Budget UpdateBudget Update

Mustafa Mastoor, Director General Budget, MoF

Outline

-1387 Budget

-Donor Financial Review

-1388 budget

Core Development Budget 1386 Vs 1387

-Unrealistically high Budget

-Delay in Non discretionary financing

-Direct Budget Support to Next year

-Cash

-Technical capacity in LMs in budget preparation

- Absorption of the technical capacity of LM by TA firms

-Security

Development Budget 1386 Expenditure Vs 1387 Expenditure

963

559

0100200300400500600700800900

1,0001,1001,2001,3001,4001,5001,6001,7001,8001,9002,0002,100

1386 Expenditure

1387 Expenditure

1387 Core Development Budget Execution

Development Budget Expenditures and Allotments

2,100.1

828560

0.0200.0400.0600.0800.0

1,000.01,200.01,400.01,600.01,800.02,000.0

Development Budget

Budget

Allotment

Expenditure

39% 27%

Execution: Discretionary Vs Non Discretionary1387 Disrectionary fund progress

100%

55%

30%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1

1387 Non discrestionary fund progress

100%

35%

20%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1

-Top 50 projects represent 75% of the Core development budget so far 36% contracted and 22% disbursed

Core Development Budget 1386 Vs 1387

Operating Budget 1386 Expenditure Vs 1387 Expenditure

17

952 1,015

0100200300400500600700800900

1,0001,1001,2001,3001,4001,500

April

May

June Ju

ly

Augus

t

Septe

mbe

r

Octobe

r

Novem

ber

Decem

ber

Janu

ary

Febru

ary

Mar

ch

1386 Expenditure

1387 Expenditure

-Higher Budget than last year

-Wheat purchase

-Teacher salary Increase

-Early Consumption of Fuel Subsidy

-Food and Fuel Price

Update on other major activities

ANDS integration into MoF Structure

Further Alignment of the Budget with ANDS

IMCs formation

Program Budgeting Expansion

Costing of the ANDS remaining strategies

Provincial Budgeting

Donor Financial Reviews

Key Findings Donor Financial Review

Took place in Oct

40 included, 21 submitted most of the data, 6 submitted part of

the information and 13 did not submit anything

Very late information submission (mid December0

Not improved than DFR in April

Pledges, Commitments and Disbursements re confirmed

Over all poor data on Multi Year Projection

Better utilization of the Harmonized reporting format

More in – country staff needed

-Donor Pledges reached around USD 55 billion

- Paris Conference pledges aprx. USD 7 M less then announced

Pledges Tokyo Berlin London Rome Paris Total

Announced 4,500 8,200 10,500 360 20,840 44,400

After Verification with Donors 5,133 5,565 8,726 43 14,268 33,735

Donors' Pledges by Donor Conference (figures in USD million)

Source: Ministry of Finance, Budget Dept. Pledge Table, Dec 2008

Donors' Pledges by Conference + Supplemental Pledges (figures in USD million)

Pledges Tokyo Berlin London Rome ParisSupplemental

Pledges Total

Announced 4,500 8,200 10,500 360 20,840 N/A 44,400

After Verification with Donors 5,133 5,565 8,726 43 14,268 21,820 55,555

Source: Ministry of Finance, Budget Dept. Pledge Table, Dec 2008

Pledge Com Disb

Total 55,555 38,976 31,898 23,657 16,579 7,078 Source: Ministry of Finance, Budget Department, ODA to Afghanistan, December 2008

2002 - 2013 2002-20082002 - 2008

Donors Official Development Assistance to Afghansitan (2002 - 2013)

All figures in USD million

Uncommitted against pledge

Undisbursed against

commitment

Undisburesed against Pledge

Expenditure of Core and External Budgets 1382-87

0

1000

2000

3000

4000

5000

1382 1383 1384 1385 1386 1387

Source: M inistry of Finance, Budget Dept, DAD, Dec 2008

in U

SD m

illio

n

Core

External

Chart 4: Expenditure of Core and External Budget 1382 - 1387 in USD Million

33%

67%

Core

External

Source: Ministry of Finance, Budget Dept. DAD, Dec 2008

Estimated donor future allocations (1387 – 1391) represent matter for concern – they indicate lower donor contributions to the Core Budget, and specially to the trust funds

