The Challenges of Provincial Budgeting in Afghanistan

Sayed Nasrat, independent consultant based in Kabul, Afghanistan— Aug 12, 2015

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Since Afghanistan’s transition to a democracy 13 years ago, the government and the international community have made multiple attempts to decentralize the budget system to better incorporate the needs of provinces. So far, these attempts have failed. A new set of reforms currently awaiting approval, however, shows greater promise.

Demands for Provincial Budgeting

In Afghanistan today, provincial departments are constrained by the decisions of central line ministries, and the central government takes little notice of their input when it comes to preparing budgets. The centralized budgeting system has a negative effect on service delivery at the subnational level, as provincial needs are not being met in the budget process. Moreover, the current system makes it difficult to establish compromise between government, civil society, and the international community.

Several Failed Attempts

Alexandra Hoachlander/ISAF
Alexandra Hoachlander/ISAF

The provincial budgeting reform process began as a set of pilot policies in 2007, targeting three specific ministries in three provinces. A second pilot policy expanded this effort to even more provinces. However, both of these policies faltered because reform efforts focused on provincial offices instead of the central line ministries, which currently steer decision making through most of the budget process.

The Afghan government, with the assistance of the international community, also attempted to establish multiple strategic plans that would have coordinated budgeting between the provincial and sectoral ministries, as well as provided annual and five year development plans for each province.

However these attempts failed due to poor communication and lack of coordination between the several parallel governance bodies at the subnational level. These plans were also unable to prioritize the most critical development needs of specific provinces and had an unclear relationship with other budgetary plans at the national and subnational level.

Why the Latest Reforms Hold More Promise

A new provincial budgeting policy drafted in 2013 shows more promise. Compared to previous efforts, the new policy has several strengths, including its comprehensiveness and clarity. The policy outlines the responsibility of provincial line departments, provincial governors, and provincial councils, in the provincial budgeting process. The policy also focuses on coordination and communication between central and provincial directorates through the establishment of a public financial management committee.

Civil society should have a role in each stage of the budget process, including formulation and execution.

Despite these strengths, however, the policy only gives civil society an oversight role. This isn’t enough to ensure the needs of individual provinces are being met.  Civil society should have a role in each stage of the budget process, including formulation and execution.

The policy is still awaiting approval by the government. It faces a tough road becoming law for five reasons: 1) the centralized system is established in law; 2) there is a lack of political will to change the current system; 3) the Afghan treasury doesn’t have enough discretionary budget from the international community; 4) the structure of the subnational government is complicated; 5) government institutions lack capacity, especially in the field of public financial management.

To align the provincial needs with the national budget, civil society organizations should step up efforts to lobby the government for needs-based budget allocation. Additionally, the Afghan government needs to bring legal change to the current system, including approving the current provincial budget policy. If not, provincial budgeting policy will not succeed.