. The Project aims to achieve this through implementation of the following two components: Component 1: Improvement of the road network in Kabul. Carrying out investments for the improvement of key city roads in Kabul, including: (i) rehabilitation of about 12 kms of existing roads; (ii) construction and rehabilitation of road side drains and walkways; (iii) construction of roundabouts at key intersections; and (iv) installation of street lights. Component 2: Project Management Support. Provision of support to Kabul Municipality (KM) for the preparation, design, implementation and supervision of the Project; and establishment of a Project Management Unit (PMU) within KM to strengthen the institutional capacity of KM. Implementation Progress: Design: The Implementation Consultant (IC) has completed the topographic survey, geotechnical investigations and submitted the design for 75 km of roads under their contract. The design for 55 km of has been reviewed by KM and the IC is working on the KM's comments. Environmental and Social Management Plan: The IC has prepared an Environmental and Social Management Plan (ESMP), which has been approved by the National Environmental Agency of Afghanistan (NEPA). Training and Capacity Building: The IC undertook a comprehensive winter training program in December 2008 and January 2009. The training focused on various aspects of civil engineering including four days of testing in the soils laboratory. 47 municipal staff attended the professional development course. Four days of road safety and environmental awareness training was also held for municipal and contractor staff in March 2009. Construction: The four civil works packages under the Project ­ W1, W2, W3 and W4 ­ valued at US$ 13.7 million have been awarded. Issues and Actions: There are serious decision-making delays on the part of KM. In particular, procurement and financial management capacity in KM is low. The works on all the four contract packages are stalled since the Construction Supervision Consultant on August 27, 2009 have terminated their contract with the KM on account of delayed/non-payment of their dues. KM needs to set-up the Project Management Unit (including a Team Leader, City Roads Engineer, and Finance Officer) at the earliest opportunity. KM also needs to engage a Consultant for the proper supervision of civil works before the onset of the 2010 dry season. 63 ARTF Quarterly Report (December 21, 2009) Achievement of Unsatisfactory $21.00 Objectives: $18.00 Disbursement $15.00 Rate: 18% $12.00 Million $9.00 Implementation: Unsatisfactory $6.00 $3.00 $0.00 64 ARTF Quarterly Report (December 21, 2009) Contact: 15. POWER SYSTEM DEVELOPMENT PROJECT (TF093513) Mr. Sunil Kumar Khosla Approved: 19-Mar-09 Effective: 19-Mar-09 Closing: 31-Jul-12 Skhosla1@worldbank.org Allocated: US$35.0 million Disbursed: US$5.2 million Available: US$29.8 million Objective: Increasing access to grid power and the quantity of available power to the consumers in the target areas of the urban centers at Aybak, Pul-e-Khumri, Charikar, Gulbahar, Jabul-Seraj, Doshi and Khenjan. Component 1: Distribution system rehabilitation. Component 2: Rehabilitation of transmission switchyards associated with Naghlu, Mahipar and Saroubi hydropower stations. Component 3: Institutional capacity building, project management support and establishing an Energy Efficiency Unit at MEW. Implementation Progress: The government has signed contracts for distribution works at Pul-e-Khumri, Charikar, Gulbahar and Jab-ul Seraj. The contractors are ready to mobilize and commence the survey and design work. The appointment of a supervision consultant has been delayed but is expected to be finalized within the coming months. The effectiveness of the above contracts has been delayed due to delays in the roll-over of budget allotments from SY1387. Three engineers have been hired by MEW to establish the energy efficiency unit in the ministry. The World Bank, as requested by MEW, has agreed to support these positions in the interim and is preparing a work plan for the energy efficiency unit. Issues and Actions: The flow of funds to the projects has been delayed by more than three months during the new fiscal year, causing delays in project implementation and consequent delays in the realization of the intended benefits for the people of project areas. MEW's intervention to mitigate disbursement delays has been requested. Funding for the Charikar substation, agreed to be provided by the Government of India, needs to be formalized soon to ensure that the substation is completed in time to complement the completion of distribution works planned under this project. Achievement of Satisfactory $40.00 Objectives: $35.00 $30.00 Disbursement Rate: 15% $25.00 Million $20.00 $15.00 Implementation: Moderately Satisfactory $10.00 $5.00 $0.00 65 ARTF Quarterly Report (December 21, 2009) Contact: 16. WATER RESOURCES DEVELOPMENT TECHNICAL ASSISTANCE Mr. Sanjay Pahuja, PROJECT (TF093637) Mr. Mohammad Arif Rasuli spahuja@worldbank.org Approved: 23-Mar-09 Effective: 23-Mar-09 Closing: 31-Mar-11 mrasuli@worldbank.org Allocated: US$5.5 million Disbursed: US$1.0 million Available: US$4.5 million Objective: The development objective of the project is to build GoA capacity to progressively undertake strategic basin planning and to improve project preparation for water resources development. Component 1: Capacity Building for multi-sector River Basin Planning. Component 2: Preparation of Water Resources Development Investments Component 3: Technical and Implementation Support Implementation Progress: The Water Resources Planning Unit (WRPU) and Project Preparation Unit (PPU) are the two units of the MEW which serve as the counterpart and focus of capacity-building under this project. The two units are now adequately staffed. Workplans for the first three quarters of 2009 were prepared and approved by the Bank Team and the PPU and WRPU have submitted the fourth quarter progress report which is under review. Issues and Actions: The procurement of a technical and implementation support consultant (TISC) is central to the effective implementation of the project. The short-list of firms for this consultancy has been finalized. However, only one company out of six short-listed firms has sent a proposal. The MEW has started evaluation of the proposal. The project activities on trans-boundary waters capacity-building are awaiting the nomination (by the government) of a dedicated Afghan trans-boundary waters team. Achievement of NA $6.00 Objectives: $5.00 Disbursement $4.00 Rate: 18% Million $3.00 Implementation: Moderately $2.00 Satisfactory $1.00 $0.00 66 ARTF Quarterly Report (December 21, 2009) Contact: Mr. Venkatesh Sundararaman, 17. SKILLS DEVELOPMENT PROJECT (TF093854) Mr. Mostaeen Jouya Closing: 28-Feb- vsundararaman@worldbank.org Approved: 14-Apr-09 Effective: 14-Apr-09 13 mjouya@worldbank.org Allocated: US$9.0 million Disbursed: US$2.2 million Available: US$6.8 million Objective: The Project Development Objective (PDO) is to increase access to high-quality vocational education and training in the areas of Management, Administration and ICT in a manner that is equitable, efficient and sustainable. Component 1: Develop regulatory and quality assurance framework for TVET (Technical & Vocational Education) Component 2: Improve relevance, quality and efficiency of TVET Component 3: Skill Development Program and market linkage with a rural focus Component 4: Research, Monitoring and Evaluation Implementation