Contacts:
In Kabul
Abdul Raouf Zia (93) 702 80800
Email: Azia@worldbank.org
In Washington:
Zita Lichtenberg (202) 458-7953
Email: Zlichtenberg@worldbank.org Audio Available
Washington, July 29, 2004 – Nearly half a billion dollars of World Bank commitments to Afghanistan are expected to be in grant funding by June of next year. By then, total commitments from the International Development Association (IDA) are expected to be US$893 million, of which US$456 would be grant funding. The large proportion of grant funding to Afghanistan recognizes the scale of the challenge facing this nation as it recovers from a 20-year conflict. Today the institution’s Board of Directors approved a US$145 million package of assistance to the country. The package includes US$35 million in grant funding for education, a US$25 million credit for urban reconstruction, a US$80 million credit to support the Government’s medium-term development strategy, and US$5 million in seed money for a private investment guarantee initiative. The credits are on IDA terms which carry no interest and just a small service fee. The Kabul Urban Reconstruction Project will support reconstruction and rehabilitation in some of Kabul’s most vulnerable neighborhoods, and, in so doing, help mend the urban fabric of this important city now struggling to accommodate many thousands of returnees. Building capacity in both the Ministry of Urban Development and Housing (MUHD) and Kabul Municipality is an additional critical component of the project. Housing across Afghanistan is important, but, as a capital city, Kabul faces special challenges. It has become a magnet for people returning from displacement both within Afghanistan and from other countries where they had sought refuge. They have come seeking the security, facilities and social services that the capital offers. And they have come, in many cases, to escape confrontation with the current occupants of their former rural homes. For 20 years there has been little recording of land transactions, no clear system of title transfer or inheritance, and, in Kabul, no investment to sustain conventional urban services. “The efficient delivery of services is essential for the development of urban areas,” says Richard M. Beardmore, World Bank’s Senior Urban Specialist. “The huge and sudden increase in the urban population of Kabul has created entire neighborhoods outside the city’s already weak ability to deliver services. The majority of the urban poor live in informal settlements, often in bombed-out ruins. We are using this project as a pilot to help municipalities integrate these informal areas and deliver a minimal set of services to them rather than regard them as unauthorized developments to be removed.” A system of land tenure security will be worked out for residents. The costs of the project are estimated to be around US$52 million, and, in addition to today’s approved IDA credit of US$25 million, further co-financing of about US$27 million will be sought from other donors to scale up the project. The Programmatic Support for Institution Building of US$80 million is the first of a series of similar operations aimed at supporting the implementation of the government’s medium-term development strategy. Since the fall of the Taliban in late 2001, impressive progress has been made to rebuild institutions and implement critical structural reforms within a stable macroeconomic framework. A new currency was launched in late 2002. Strong fiscal discipline has ensured macroeconomic stability. Budget execution and treasury functions have improved considerably, with parallel progress in the areas of financial management, procurement, and audit. The objectives of this operation are to deepen, broaden, and sustain the reforms underway, particularly in the areas of public administration and fiscal management. These reforms will keep improving the government’s own fiduciary standards, critical for poverty reduction assistance to be effective. It will also support improvements in the administrative capacity of ministries and sub-national governments, develop revenue policy and administration, and enhance civil service effectiveness. “Without underestimating the tremendous challenges facing Afghanistan, we should acknowledge encouraging signs of increasing government capacity and tangible measures of economic improvement,” says Alastair J. McKechnie, World Bank Country Director for Afghanistan. “We are committed to helping Afghanistan create a sound and transparent institutional system, where all players – including both government and the private sector – can contribute to the country’s reconstruction and development programs.” See separate press releases for details of the Afghanistan Investment Guarantee Facility and the Education Quality Improvement Program, also approved by the World Bank’s board today. For more information on the World Bank’s activities in Afghanistan, visit: http://www.worldbank.org/af For more information about MIGA activities, visit: http://www.miga.org/ For further information on Afghanistan’s National Development Framework, visit http://www.af/ For Securing Afghanistan’s Future Report, visit http://www.af/recosting/index.html |
