The World Bank in a letter to President Ghani on Nov 23 stated that it will stop $200 million aid to Afghanistan “till banking sector data is shared.”
“I would like to alert you, however, to two important issues that remain to be resolved and may impact our capacity to disburse the full amount of US$200 million allocated for the Incentive Program. Firstly, under our current operational policies, the World Bank is obligated to assess and confirm the adequacy of a recipient country’s macroeconomic policy framework prior to disbursing budget support funds,” the letter seen by TOLOnews.
The World Bank has said that such assessment can only be undertaken if the bank is provided access to a range of basic data, including data on the banking sector.
“Unfortunately, we have not been able to obtain banking sector data from Da Afghanistan Bank (DAB) despite several written requests. This data is not sensitive and was shared with the World Bank prior to the release of funds under previous Incentive Programs,” it said.
The letter mentioned that the cabinet’s recent approval of the new Public Investment Management (PIM) Regulations was a policy before action under the 2020 Incentive Program.
“A key policy intent of the new Regulations was to align PIM and Public-Private Partnership (PPP) processes, and to ensure rigorous oversight and management of any associated fiscal risks. While the PIM Regulations have been passed, we understand that there are important inconsistencies between the PIM Regulations and recent amendments to the PPP Law, which have transferred responsibility for management of PPPs from the Ministry of Finance (MOF) to the Administrative Office of the President (AOP),” according to the letter.
These amendments to the PPP Law were approved despite the written advice of the World Bank and IMF, as conveyed in a letter to the Minister of Finance dated October 13.
“Look forward to discussing this issue further. Until a clear way forward is agreed to ensure that the PIM Regulations remain consistent with recently approved amendments to the PPP Law, we will be unable to disburse the US$20 million associated with the approval of the PIM Regulations,” the letter said.
“Please rest assured that issues related to the PIM Regulations will not impact planned disbursement against the remaining nine policy actions, and we would still expect to disburse US$180 million out of a total allocated US$200 million as soon as banking sector data is shared,” it added.
The World Bank has committed $600 million in aid to Afghanistan and so far they have provided $400 million to the country.