Progress: The Afghanistan Skills Development Program (ASDP) is supported by both IDA funds and ARTF. ARTF finances are being used for component 2 of the broader program, and in particular on the rehabilitation of the National Institute for Management and Administration (NIMA). This update will focus on ARTF-financed activities. The objective of component 2 is to establish a model TVET institution (NIMA) in Afghanistan. NIMA is now established and is now in its second semester. NIMA offers three diploma programs: General Management and Administration; Accounting and Financial Management; and ICT. Total student enrollment is currently 1,696. Maxwell Stamp (MSP), in association with the University of Jyvaskyla (UJ) of Finland, manages NIMA by providing quality diploma programs, and ensuring the consistency of these curricular programs to the UJ. MSP has deployed three senior faculty to supervise each school, and 40 junior faculty. MSP also provides experts to develop programs for curriculum and teacher development. Four computer laboratories have been equipped initially with more or less 100 computers while the remaining 350 units are in the tendering stage. The broader ASDP continues to provide support to TVET institutes and schools for the improvement of their infrastructure and equipment. Plans for technical assistance i.e. curriculum development, teacher training, and administrators' capacity building are finalized, and will be aggressively pursued in the coming months. Issues and Actions: Responsibilities for implementation of the overall ASDP are shared across MoE and MoLSA as well as the office of the Vice President. This arrangement has led to some management inefficiencies on the part of the implementation partners. A comprehensive assessment has been conducted in December 2009 and an action plan is formulated to address those obstacles. 67 ARTF Quarterly Report (December 21, 2009) Achievement of Satisfactory $10.50 Objectives: $9.00 Disbursement $7.50 Rate: 24% $6.00 Million $4.50 Implementation: Satisfactory $3.00 $1.50 $0.00 68 ARTF Quarterly Report (December 21, 2009) 18. SECOND EDUCATION QUALITY IMPROVEMENT PROGRAM Contact: Mr. Joel E. Reyes, (TF093962) Mr. Mostaeen Jouya Jreyes@worldbank.org Approved: 14-Apr-09 Effective: 14-Apr-09 Closing: 1-Sep-12 mjouya@worldbank.org Allocated: US$35.0 million Disbursed: US$25.6 million Available: US$9.4 million Objective: The project development objective is to increase equitable access to quality basic education especially for girls through school grants, teacher training and strengthened institutional capacity with support from communities and private providers. Component 1: School Grants (IDA US$0.20 million, ARTF US$36.3 million) Component 2: Teacher and Principal Training and Education (IDA US$6.7 million, ARTF US$20.6 million, and USAID US$22 million) Component 3: Project Management, Monitoring and Evaluation (IDA US$4.6 million, ARTF US$3.1 million) Implementation Progress: EQUIP is a national education program under the Ministry of Education and is being implemented in all 34 provinces of Afghanistan. The second phase of EQUIP became effective in March 2008 with added emphasis on alignment, harmonization and capacity building for the implementation of the National Education Strategic Plan (NESP) of Afghanistan. EQUIP has been very successful in mobilizing communities for establishing School Management Committees and Parent Teacher Association under the quality grants enhancement subcomponent. Approximately 9,524 school management committees have been organized across the country and 8,056 schools improvement plans have been developed. As part of the schools improvement plans, 3,931 School Management Committees (SMCs) have implemented quality grants in their respective schools. The physical infrastructure development component of the EQUIP program has focused on community participation in school construction. This emphasis on community participation and involvement has greatly increased the sense of ownership and empowerment of communities to supervise and manage the construction of their schools. EQUIP I (fully complete) financed the construction of 822 schools. EQUIP II has so far programmed the construction of 753 additional schools. To ensure the improved quality of education, EQUIP I financed training for over 110,000 teachers and principals. In alignment with the implementation of NESP, MoE contracted technical assistance for curriculum and textbook development, infrastructure designs, monitoring evaluation, community mobilization, and improved fiduciary (financial and procurement) management. A district-based teacher training team scheme is being implemented by NGOs. Registration is complete and a survey of training needs has been finalized which will serve to better plan teacher training activities across the country. Approximately 43,000 teachers have been processed through the pay and grade process after conducting a one day competency test. Issues and Actions: · Technical Assistance: EQUIP has financed approximately 500 individual technical assistance contracts in the ministry. The MOE has set up a review of technical assistance and has appointed a committee to align the utilization of technical assistance with the capacity building and institutionalization development of key institutions in the MOE for long term sustainability. 69 ARTF Quarterly Report (December 21, 2009) · Security: The MOE is elaborating strategies to guarantee the safety of students. EQUIP will also need to adjust some of its education service delivery mechanisms. Maintaining the community- based management of schools approach will remain an important strategy. · Donor coordination: Improved donor harmonization mechanisms have been put in place, and the National Education Strategic Plan's (NESP) indicators are being updated, to improve alignment, monitoring and evaluation. EQUIP's own indicators will continue to align with NESP's goals. · Fiduciary: Fiduciary (Financial and Procurement) management improvement will continue to be supported, in the new institutionalized structures of the MOE (rather than in separate/parallel implementation units). Achievement of Satisfactory $42.00 Objectives: $36.00 Disbursement Rate: 73% $30.00 $24.00 Million $18.00 Implementation: Satisfactory $12.00 $6.00 $0.00 70 ARTF Quarterly Report (December 21, 2009) Contact: 19. NATIONAL EMERGENCY RURAL ACCESS PROJECT (TF095297) Mr. Mesfin Wodajo Jijo Approved: 20-Oct-09 Effective: 20-Oct-09 Closing: 31-Dec-11 mjijo@worldbank.org Allocated: US$30.0 million Disbursed: US$16.0 million Available: US$14.0 million Objective: The Afghanistan National Emergency Rural Access Project objective (PDO) is to provide year- round access to basic services and facilities in the rural areas of Afghanistan covered by the project. This will be achieved through rehabilitation and maintenance of rural access infrastructure by contracting with the private sector and, to a lesser extent, with communities. Component 1: Improvement of secondary roads by the Ministry of Public Works (MPW) Component 2: Improvement of tertiary roads by the Ministry of Rural Rehabilitation and Development (MRRD) Component 3: Institutional strengthening, project management, and program development Implementation Progress: NERAP is a follow-on project supporting the broader government program: National Rural Access Program. ARTF has previously provided over US$50 million to the previous project, which closed at the end of 2009. As with the former ARTF