Afghanistan Reconstruction Trust Fund

Extracted 23JUL2011 from

The Economy: With 80 percent of the population living in the rural areas, the agriculture sector accounts for around one third of Afghanistan’s economy (excluding the illicit drug sector). Real GDP is expected to grow by around 8.5 percent in 2010/11 (SY1389), down from 22.5 percent last year which reflected recovery from the poor harvest in 2008/09 (SY1387). In 2010/11 (SY1389), GDP per capita is expected to reach $609.

...To date, the World Bank has committed over $2.1 billion for development and emergency reconstruction projects and four budget support operations. This support comprises over $1.67 billion in grants and $436.4 million as "credits." As of January 2011, the Bank has 23 active projects in Afghanistan with net commitments of over $900 million. A number of Bank-financed projects have been completed. For more information about closed projects, please visit: – Projects & Programs page.

The World Bank also administers the Afghanistan Reconstruction Trust Fund (ARTF). Supported by 32 donor countries, the ARTF has mobilized over $4 billion since 2002. The ARTF has emerged as one of the main instruments for financing the country’s recurrent budget and investment needs. All investment projects are aligned with the government priorities. They include agriculture and rural development, justice, private sector development, capacity development, education, urban development, transport and energy. The ARTF also supports the Government’s recurrent cost financing needs and to date more than $2.15 billion has been disbursed to the Government of Afghanistan for civil servants’ salaries.

The ARTF has, in the last two years, introduced a conditionality-based program known as the ARTF Incentive Program (IP). The IP is an important tool for coordinating multi-donor policy dialogue with the Ministry of Finance. The program allocates additional (discretionary) funding (currently around $70 million per annum) on a performance basis in line with the Afghan budget cycle. A small working group of donors negotiates reform benchmarks with the Ministry of Finance, facilitated by the World Bank. To date, the IP has supported important government-led reforms in customs and revenue collection, the corporatization of public utilities and the strengthening of the regulatory environment for extractive industries among others. The IP’s latest round of benchmarks was successfully negotiated in June 2010 and the technical review is ongoing.