Budget Sans Foreign Aid

First Regular Annual Budget of Islamic Emirates of Afghanistan

One may wonder if the new regime, The Islamic Emirates of Afghanistan, will be able to financially survive and grow with their announcement of going ahead without foreign aid. In fact, this may not be their choice, as no such aid, as such, appears to be coming. On the other hand, their legitimate funds have been blocked, rather usurped in many cases, by the world powers hoping that the new rulers would crumble and approach them with begging bowls. It does not appear to be working.

The Afghan regime is determined to manage their affairs with their own resources. It is an important development in the international finance that a nation whose resources, including reserves, have been halted, rather diverted on questionable grounds, and whose banking system has been grounded in effect, is die-hard serious not to buckle. If it works, it would be a slap on the face of the present dollarized financial systems.

The idea of managing economic affairs without foreign aid is particularly noteworthy in the case of a country where international assistance in the past represented 40 per cent of their GDP and made up 80 per cent of their budget. Obviously, this has affected the size of the budget. The budget-size for the previous year, solar 1400 to be specific, was 473 billion Afghanis (Afs), of which 311 billion Afs was for normal operations and 160 billion Afs was for development. The size of new budget now announced for Solar year 1401 is 231.4 billion Afs of which 203.5 billion Afs will be allocated for the ordinary budget, and 27.9 billion Afs for development.

Apparently, it may appear dismal as compared to the previous year. But if we consider that only 20 per cent of that budget, say 95 billion Afs, comprised local revenues. The jump of about 2.5 times in projected local revenue, if achieved, will be worth on its own. The Islamic Emirates of Afghanistan considers this feat achievable through serious directed efforts coupled with plugging in revenue leakages by ironing out corruption. There is a shortfall of 44 billion Afs in the budget as announced. The government says it would fix this gap by effective financial planning.

Public announcement of break-up of allocation of resources has either  not been done or reported in the media. A search of the same on the official website of the Afghan government has also been of no avail. However, it is reported that 88 per cent of the allocation will be for routine and recurring expenses which would comprise government expenses including salaries, while 12 per cent of allocations would be earmarked for non-recurring and development related expenses. Special attention of development will be on overall education including technical education, and higher education. The government has announced that its focus is to pave the road to education for everyone. The development projects include transport related infrastructure.

Another aspect is also noteworthy that the financial planning of the nation was done after the announcement of ban on poppy cultivation in Afghanistan. In complete disregard to the international outcry from the foreign media that this would ruin the country, the regime there is steadfast on the decision they have taken. So, revenue from poppy cultivation is also taboo like that on foreign aid. They might be considering both poppy and foreign aid belonging to the same genre – the opium for masses.

Spokesman for the Finance Ministry Ahmad Wali Haqmal accepted that the funds earmarked for development projects are not sufficient. “We are trying to finance it from our domestic revenues – and we believe we can,” he said. He had earlier said, “It’s a small amount but that’s what we can do now.” He further informed that revenues are collections from departments related to customs, ministries and mines.

The announcement of budget for solar year 1401 was delayed by about two months. It should have been announced before March 21, 2022, the date of its beginning. It tells upon the administration of budget and related financial plannings. One may hope that with the passage of time the financial administration of Afghanistan would mature and the principle of “announcement and approval of budget before the commencement of budget-period” would be possible. This principle of prior presentation of budget is universally accepted and practised, and it is logically justified too. For example, the budget in India is presented on the first day of February, although it commences from the first day of ensuing April. The process of interim approval of budget in India is completed within the months of February and March so that every charge on the exchequer is duly authorised.

The administrative issues faced by the new Afghan regime is understandable. However, it may be appreciated that the Emirates had released its first draft national budget after taking over Afghanistan in August, 2021, covering the interim period up to the financial year, planning to spend 4.7 billion Afs on development projects, including transport infrastructure. So, it may be said that the period prior to the new financial year too was also covered by the earlier draft budget.

All said and done, the fact that the budget of Islamic Emirates of Afghanistan is made without any reliance on foreign aids, does not mean that foreign aids, as such, are unwelcome. If it comes, it would ease out their financial position. Hence, the aid that many countries including the gracious inflow from India are accepted with gratitude. But they are psychologically not reliant upon such non-domestic inflow of resources.

There are many aspects of the new rulers of Afghanistan, including their interpretation of their religion and its linkage with their culture and practices, where one has scope of disagreement with them. But one point is obvious that they are not available to be subdued, either physically or mentally.  They are ready to earn and utilise the fund so created for their future planning. So, they mean business and the message is loud and clear that they are not “White Man’s Burden.”

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