project, this project is implemented by two agencies: Ministry of Public Works (MPW) and Ministry of Rural Rehabilitation and Development (MRRD), with support from an Implementation Consultant (IC), the United Nation Office for Project Services (UNOPS). Works have only recently begun under the project. Component 1 is implemented by MPW and supports the improvement of about 176 km of roads packaged into 15 contracts. The grant amount allocated to this component is US$23.5 million. Component 2 is implemented by MRRD and supports the improvement of about 190 km of roads packaged into 16 roads and bridges contracts. The grant amount allocated to this component is US$6.5 million. Depending on the degree of the environmental and social impact of each sub project, mitigation measures are prepared as part of the design process, and will be implemented on the ground. Component 3 of the project, fully financed by IDA, seeks to build the capacity of the implementing institutions, as well as contractors and communities engaged in the project. This will be implemented with a support from a Capacity Building Consultant, which will be expected on board by Mid February 2010. 71 ARTF Quarterly Report (December 21, 2009) Issues and Actions: 1. Sub projects duplication with other programs/agencies: after significant time and resources spent on the identification of sub-projects, some are now found to be undertaken by other programs/agencies. From the overall NERAP list of sub-projects, 13 secondary road sub projects and 5 tertiary road sub projects are in fact already underway by PRTs. This is attributed to a lack of central coordination in the sector, which is needed to save time and financial resources. The PIUs and the national Coordination Unit (NCU) need to increase the agreed coordination effort through their regional offices and report progress as part of the monthly and quarterly progress reports. 2. Delayed Approval of Grant: a significant number of the sub projects that were planned to be financed under the Grant were supposed to commence in the first quarter of SY1387. To avoid further delay sub-projects have been swapped with those under IDA financing which are at design and procurement stages. 3. Slow Pace of Disbursement: the first and second quarters of SY1388 were marred by a very slow rate of disbursement attributed to inefficient financial management systems in both ministries and to some extent also in the Ministry of Finance. The PIUs and MoF took steps to identify the bottlenecks in the overall FM process and took actions to speed up disbursement. Achievement of Satisfactory $36.00 Objectives: $30.00 Disbursement $24.00 Rate: 53% Million $18.00 Implementation: Moderately $12.00 Satisfactory $6.00 $0.00 72 ARTF Quarterly Report (December 21, 2009) ANNEX 2: ARTF Recurrent Cost Financing 73 ARTF Quarterly Report (December 21, 2009) ARTF Fiduciary Framework: 1. Overview of the Monitoring Process The Administrator's oversight of the ARTF's recurrent cost financing includes the services of a Monitoring Agent (MA), employed by the Administrator. Figure 25 gives an overview of the monitoring process. The MA reviews recurrent cost expenditures through (i) desk review of all expenditures; and (ii) site visits to test a sample of expenditures. Desk Reviews: Desk reviews are applied to 100 percent of all operating budget transactions recorded in the centralized integrated financial management system. Desk reviews are carried out before the government's reimbursement request is submitted to the Administrator. Any identified inadmissible expenditures are deducted from that month's request for reimbursement. Site Visits: Site visits provide assurance that expenditures reimbursed by the ARTF comply with the fiduciary standards agreed between the Administrator and the Ministry of Finance. Ineligible expenditures detected during site visits are deducted from subsequent payment requests to be sent to the Administrator. This system ensures that all identified ineligible expenditures are promptly regularized and recovered from the Ministry of Finance, normally in the month following their detection in a site visit. Compliance Testing: The MA verifies expenditure eligibility against three main sets of criteria: · Government of Afghanistan (GoA) standards · ARTF Provisions (Legal agreement/Grant Agreement) · Fiduciary Standards (efficiency standards set by the Administrator) Non-compliance with any of the above-mentioned sets of standards renders expenditure ineligible for reimbursement from the ARTF. There are various eligibility sub-criteria under each of the three broad sets of standards mentioned above; for instance head-count caps under GoA standards. All payroll head- counts are compared to authorized levels; payroll costs of head-counts above authorized levels are ineligible. If a certain ministry shows high trends of ineligibility in payroll, the MA then increases the frequency of site visits, thereby capturing and reviewing a larger share of the expenditures on site. Risk-based Approach: The historic trends of ineligibility over the past five years provide a good basis for planning O&M monitoring on a risk basis, tailoring the approach based on each line ministry's performance and by the cause of ineligibility. The resulting coverage puts greater emphasis on high risk entities and high risk operations. For example, expenditures from line ministries with a history of greater ineligibility are more intensely reviewed. Reporting: The MA reports to the Administrator on a monthly basis, detailing its activities. These reports provide insight into the usage of funds and findings arising from the MA's examination of expenditures. A summary report of the MA's findings is also shared with the Ministry of Finance. 74 ARTF Quarterly Report (December 21, 2009) Figure 25: ARTF Recurrent Cost Monitoring Process Expenditures for non- Monitoring Agent qualified activities (e.g., Government incurs and (MA) performs an military) and identified pays recurrent cost automated Desk ineligible expenditures by expenditures, Review of 100% of MA are deducted and a comprising wages the recurrent cost Statement of Expenditure (~75%) and O&M expenditures (SOE) is prepared for the (~25%) expenditures of the eligible activities Identified ineligible expenditures are deducted from future Special (Working Capital) Monitoring Agent SOE is submitted to the Account reimbursements performs a risk- Administrator and the Special by the Administrator based review of the (Working Capital) Account is SOE expenditures reimbursed Impact of External Audit: Ineligible expenditures identified in the annual external audit of the Government's financial statements are reviewed by the Administrator and Monitoring Agent and deducted from future Statements of Expenditures. 2. Frequently Asked Questions on the ARTF Recurrent Costs Financing Why does the ARTF support the recurrent costs of the government? The government is gradually improving its own revenue base, through customs and taxation, so that it can pay its recurrent expenditures fully in the future. Improvements in revenue collection are being made. However it will take some time before the government is fully able to support its recurrent expenditures by domestic revenues. According to the MTFF (Medium-Term Fiscal Framework) as of January 2009 the government will be able to cover 79 percent of operating expenditures in 2013/14. Therefore, ARTF remains a critical part of the government's fiscal sustainability, reimbursing a major component of non-security related costs. The annual budget is first approved by the Cabinet and, since SY1385, subsequently by the National Assembly. From SY1388 onwards, the ceiling for ARTF recurrent cost reimbursements is set according to the ARTF Incentive Program. This program envisages an automatic annual decline in guaranteed resources through the recurrent cost window, with an additional incentive top-up, based on the government's performance against reform benchmarks. Why does the ARTF not fund military or security related expenses? 