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UN Office for the Coordination of Humanitarian Affairs |
AFGHANISTAN: Interview with finance minister
KABUL, 28 August 2003 (IRIN) - One of the major challenges facing the fledgling Afghan government is the collection of taxes and revenues from the provinces, which are still largely dominated by powerful warlords and local commanders. In an interview with IRIN, Dr Ashraf Ghani, the Afghan finance minister, said the government's ability generate revenue from the provinces was gradually improving and that its target of raising income of US $200 million this financial year was realisable.
QUESTION: You have a very difficult portfolio generating government revenue in a country just emerging from decades of conflict and where Kabul's authority remains limited. What have been the most immediate challenges?
ANSWER: We need the reform of customs, and reform of customs depends on the flow of revenues and our ability to make decisions ourselves. The international community does not usually fund the ordinary budget. It is extraordinary that they are helping us, but they are looking to the end of their commitment. So we need to make sure that a responsible fiscal regime is laid down that can give us self-sufficiency.
The second challenge is the reform of the treasury so we can create a system of payment so all civil servants in Kabul and the provinces are paid on time in full and on a regular basis. We have computerised the system here and that has resulted in significant improvement. We need to expand the system to the provinces. Also, the tax laws need to be overhauled completely in order to enable us to create a system that is attractive to investment and easy to administer.
Our budget execution and preparation needs very substantial improvement. Our most important challenge is to recruit on the basis of merit the cadres that will be the pride of this country and really defend and represent the interests of this country. We need to evaluate the existing staff and bring out the best in them.
Q: The low pay of civil servants is becoming a concern in many parts of Afghanistan. Civil servants are complaining that their pay of US $40 per month is not enough to live on. How are you addressing this problem?
A: The pay grades are based on the income of the country. The international community is not willing to pay increasing amounts for civil servants. You must realise that getting international support for the recurrent budget is one of the most difficult things in the world. I had to spend the bulk of my first year as finance minister in raising money. When I became finance minister [early last year] there was zero money in the treasury.
It is up to us to raise domestic resources very substantially in order to be able to meet our fiscal needs. We have to be able to find a source of payment. A source of payment cannot be found until the system of customs and taxes is modernised and centralised, and we are in that process.
We are round the clock devoting our efforts to raise the national revenues. And today all the domestic revenue goes to the security sector. I don’t have a penny to allocate to civil servants, because the international community is not willing to provide a cent for the support of our existing soldiers. While the defence ministry is being paid now on time and in full and their wages are higher than civil servants, that is being met from the domestic resources, and thanks to domestic reform they are being paid.
Our key goal is to ensure that the civil servants receive their pay on time. This is required both by the donors who fund our budget and the Afghan law. We are measuring our performance in this area. We have a lot of shortcomings, but we are working round the clock to improve our performances in this area.
Q: Your government made a commitment this year to raising US $200 million from domestic revenue. Are you on target here?
A: All the major revenue-producing provinces are submitting their revenues on a regular basis. What is coming is significant. We have exceeded $85 million in collection. I fully expect to meet our $200 million commitment and hope to exceed it. In terms of flow, the system is working. We are getting weekly information, and all directors and staff of the major customs houses are under training. Of course, we are lacking the infrastructure that a modern customs management and
tax system requires, and that is what we are in the process of creating now.
Q: What are the challenges in collecting the border revenues?
A: Although all the provinces are submitting their revenues, Afghanistan is a very large country with very long borders. There is illegal crossing [of borders] and there is corruption. We need to get control of all of these in a uniform manner, but in a country like ours with long borders, this is not something to happen overnight. The reform of the security sector will provide the basis for revenue collection. The other part is reform in the financial system, which is also under way in order to increase our efficiency in this process.
Q: How is the new Afghan currency doing?
A: The Afghan currency has been remarkably stable. I think we are unique in the post-conflict governments in having a very strict and extremely conservative and responsible fiscal policy. As minister of finance, I have not issued a single cheque or authorised a single cheque without having the money at the central bank. And for a country that has suffered double and even triple digit inflation in terms of our monetary situation, I think we can be proud of our accomplishment.
Q: Has the government fulfilled its financial responsibilities to donors?
A: We are making new grounds in terms of coordinating the donors, but we need major improvements in our transparency, accountability and in our effectiveness. As long as there are allegations of corruption and mismanagement and ineffectiveness we will not succeed. In this ministry significant changes are under way. Other ministries must also do their best to convince the Afghans and to convince the donors. This is not a one-way relationship: the international community will not give us money if we are not accountable for it. We must have measurable criteria of success.
Q: Recently, you had a trip to neighbouring Pakistan. How significant was that?
A: The [team which made the] trip was composed of the Afghan deputy minister of commerce, the director of customs, our ambassador to Pakistan and 10 people from the private sector. It is over 12 years that we have had major difficulties in the area of transit trade with Pakistan. A ban on the import of a number of items was imposed in the past. I am pleased to announce that during this meeting we had a fundamental breakthrough. Six more items were removed, so the number of items remaining on the list is only 12.
There is a commitment that substantial progress would be made on this issue by the next meeting, which will take place in Kabul. More importantly, we have really managed to iron out all the difficulties at the lower level of bureaucracy in the port of Karachi in Port [Muhammad Bin] Qasim. I hope that within a very short period, transit trade will flow in a major way to the port of Karachi and Port Qasim to Kabul and Kandahar.
We also discussed Pakistan’s aid to Afghanistan. We reached agreement that the Torkham and Jalalabad roads will be repaired and a new road parallel to the existing one will be constructed within the next 18 months.
It is important to say that in the Pakistani fiscal year - that runs from June to June - recorded exports to Afghanistan which exceeded $400 million. This indicates that the reconstruction of Afghanistan is providing a major opportunity for Pakistani businesses.
Themes: (IRIN) Conflict, (IRIN) Economy, (IRIN) Governance
[ENDS]
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