Donors Allocation to Trust Funds for 1381-1391

846

429

327

168 148

352

446

501

585

789

192

0

100

200

300

400

500

600

700

800

900

1381 1382 1383 1384 1385 1386 1387 1388 1389 1390 1391

Source: Ministry of Finance, Budget Department, Dec 2008

in U

SD

Millio

n

2008-09 2009-10 2010-11 2011-12 2011-2012Core 717 1,019 740 490 442 3408 16%External 7,191 4,771 2,272 1,671 1,582 17487 84%

%

Estimated Donor Allocation to Core and External Budgets 1388-1391 (in USD million)

Budget Grand Total1387 1388 1389 1390 1391

ANDS prioritization Vs five year projection

50.1 Billion USD20.9 Billion USD 6.8 Billion USD

22.3 Billion USD

ANDS External Financing Gap (1387-1391)

Source: Ministry of Finance, Budget Dept. Dec 2008

ANDS Funding NeedsEstimated Donors SupportDomestic Revenues Projection

ANDS External Financing Gap

•ANDS Financing Gap remains extremely high

• The most priority ANDS Sector (Infrastructure and Natural Resources) is estimated to be severely under-funded USD 15 billion

•Education, Agriculture, Economic Governance seriously under funded

SectorANDS

Funding Needs

%Estimated

Donors Support

% Domestic Revenues %

Financing Gap

Security 14,179 28% 5,880 28% 2,785 41% -5514

Infrastructure & Natural Resources 17,186 34% 1,929 9% 295 4% -14962

Agriculture & Rural Development 4,487 9% 2,985 14% 115 2% -1387

Education 4,873 10% 1,048 5% 1,349 20% -2476

Good Governance & Rule of Law 2,985 6% 965 5% 1,277 19% -743

Health & Nutrition 2,478 5% 2,541 12% 160 2% 223

Economic Governance 1,186 2% 866 4% 101 1% -219

Social Protection/Humanitarian 1,815 4% 1,196 6% 451 7% -168

Unclassified 915 2% 3,486 17% 331 5% 2902

TOTAL 50,104 100% 20,895 100% 6,865* 100% -22344

* Based on still valid projections for Domestic Revenue growth. However, in line with the ongoing consultations with the IMF these projection might be revised downwards

Source: Ministry of Finance, Budget Dept. Dec 2008

Estimated ANDS Sector External Financing Gap for 1387 -1391 ( in USD million)

Preparation for 1388 Budget

• Sufficient time has been given to LMs to prepare their budget

• Budget Hearings from Dec 13th to 31st

• Cabinet would discuss the budget On Jan 21st

• Submission to parliament on time (Feb 5th)

• Operating Budget would be lower by USD 160 M

than the MTFF

• Core Development budget should be realistic

Challenges

Uncertainty about Ceilings

Uncertainty about future Projections

Less ARTF Recurrent Cost Window

Less Domestic Revenue

High demand for the Expenditure

Less budget support to Development Budget

Changes of the commitment during the fiscal year

- Estimated donor support to 1388 Core Budget is well below ANDS funding needs

- Donor allocations for 1388 continue to show misalignment with the ANDS sector priorities

SectorEstimated

ODA

% of Estimated

ODADomestic Revenues

ANDS Funding Needs

External Financing

Gap

Security 2468 43% 447 2,585 330Governance & Rule of Law 305 5% 204 558 -49Infrastructure 717 12% 46 3,093 -2,330Education 179 3% 205 893 -509Health 147 3% 24 465 -294Agriculture & Rural Development 622 11% 19 921 -280Social Protection/Humanitarian 147 3% 72 359 -140Economic Governance 284 5% 16 215 85Unclassified* 921 16% 71 198 794

Total 5,790 100% 1,104* 9,287 -2,393

* Based on still valid projections. How ever, in line w ith the ongoing

consultations w ith the IMF these projection might be revised dow nw ards

* Unclassif ied mean Donors have not yet identif ied the sector to allocate funds

Estimated Sector Allocations for 1388 Core and External Budget (in USD million)

Source: Ministry of Finance, Budget Department,Dec 2008

Thank You