75 ARTF Quarterly Report (December 21, 2009) The Articles of Agreement of the International Development Association (IDA) and the International Bank for Reconstruction and Development (IBRD) (together, "the World Bank") prohibit the World Bank from involvement in the political affairs of its member countries. In addition, the Articles of Agreement spell out the purposes of the World Bank, which purposes have been interpreted by the World Bank's Board of Executive Directors not to permit involvement in military or security related activities of member countries. The World Bank in its capacity as the trustee of the ARTF is guided by the overall purposes of the World Bank, the political prohibition clause and the other provisions in the Articles of Agreement. Funding military or other security-related expenditures would be outside the World Bank's mandate and would violate the political involvement prohibition. What kinds of recurrent costs are financed by the ARTF? Government's recurrent expenses are reimbursed by the ARTF as long as they adhere to the ARTF grant agreement, government's financial management regulations and the fiduciary standards agreed with the government. To date, approximately 74 percent of recurrent costs have been for payroll expenses and 26 percent for operations and maintenance expenses. How does the ARTF Administrator monitor use of these funds? The Administrator has a contract with PriceWaterhouseCoopers (PWC) to serve as a Monitoring Agent (MA), which is responsible for reviewing expenses submitted to the ARTF by the government. The MA checks compliance with (i) government's internal controls; (ii) ARTF requirements; and (iii) efficiency standards. The MA reviews all of the expenditures codes to ensure they are eligible for ARTF funding and in line with the budget. The MA also reviews some expenses in more detail. The MA decides which expenses to examine more thoroughly by applying a carefully designed risk-based approach to monitoring. How does the World Bank monitor the work and performance of the Monitoring Agent? The MA is under contract with the Administrator which works closely with the MA to monitor their performance and work outputs. They meet regularly to review findings and determine follow up actions. In addition, as part of the Administrator's fiduciary framework for all operations (whether financed by the World Bank or the ARTF), an annual independent audit is conducted. The World Bank follows up with the government and the MA on audit findings. The most recent audit covering SY1386 (March 21, 2007 ­ March 20, 2008), has been received by the Administrator and it has been shared with the donors along with Administrator's comments. Responses to audit findings will be received from MoF shortly. Audit for 1387 is underway. What are 'ineligible expenditures'? Firstly, as noted above, any security related expenditures are ineligible for ARTF financing. In addition, any expenditure that does not adhere to the government's budget and procurement rules, or to the reporting and cash management standards agreed with the World Bank, or with the ARTF grant agreement would be ineligible. When an expenditure is found to be `ineligible' it does not necessarily imply misuse or wrongdoing. How does the ARTF finance the government's operating budget? The ARTF has provided an advance of US$50 million. The government uses this to finance its operating budget and after an initial review of eligibility by the MA, then submits expenditure details to the Administrator which reimburses government for the eligible amounts authorized by the MA. Ineligible expenditures are frequently detected by the MA before any reimbursement takes place. However, the monitoring process 76 ARTF Quarterly Report (December 21, 2009) reviews expenditures at later stages to detect any further ineligible expenditure which may have been reimbursed to the government at the first stage. What is the mechanism for recouping ineligible expenditures and for that matter, misused funds after they have already been paid by the ARTF? After ineligible expenditures are detected by the MA, they are deducted from the other eligible reimbursements made by the ARTF to the government. Sometimes this happens in the same month the expenditure is submitted but often it happens later due to the lag in the monitoring process. For this reason the ineligible expenditures reported each month can vary as amounts are reconciled through an ongoing process. The same process is followed if funds have been misused but in such cases the ARTF brings the issue to the direct attention of the Ministry of Finance so that controls may be strengthened in the future. Is the government's overall performance with regard to expenditure eligibility improving? Improvements have been made in the government's compliance with agreed fiduciary standards, as well as with the financial management. The World Bank is providing capacity-building support to all the ministries on compliance with the new Procurement Law. However, the confusion with change in the procurement law in SY 1387 has impacted compliance. 3. Financial Management in the National Government Audit of SY1386 & SY1387: SY 1386 audited financial statements for the recurrent cost and investment trust funds were presented to the Administrator in June 2009. The Administrator found the reports acceptable and circulated it to the donors along with administrator's review of audit report. The belated start of the SY 1386 audit work by the CAO with support of the audit firm has shifted the timetable for carrying out and completing the SY 1387 audits which were due on September 22, 2009. The Bank received a time-bound action plan from the CAO for the completion of the audits. As of January 14, the Bank had received 24 audit reports; and 19 audit reports were still pending. The pending audit reports are expected to be received on or before January 22, 2010. Public Financial Management: Over the last three years the government has established a new framework for Public Finance Management (PFM) comprising: the national budget as the main policy instrument; a commitment to transparency; centralization of accounting and payments in MoF; and a centralized computerized system to issue checks and record revenues and expenditures of the ordinary and development budgets. Parallel improvements have been made in the Da Afghanistan Bank (DAB) payment systems. The government also established a Treasury Single Account (TSA) which ensures strong fiduciary controls (including regular sweeping of revenues to the center and bank reconciliations). External audit capacity was also developed; consequently, the 2007/8 financial statements of ARTF and IDA ­financed operations have been audited to international standards. Procurement Management: The government established a central facility for procurement that has finalized more than 527 contracts, with a total value above US$1.5 billion, using internationally accepted standards. Audit: The Ministry of Finance has developed work practice tools and has carried out classroom training for 100 Internal Auditors with on-the-job-training to continue through 2009. Analytical and Advisory Work: A major review of Afghan public financial management/PEFA indicators was performed in 2005 by the Administrator. This PEFA study was updated to December 31, 2007 and a detailed report was shared with the Donors. 77 ARTF Quarterly Report (December 21, 2009) The main findings of the assessment suggest that: Revenue Mobilization: On "sound and fair revenue policies; revenue projection", revenue projections are regularly updated and they are incorporated into the budget process. However, key tax policy measures have not commenced as the National Assembly has not yet approved the amendment to the income tax law. On "effective revenue administration", the performance of the Large Taxpayer Office (LTO) has significantly improved and it currently collects 35 percent of domestic tax revenues. The Income Tax Law stipulates that basic enforcement powers for the Revenue Department of the Ministry of Finance and Mustufiats (provincial branches of the Ministry of Finance). Budget Formulation: On "strategic, realistic, predictable multi-year framework", the Medium-Term Fiscal Framework (MTFF) was first formulated in 2005 to strengthen medium-term fiscal projections. The link between the Afghanistan National Development Strategy (ANDS) and the national budget is likely to be strengthened through the ongoing costing exercises. Also, the Ministry of Finance has been piloting initiatives on `program budgeting' and `provincial budgeting'. With regard to "comprehensive, fully integrated budget", the inclusion of data on municipalities and State-Owned Enterprises (SOEs) in the budget documentation requires further progress. On "orderly, open, participative budget process and revisions", the budget circular must include indicative budget ceilings for the primary budgetary units and the budget process needs to be planned in such a way that the ministries and agencies have sufficient time to prepare their budget submissions. Also, despite progress on the part of the Ministry of Finance, strengthening capacities in the line ministries to prepare budget proposals is essential. On "adequate legislative scrutiny of the Annual Budget Law", the Finance and Budget Commission is now providing training to its budget analysts and the members of the Commission. Budget Execution: On "effective cash management", the cash management unit of Ministry of Finance has annual cash plan with monthly update. And all discretionary funds flows are fully consolidated through Treasury Single Account (TSA). However, cash management of line ministries and Mustufiats has little progress. On "effective debt and guarantee management", the Ministry of Finance completed a debt management strategy in October 2005 and debt review finished a fully reconciled. On "smooth, predictable budget implementation", a survey of arrears as well as asset registry has not yet been conducted. On "internal controls", capacity building of internal controllers of line ministries remains an issue. On "internal audit", in the Ministry of Finance, PRR in the internal audit department of Ministry of Finance was implemented and 200 staff was trained. Capacity building of line ministries and municipalities are still of concern. On "payroll", the coverage of Individualized Salary Payments was increased from 23,000 in 2005 to 110,000 in 2009. On "procurement", the Procurement Policy Unit (PPU) was established in August 2006 and Rules of Procedures for Public Procurement was issued in April 2007 and training in public procurement has been delivered to over 1000 procurement staff from the line ministries, including from 6 provinces. Accounting and Reporting: On "accounting, in-year reporting", reconciliation of government accounting records with banking data and TSA is performing satisfactory. Undertaking roll-out of AFMIS to Mustufiats has been completed in twelve provinces and planned for twelve more provinces. On "transparent and accessible external financial reporting", the Harmonized reporting and financial reviews by the Aid Coordination Unit of Ministry of Finance in late 2007 has contributed to capture and report accurate expenditures of donor implemented projects. A remaining agenda is disclosure of SOEs annual financial results. Treasury Operations at Present: Treasury operations are advancing. Most middle management positions have been staffed. Similarly, the review of the internal controls being carried out by the MA indicates that the bank reconciliations have improved although weaknesses in payments and payroll 78 ARTF Quarterly Report (December 21, 2009) persist. Progress on the extension of the Verified Payroll Program (VPP) has fell short of plans. These problems are being addressed. Internal Control at MoF: All payment requests are subject to internal control by the MoF. The main procedures are as follows: All payment request forms are reviewed at the line ministries by the independent MoF controllers. Treasury will only accept payment authorization forms that are authorized by the independent controllers. Budget availability is verified at the MoF prior to issuance of checks. A check authorization process is in place. Furthermore MoF has established an internal audit department. This department is verifying expenditure at the Ministries as well. 79 ARTF Quarterly Report (December 21, 2009) ANNEX 3: ARTF Financial Tables The tables below show the financial situation of ARTF at December 21, 2009. The tables are updated monthly and are available at the ARTF web site: http://www.worldbank.org/artf 80 ARTF Quarterly Report (December 21, 2009) Table 1 - Actual and Expected Donor Contributions Paid-In, Committed, Pledged (US$ Million) December 21, 2009 SY 1381- SY 1381- SY 1381- SY 1381- SY 1381 SY 1382 SY 1383 SY 1384 SY 1385 SY 1386 SY 1387 SY 1388 88 88 88 88 Donor Total Total Total Total Total Total Total Total Signed Un-signed Total % of Total Total % of Total Total % of Total Paid-in Paid-in Paid-in Paid-in Paid-in Paid-in Paid-in Paid-in Pledges Pledges SY 1388 SY 1388 Paid-in Paid-in Australia 0.000 2.635 6.268 7.654 5.836 2.089 31.439 14.992 0.000 0.000 14.992 2.1% 70.913 1.9% 70.913 2.0% Bahrain 0.000 0.504 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.0% 0.504 0.0% 0.504 0.0% Belgium 0.000 0.000 0.000 0.000 0.000 0.000 2.606 0.000 2.869 0.000 2.869 0.4% 5.475 0.1% 2.606 0.1% Brazil 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.200 0.000 0.000 0.200 0.0% 0.200 0.0% 0.200 0.0% Canada 11.998 50.093 5.491 72.343 58.863 213.461 22.068 34.225 0.000 12.726 46.951 6.6% 481.267 13.1% 468.541 13.1% Denmark 5.000 5.000 3.163 3.916 4.343 8.426 20.862 6.257 0.000 0.000 6.257 0.9% 56.967 1.5% 56.967 1.6% EC/EU 15.871 52.720 47.595 58.771 52.720 73.615 11.314 14.193 0.000 3.142 17.334 2.4% 329.940 8.9% 326.798 9.2% Finland 2.792 2.451 5.946 0.000 2.418 5.404 7.915 8.861 0.000 0.000 8.861 1.2% 35.787 1.0% 35.787 1.0% France 0.000 0.000 0.000 0.000 0.000 0.000 5.133 0.000 0.000 5.738 5.738 0.8% 10.871 0.3% 5.133 0.1% Germany 10.068 11.443 15.941 1.230 20.474 55.992 74.000 37.153 0.000 14.345 51.498 7.2% 240.645 6.5% 226.300 6.3% India 0.200 0.200 0.000 0.400 0.200 0.200 0.193 0.000 0.007 0.000 0.007 0.0% 1.400 0.0% 1.393 0.0% Iran, Islamic Repub 0.000 0.989 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.0% 0.989 0.0% 0.989 0.0% Ireland 1.000 1.699 1.814 0.612 1.276 1.458 1.576 2.782 0.000 0.000 2.782 0.4% 12.216 0.3% 12.216 0.3% Italy 17.000 0.000 6.539 0.000 9.223 8.804 34.073 0.000 0.000 5.738 5.738 0.8% 81.376 2.2% 75.638 2.1% Japan 5.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.0% 5.000 0.1% 5.000 0.1% Korea, Republic of 2.000 2.000 2.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.0% 6.000 0.2% 6.000 0.2% Kuwait 5.000 5.000 5.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.0% 15.000 0.4% 15.000 0.4% Luxembourg 1.000 0.000 0.000 0.605 1.563 1.070 1.138 1.136 0.000 0.000 1.136 0.2% 6.513 0.2% 6.513 0.2% Netherlands 33.667 41.151 46.415 29.664 50.805 39.765 39.463 41.895 0.000 7.890 49.785 6.9% 330.714 9.0% 322.825 9.0% New Zealand 0.000 0.000 0.000 0.000 0.628 0.000 0.000 0.000 0.000 0.000 0.000 0.0% 0.628 0.0% 0.628 0.0% Norway 6.818 29.630 9.913 22.544 23.215 30.980 31.470 38.365 0.000 0.000 38.365 5.4% 192.935 5.2% 192.935 5.4% Poland 0.000 0.000 0.000 0.000 0.290 0.270 1.171 0.000 0.000 1.200 1.200 0.2% 2.930 0.1% 1.730 0.0% Portugal 0.000 0.457 0.725 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.0% 1.182 0.0% 1.182 0.0% Russian Federation 0.000 0.000 0.000 0.000 0.000 0.000 2.000 2.000 0.000 0.000 2.000 0.3% 4.000 0.1% 4.000 0.1% Saudi Arabia 10.000 5.000 5.000 0.000 5.000 0.000 0.000 0.000 0.000 0.000 0.000 0.0% 25.000 0.7% 25.000 0.7% Spain 0.000 0.000 0.000 0.000 0.000 22.038 0.000 35.225 0.000 15.780 51.004 7.1% 73.042 2.0% 57.263 1.6% Sweden 3.103 5.982 25.905 12.839 14.680 20.178 18.354 0.000 25.440 0.000 25.440 3.5% 126.480 3.4% 101.040 2.8% Switzerland 0.673 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.0% 0.673 0.0% 0.673 0.0% Turkey 0.500 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.0% 0.500 0.0% 0.500 0.0% UNDP 0.000 2.411 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.0% 2.411 0.1% 2.411 0.1% United Kingdom 15.079 47.096 103.062 131.473 128.487 151.052 162.544 99.048 6.451 0.000 105.499 14.7% 844.291 22.9% 837.840 23.5% United States 38.000 20.000 89.591 62.000 73.900 0.000 159.500 264.000 0.000 15.000 279.000 38.9% 721.991 19.6% 706.991 19.8% TOTAL 184.768 286.461 380.368 404.050 453.921 634.803 626.816 600.330 34.768 81.557 716.655 100.0% 3687.841 100.0% 3571.516 100.0% 1. Unsigned pledges are recorded based on a communication from the Donor to the ARTF Administrator 2. Signed pledges are commitments recorded based on countersigned legal documents confirming the pledged amount. 3. Paid amounts reflect receipt of funds and conversion to US dollars. 81 ARTF Quarterly Report (December 21, 2009) Table 2 - Expressed Donor Preferences By Projects Paid-In, Committed, Pledged (US$ Million) December 21, 2009 SY 1381 SY 1382 SY 1383 SY 1384 SY 1385 SY 1386 SY 1387 SY 1388 SY 1381-88 Donor Curr Program Paid-in Paid-in Paid-in Paid-in Paid-in Paid-in Paid-in Pledged Paid-in Total Expressed Of which US$ US$ US$ US$ US$ US$ US$ Own Curr. US$ Est. Own Curr. US$ SY 1388 Preference Paid-in Australia AUD Basic Package of Health Services (BPHS) 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 2.500 1.785 1.785 1.785 1.785 Total Basic Package of Health Services (BPHS) 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 2.500 1.785 1.785 1.785 1.785 Norway NOK Civil Service Capacity Building 0.000 0.000 2.918 3.102 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 6.020 6.020 United States USD Civil Service Capacity Building 0.000 0.000 4.300 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 4.300 4.300 Total Civil Service Capacity Building 0.000 0.000 7.218 3.102 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 10.320 10.320 Australia AUD Education - EQUIP 0.000 0.000 0.000 0.000 0.000 0.000 7.622 0.000 0.000 2.500 1.785 1.785 9.406 9.406 Canada CAD Education - EQUIP 0.000 0.000 0.000 0.000 0.000 29.797 0.000 11.500 10.840 11.500 9.290 20.130 49.928 39.087 Germany EUR Education - EQUIP 0.000 0.000 0.000 0.000 0.000 0.000 15.716 10.000 14.345 0.000 0.000 14.345 30.061 15.716 Netherlands EUR Education - EQUIP 0.000 0.000 0.000 0.000 0.000 0.000 0.000 5.500 7.890 0.000 0.000 7.890 7.890 0.000 Netherlands USD Education - EQUIP 0.000 0.000 0.000 0.000 0.000 4.000 0.000 0.000 0.000 0.000 0.000 0.000 4.000 4.000 Norway NOK Education - EQUIP 0.000 0.000 4.607 0.000 0.000 5.130 0.000 0.000 0.000 50.000 8.454 8.454 18.192 18.192 Spain EUR Education - EQUIP 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 1.500 2.113 2.113 2.113 2.113 United States USD Education - EQUIP 0.000 0.000 0.000 0.000 0.000 0.000 12.000 0.000 0.000 0.000 0.000 0.000 12.000 12.000 Total Education - EQUIP 0.000 0.000 4.607 0.000 0.000 38.928 35.338 27.000 33.075 65.500 21.642 54.718 133.590 100.515 Canada CAD Horticulture and Livestock Program 0.000 0.000 0.000 0.000 0.000 3.531 0.000 0.000 0.000 0.000 0.000 0.000 3.531 3.531 United Kingdom GBP Horticulture and Livestock Program 0.000 0.000 0.000 0.000 0.000 1.977 4.163 3.000 4.839 0.000 0.000 4.839 10.979 6.140 Total Horticulture and Livestock Program 0.000 0.000 0.000 0.000 0.000 5.508 4.163 3.000 4.839 0.000 0.000 4.839 14.510 9.671 Canada CAD Justice Sector Reform Project 0.000 0.000 0.000 0.000 0.000 0.000 0.000 2.000 1.885 3.700 2.996 4.881 4.881 2.996 EC/EU EUR Justice Sector Reform Project 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 10.000 14.193 14.193 14.193 14.193 Italy EUR Justice Sector Reform Project 0.000 0.000 0.000 0.000 0.000 0.000 14.790 0.000 0.000 0.000 0.000 0.000 14.790 14.790 Norway NOK Justice Sector Reform Project 0.000 0.000 0.000 0.000 0.000 0.000 2.098 0.000 0.000 15.000 2.324 2.324 4.421 4.421 United Kingdom GBP Justice Sector Reform Project 0.000 0.000 0.000 0.000 0.000 0.000 4.904 0.000 0.000 0.000 0.000 0.000 4.904 4.904 United States USD Justice Sector Reform Project 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 1.500 1.500 1.500 1.500 1.500 Total Justice Sector Reform Project 0.000 0.000 0.000 0.000 0.000 0.000 21.792 2.000 1.885 30.200 21.012 22.898 44.689 42.804 United Kingdom GBP Management Capacity Program 0.000 0.000 0.000 0.000 0.000 0.000 7.387 1.000 1.613 0.000 0.000 1.613 9.000 7.387 United States USD Management Capacity Program 0.000 0.000 0.000 0.000 0.000 0.000 1.000 0.000 0.000 0.000 0.000 0.000 1.000 1.000 Total Management Capacity Program 0.000 0.000 0.000 0.000 0.000 0.000 8.387 1.000 1.613 0.000 0.000 1.613 10.000 8.387 Australia AUD Microfinance for Poverty Reduction 0.000 0.000 0.000 0.000 0.778 1.045 4.764 0.000 0.000 2.000 1.428 1.428 8.014 8.014 Canada CAD Microfinance for Poverty Reduction 0.000 4.708 5.491 12.847 24.165 38.832 5.413 0.000 0.000 5.000 4.471 4.471 95.926 95.926 Denmark DKK Microfinance for Poverty Reduction 0.000 0.000 0.000 1.625 2.110 1.465 6.400 0.000 0.000 15.000 3.028 3.028 14.629 14.629 Finland EUR Microfinance for Poverty Reduction 0.000 0.000 0.000 0.000 0.000 1.367 2.216 0.000 0.000 1.600 2.215 2.215 5.798 5.798 Netherlands USD Microfinance for Poverty Reduction 0.000 0.000 0.000 0.000 0.000 2.500 0.000 0.000 0.000 5.300 5.300 5.300 7.800 7.800 Sweden SEK Microfinance for Poverty Reduction 0.000 0.000 2.220 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 2.220 2.220 United Kingdom GBP Microfinance for Poverty Reduction 0.000 0.000 3.782 14.542 9.312 9.846 27.452 0.000 0.000 0.000 0.000 0.000 64.935 64.935 United States USD Microfinance for Poverty Reduction 0.000 0.000 5.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 5.000 5.000 Total Microfinance for Poverty Reduction 0.000 4.708 16.493 29.015 36.365 55.055 46.245 0.000 0.000 28.900 16.441 16.442 204.323 204.323 Australia AUD National Emergency Employment Program 0.000 0.000 0.000 0.000 0.778 0.000 4.764 0.000 0.000 1.000 0.714 0.714 6.256 6.256 Canada CAD National Emergency Employment Program 0.000 0.000 0.000 0.000 1.277 3.363 0.000 0.000 0.000 0.000 0.000 0.000 4.640 4.640 EC/EU EUR National Emergency Employment Program 0.000 0.000 0.000 0.000 0.000 0.000 11.314 2.190 3.142 0.000 0.000 3.142 14.455 11.314 Spain EUR National Emergency Employment Program 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 6.000 8.454 8.454 8.454 8.454 United Kingdom GBP National Emergency Employment Program 0.000 0.000 0.000 18.238 13.909 0.000 0.000 0.000 0.000 0.000 0.000 0.000 32.147 32.147 United States USD National Emergency Employment Program 0.000 0.000 0.000 2.000 0.000 0.000 21.000 0.000 0.000 0.000 0.000 0.000 23.000 23.000 Total National Emergency Employment Program 0.000 0.000 0.000 20.238 15.964 3.363 37.077 2.190 3.142 7.000 9.168 12.309 88.952 85.810 Spain EUR National Emergency Rural Access Project 0.000 0.000 0.000 0.000 0.000 0.000 0.000 3.500 5.021 0.000 0.000 5.021 5.021 0.000 Total National Emergency Rural Access Project 0.000 0.000 0.000 0.000 0.000 0.000 0.000 3.500 5.021 0.000 0.000 5.021 5.021 0.000 Australia AUD National Solidarity Program 0.000 0.000 0.000 0.000 0.778 0.000 9.527 0.000 0.000 2.000 1.428 1.428 11.733 11.733 Belgium EUR National Solidarity Program 0.000 0.000 0.000 0.000 0.000 0.000 1.303 1.000 1.435 0.000 0.000 1.435 2.738 1.303 Canada CAD National Solidarity Program 0.000 10.985 0.000 14.339 17.830 77.238 9.993 0.000 0.000 9.000 8.047 8.047 138.432 138.432 Denmark DKK National Solidarity Program 0.000 0.000 0.000 0.000 0.000 3.663 0.000 0.000 0.000 0.000 0.000 0.000 3.663 3.663 EC/EU EUR National Solidarity Program 0.000 0.000 9.694 21.568 13.180 22.076 0.000 0.000 0.000 0.000 0.000 0.000 66.518 66.518 Finland EUR National Solidarity Program 0.000 0.000 0.000 0.000 0.000 1.367 1.741 0.000 0.000 1.600 2.215 2.215 5.323 5.323 Germany EUR National Solidarity Program 0.000 0.000 6.131 0.000 0.000 22.397 23.314 10.000 14.345 0.000 0.000 14.345 66.186 51.841 Norway NOK National Solidarity Program 0.000 0.000 0.000 3.102 9.018 10.728 4.263 0.000 0.000 30.000 4.743 4.743 31.854 31.854 Spain EUR National Solidarity Program 0.000 0.000 0.000 0.000 0.000 0.000 0.000 2.000 2.869 5.000 7.045 9.914 9.914 7.045 Sweden SEK National Solidarity Program 0.000 0.000 0.000 0.000 3.670 5.236 5.840 50.000 6.876 0.000 0.000 6.876 21.622 14.746 United Kingdom GBP National Solidarity Program 0.000 5.723 0.000 16.394 9.312 30.252 0.000 0.000 0.000 0.000 0.000 0.000 61.681 61.681 United Kingdom USD National Solidarity Program 0.000 0.000 0.000 0.000 0.000 0.000 13.445 0.000 0.000 0.000 0.000 0.000 13.445 13.445 United States USD National Solidarity Program 0.000 0.000 10.000 0.000 25.000 0.000 65.000 5.000 5.000 160.000 160.000 165.000 265.000 260.000 Total National Solidarity Program 0.000 16.707 25.825 55.403 78.789 172.957 134.426 68.000 30.524 207.600 183.478 214.002 698.109 667.585 France EUR Power System Development Project 0.000 0.000 0.000 0.000 0.000 0.000 0.000 2.000 2.869 0.000 0.000 2.869 2.869 0.000 Total Power System Development Project 0.000 0.000 0.000 0.000 0.000 0.000 0.000 2.000 2.869 0.000 0.000 2.869 2.869 0.000 Germany EUR Private Sector Development 0.000 0.000 0.000 0.000 3.199 0.000 0.000 0.000 0.000 0.000 0.000 0.000 3.199 3.199 Total Private Sector Development 0.000 0.000 0.000 0.000 3.199 0.000 0.000 0.000 0.000 0.000 0.000 0.000 3.199 3.199 Germany EUR Public Admin Reform 0.000 0.000 0.000 0.000 3.199 0.000 0.000 0.000 0.000 0.000 0.000 0.000 3.199 3.199 Total Public Admin Reform 0.000 0.000 0.000 0.000 3.199 0.000 0.000 0.000 0.000 0.000 0.000 0.000 3.199 3.199 Norway NOK Rural Water Supply and Sanitation 0.000 0.000 0.921 2.326 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 3.248 3.248 United States USD Rural Water Supply and Sanitation 0.000 0.000 0.000 0.000 0.000 0.000 0.500 0.000 0.000 0.000 0.000 0.000 0.500 0.500 Total Rural Water Supply and Sanitation 0.000 0.000 0.921 2.326 0.000 0.000 0.500 0.000 0.000 0.000 0.000 0.000 3.748 3.748 Norway NOK Skills Development Programme (NIMA) 0.000 0.000 0.000 0.000 0.000 0.000 2.797 0.000 0.000 25.000 3.873 3.873 6.670 6.670 United States USD Skills Development Programme (NIMA) 0.000 0.000 0.000 0.000 0.000 0.000 3.000 0.000 0.000 0.000 0.000 0.000 3.000 3.000 Total Skills Development Programme (NIMA) 0.000 0.000 0.000 0.000 0.000 0.000 5.797 0.000 0.000 25.000 3.873 3.873 9.670 9.670 Russian Federatio USD Strengthening Higher Education Project 0.000 0.000 0.000 0.000 0.000 0.000 1.000 0.000 0.000 1.000 1.000 1.000 2.000 2.000 Total Strengthening Higher Education Project 0.000 0.000 0.000 0.000 0.000 0.000 1.000 0.000 0.000 1.000 1.000 1.000 2.000 2.000 United States USD Technical Assistance Feasibility Studies 0.000 0.000 1.500 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 1.500 1.500 Total Technical Assistance Feasibility Studies 0.000 0.000 1.500 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 1.500 1.500 Grand Total 0.000 21.415 56.565 82 110.084 137.516 275.810 294.725 108.690 82.967 367.700 258.400 341.367 1237.482 1154.515 ARTF Quarterly Report (December 21, 2009) Table 3 - ARTF Commitments & Disbursements As of: December 21, 2009 SY1381-88 (US$ million) Com m Disbursed Com m Disbursed Com m Disbursed Com m Disbursed Com m Disbursed Com m Disbursed Com m Disbursed Com m Disbursed SY1381-88 21-Dec-09 Last Month SY 1381 SY 1381 SY 1382 SY 1382 SY 1383 SY 1383 SY 1384 SY 1384 SY 1385 SY 1385 SY 1386 SY 1386 SY 1387 SY 1387 YTD YTD Total Total Disbursed Available Year End Year End Year End Year End Year End Year End Year End Year End Year End Year End Year End Year End Year End Year End SY 1388 SY 1388 Com m ited Disbursed (g) (h) (g) - (h) TF050577 - Recurrent & Capital Costs Component Wages 40.953 145.769 179.321 174.213 216.199 203.000 276.740 101.476 1337.672 0.000 O&M 13.655 51.164 55.277 79.035 84.015 87.549 33.319 41.639 445.653 0.000 Debt Service, IMF 0.767 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.767 0.000 Debt Service, IDA 2.770 3.870 0.000 0.000 0.000 0.000 0.000 0.000 6.640 0.000 Debt Service, ADB 0.000 0.557 0.000 0.000 0.000 0.000 0.000 0.000 0.557 0.000 Bulk Contracts 1.067 12.782 0.557 0.000 0.000 0.000 0.000 0.000 14.405 0.000 Disbursem ents(A) 59.212 214.144 235.155 253.248 300.213 290.550 310.059 143.116 1805.696 0.000 Special Account(Opening) Balance (B) 0.000 51.500 50.603 50.000 50.000 50.000 50.000 50.000 50.000 Loan Account com m itm ents and disbursem ents (C) 155.000 110.712 195.000 213.246 258.000 234.553 280.000 253.248 299.000 300.213 286.000 290.550 316.000 310.059 145.000 143.116 1934.000 1855.696 0.000 78.304 Updated Special Account Balance * 51.500 50.603 50.000 50.000 50.000 50.000 50.000 50.000 50.000 TF050578 - Monitoring Agent [2] 2.000 0.668 0.777 1.407 2.311 2.641 4.640 2.158 7.001 2.534 3.500 4.798 3.139 2.843 0.000 2.390 23.367 19.439 0.000 3.928 Closed Investment Projects [3] TF050855 - UNDP Police Pr. 1 & 2 4.836 4.836 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 4.836 4.836 0.000 0.000 TF050973 - National Emergency Employment Program 0.000 0.000 16.620 8.310 0.000 8.310 20.200 0.000 16.000 20.200 0.000 15.119 0.000 0.881 0.000 0.000 52.820 52.820 0.000 0.000 TF052081 - Microfinance for Poverty Reduction 0.000 0.000 1.000 0.358 0.000 0.335 0.000 0.306 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 1.000 1.000 0.000 0.000 TF052366 - UNDP Police 3 0.000 0.000 16.800 16.800 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 16.800 16.800 0.000 0.000 TF052475 - Telecom & Microw ave Link 0.000 0.000 3.000 0.150 3.130 1.029 0.000 3.069 0.000 1.522 -0.119 0.241 0.000 0.000 0.000 0.000 6.011 6.011 0.000 0.000 TF052482 - Kabul Roads and Drainage System 0.000 0.000 3.000 0.000 0.000 2.910 0.000 0.000 -0.172 -0.113 -0.031 0.000 0.000 0.000 0.000 0.000 2.797 2.797 0.000 0.000 TF052541 - Kabul Pow er Supply 0.000 0.000 7.435 0.000 0.000 2.901 0.000 1.508 0.000 1.402 0.000 1.029 0.000 0.261 -0.006 0.329 7.429 7.429 0.000 0.000 TF052735 - Strengthening Financial Capacity of the Government 0.000 0.000 5.100 2.046 0.000 0.255 0.000 1.380 -1.041 0.378 0.000 0.000 0.000 0.000 0.000 0.000 4.059 4.059 0.000 0.000 TF053939 - National Solidarity Program 0.000 0.000 0.000 0.000 27.000 26.618 70.900 47.582 58.500 82.038 12.292 12.454 0.000 0.000 0.000 0.000 168.692 168.692 0.000 0.000 Subtotal Closed Investm ent Projects [3] 4.836 4.836 52.955 27.664 30.130 42.357 91.100 53.845 73.287 105.428 12.142 28.844 0.000 1.141 -0.006 0.329 264.445 264.445 0.000 0.000 Current Investment Projects [4] TF050970 - Technical Assistance Feasibility Studies 0.000 0.000 8.000 2.523 6.000 3.881 4.500 2.905 0.000 3.281 0.000 3.024 0.000 1.287 0.000 0.088 18.500 16.990 0.000 1.510 TF052452 - Microfinance for Poverty Reduction 0.000 0.000 4.000 2.202 12.000 12.635 38.300 21.207 32.000 48.477 33.000 34.219 64.000 24.875 0.000 20.244 183.300 163.861 0.000 19.439 TF053940 - Civil Service Capacity Building 0.000 0.000 0.000 0.000 0.000 0.000 8.000 2.384 5.000 4.243 0.000 4.979 0.000 1.081 0.000 0.312 13.000 12.998 0.000 0.002 TF054718 - Rehabilitation of Naghlu Hydropow er Plant 0.000 0.000 0.000 0.000 20.000 0.000 0.000 0.000 0.000 0.160 0.000 0.071 0.000 6.051 0.000 0.160 20.000 6.443 0.000 13.557 TF054729 - Urban Water Supply and Sanitation 0.000 0.000 0.000 0.000 20.000 0.000 21.000 3.628 0.000 3.475 0.000 11.506 0.000 4.485 0.000 2.580 41.000 25.675 0.000 15.325 TF054730 - Education - EQUIP 0.000 0.000 0.000 0.000 0.000 0.000 5.000 0.000 0.000 0.490 27.000 6.512 12.000 29.548 0.000 7.450 44.000 44.000 0.000 0.000 TF055447 - Rural Water Supply and Sanitation 0.000 0.000 0.000 0.000 0.000 0.000 5.000 0.000 0.000 0.590 0.000 0.633 2.650 2.055 0.000 1.681 7.650 4.959 0.096 2.691 TF090077 - Management Capacity Program 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 10.000 0.000 0.000 0.548 5.000 1.932 15.000 2.480 0.375 12.520 TF090205 - National Solidarity Program 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 171.500 136.325 178.000 162.394 100.000 104.517 449.500 403.236 1.704 46.264 TF091120 - Kabul-Aybak/Mazar-e-Sharif Pow er Project 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 57.000 0.000 0.000 14.697 0.000 14.229 57.000 28.926 1.049 28.074 TF091885 - Horticulture and Livestock Program 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 11.000 1.566 0.000 2.460 11.000 4.026 0.052 6.974 TF092073 - Kabul Urban Reconstruction Project 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 5.600 0.000 0.000 1.005 5.600 1.005 0.000 4.595 TF092160 - Justice Sector Reform Project 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 27.750 0.400 0.000 0.774 27.750 1.174 0.768 26.576 TF092544 - Strengthening Higher Education Project 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 5.000 1.000 0.000 0.000 5.000 1.000 0.000 4.000 TF093513 - Pow er System Development Project 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 35.000 5.167 35.000 5.167 0.000 29.833 TF093632 - Kabul Urban Roads Improvement Project 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 18.000 0.000 0.000 3.311 18.000 3.311 0.000 14.689 TF093637 - Water Resources Development Technical Assistance Proje 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 5.500 1.000 5.500 1.000 0.000 4.500 TF093854 - Skills Development Project 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 9.000 2.172 9.000 2.172 0.282 6.828 TF093962 - Second Education Quality Improvement Program 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 35.000 25.643 35.000 25.643 4.692 9.357 TF095297 - National Emergency Rural Access Project 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 30.000 16.000 30.000 16.000 0.000 14.000 Subtotal Current Investm ent Projects [4] 0.000 0.000 12.000 4.725 58.000 16.516 81.800 30.124 37.000 60.717 298.500 197.270 324.000 249.988 219.500 210.727 1030.800 770.067 9.018 260.733 TOTAL COMMIT & DISB. [1+2+3+4] 161.836 116.217 260.732 247.042 348.441 296.067 457.540 339.375 416.288 468.892 600.142 521.461 643.139 564.031 364.494 356.562 3252.612 2909.647 9.018 342.965 Note: * Includes US $50 million Special Account advance plus adjustment for any timing difference. 83 ARTF Quarterly Report (December 21, 2009) Table 4 - ARTF Consolidated Sources & Uses of Funds US$ Mil. Report Date: December 21, 2009 SY 1381 SY 1382 SY 1383 SY 1384 SY 1385 SY 1386 SY 1387 SY 1388 SY 1388 Total Total Total Total Total Total Total Total Total Actual Actual Actual Actual Actual Actual Actual Actual Forecast ², 3 SOURCES OF FUNDS (A+B) A. Net Donors Contributions (A1-A2) 184.240 284.382 378.774 404.094 459.996 654.246 632.694 597.338 716.155 A.1. Donors Contributions 184.768 286.461 380.368 404.050 453.921 634.803 626.816 600.330 716.655 A.2. IDA fees minus Investment Income 0.527 2.079 1.594 -0.044 -6.076 -19.443 -5.879 2.992 0.500 B. Cash Carried-Over (=D previous year) 119.524 155.966 238.070 302.789 293.893 426.679 495.342 495.342 USES OF FUNDS (C+D) C. Disbursements (C1+C2+C3+C4) ¹ 64.717 247.940 296.670 339.375 468.892 521.461 564.031 356.562 593.320 C.1 Recurrent window - Disbursed by DAB 59.212 214.144 235.155 253.248 300.213 290.550 310.059 143.116 290.000 Wages 40.953 145.769 179.321 174.213 216.199 203.000 276.740 101.476 O&M 13.655 51.164 55.277 79.035 84.015 87.549 33.319 41.639 Other 4.604 17.210 0.557 0.000 0.000 0.000 0.000 0.000 C.2. Investment window 15.589 58.873 83.969 166.145 226.113 251.129 211.056 300.000 C.3. Pass-through to LOTFA (UNDP Police) 4.836 16.800 0.000 C.4. Fees to monitoring agent 0.668 1.407 2.641 2.158 2.534 4.798 2.843 2.390 3.320 D. Cash Balance (end-of-period) (A+B-C=D1+D2) 119.524 155.966 238.070 302.789 293.893 426.679 495.342 736.118 618.177 D.1. Committed Cash Balance: 97.120 109.913 161.684 279.849 227.244 305.926 385.033 392.965 474.613 to recurrent window special account 51.500 50.603 50.000 50.000 50.000 50.000 50.000 50.000 50.000 to recurrent window Trust Fund 44.288 26.042 49.489 76.242 75.029 70.479 76.420 78.304 70.000 undisbursed investment window balance 32.566 61.822 150.753 94.895 179.424 252.295 260.733 352.295 to Monitoring Agent 1.332 0.702 0.372 2.854 7.321 6.023 6.318 3.928 2.318 D.2. Unallocated Cash Balance 22.404 46.053 76.386 22.940 66.649 120.753 110.309 343.153 143.564 (1) Advance disbursements reported following standard World Bank practice. (2) Assumes all pledges collected, and estimates of future allocations and disbursements are met. (3) SY1387 forecasted balance (previous balance + new commitments - disbursements) is based on projected contributions, commitments and disbursements. (4) Unallocated cash balance refers to funds in the ARTF parent account that the MC has not formally committed. During the Solar Year they will be committed in line with priorities for ARTF funds as set out in the Afghan National development budget. The balance as per Bank system (SAP) as of the date of this report is US$343.100. The small difference is due to interest income treatment. 84