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Why Afghan ministries fail to spend their Annual Budgets

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By Ahmad Sahil-Afghan Ministry of Finance (MoF) plays a vital role in fiscal and economic affairs of the country. It is a key of other Ministries. In addition to controlling and managing financial and economic activities of the government, it plays a central role in revenue collection, devising monetary policies and channeling funds to other ministries. This ministry also has a number of other major responsibilities, but this article focuses more on the failure of other ministries and government agencies for not being able to properly utilize the budgets they jointly develop. As mentioned above, The Finance Ministry is responsible to provide and control the funds of government ministries and agencies, so that they are able to achieve their strategic objectives and goals annually.

First, we will discuss on budget process. Every annual draft budget of ministries establish by every ministry and this draft budget send to Ministry of Finance (MoF) to approve and legalize the budget, it should undergo several stages. After compiling and preparing a draft the Annual Budget from the Ministries the Ministry of Finance (MoF) sends the first draft to the legislative branch of the state (Afghan Parliament). The draft budget goes to the first Senate in other laws; the upper house alone has views of the ideas and recommendation in the draft budget. The approvals and rejections of budgets authorization are only with Wolesi Jirga. Subsequently, the draft budget goes to the second approval to presidential palace where the president gives approval on the draft budget.

In comparison to other countries, Afghanistan remains a long term corrupt country in its financial activities which still has its national budget deficit; this means in economic that the expenditure rate of Afghanistan is much higher than its revenue. Whenever, Afghanistan’s Central Bank makes its fiscal policy every year for Afghanistan the graph of expenditures is greater than its revenue, in recent years Afghanistan found some economic potentials to reduce the costs of high expenses by implementing some fundamental contemporary economic projects to equal the balances of the fiscal policy. Here we will discuss why the annual budget of Afghanistan is being deficit it every year? What are the reasons why the national annual budget goes into deficit every year? There are many factors which will be put forward here in this article: First, the basic reason is that Afghanistan suffered in war from many decades, secondly, it doesn’t have industrialize country  therefore its annual budget is facing crises every year, thirdly, allegation of excessive corruption in custom departments, briberies, lack of comprehensive financial assessment in government agencies. Finally, lack of a good financial system in the ministries furthermore, there are other factors that will be pointed out below:

We will try to answer the following questions in this article:

What are the challenges and obstacles?

Why are Afghan Ministries not able to spend their budgets on time?

What are the major causes of under spending?

What are the solutions?

Challenges and Obstacles:

The power limitation of minister causes to delay a mega projects in Afghanistan which creates a big problems in spending of budgets, in the entire world every government gives proportional powers and responsibilities for Ministers but in Afghanistan the federal government assigned lot of responsibilities but not enough power and authority which always causes of delays work and delay on budget. In Afghanistan all government officials  and independent government leaders and ministers have access to sign contract for about 70 million Afghanis, most of the projects will have lower prices more major development projects have more than 70 million expenses. All the above mentioned expenditure should be done by the national procurement Authority (NPA).  This procurement process makes to delay a large number of development projects in the country, Secondly the process and bureaucracy are the other problems that delays the mega projects by months in a National Procurement Authority (NPA).

Long Procurement Process:

Generally all administrative system in Afghanistan is very complicated and filled with high bureaucracy and very week. Recently the government works for reducing these long term process there are a lot of problems inside the ministries procurement system those should be resolved primarily, this process led to the fact that most of the famous companies on one side do not like this difficult and complicated process to participate in project volunteers and on the other hand dealing with companies that have been preciously targeted which also affect the quality of projects and the budget. Sometime the procurement process crosses and takes several months on evaluation of the projects and these papersare in its procurement process, six months of fiscal year has also been past in annual budget, when the legal procurement of the national procurement department ends so at the time the ministry had decided to make a contract, so there were counted  days remain of the year at that time, nobody can choose whether the project goes to the front  or implement the project at such a short time so it’s so difficult to guarantee for the implementation of project in such a short time.

Lack of transparent system:

In the past decades, Government has not done any work for establish a proper financial system in Afghanistan, creating a proper financial system for government is very important task. Many of our ministries seen in our country that still it have some gaps; it faces with lot of financial system the financial systems are absolutely down. Government agencies should work hard to fill these gaps. If there is a systematic and transparent modern financial system so we can easily find the solution for current barriers and through by that system the ministries will able to spend their budget on time. The transparent financial system makes the work fast and accurate indeed, it keeps the accurate financial record of every year.

Delays on budget transfer:

Every year Afghanistan’s financial year starts at the beginning of January (Jadi) Month. Ministries should start to spend budget from early startup of the fiscal year and start operation of all the projects that have been allocated in the budget line. But, now taking longer time process of the budget by the Wolesi Jirga, President Office and National Procurement Authority (NPA) Offices is another problem, when the budget signed by these legislative authorities after that the budget comes to finance ministry then its distributed to ministries and budget unit which the process takes a month when the ministries are receiving the budget so the last four months of fiscal year has been diminished. So four months later the ministries start working to spend the  budget, and as mentioned, the procurement process of small projects takes three months and the procurement of massive projects takes six months sometimes this expand to a year.

Lack of good Management System:

If the government conduct assessment of the budget expenditure in all ministries and check that we have professional staffs in Afghan Ministries who are already have known the planning and prioritize the important financial activities. In this sector, human rights forces are considered to be very confused, which has managed all its activities and problems with such difficulties.  In current recruitment  process in government agencies,  most of recruitment is based on relations which impact this work again all actions the second part lacks the evaluation and assessment unit in most government agencies, are very weak to have plan for their activities and the third  is seen in this part that government agencies are not control the work.

What are the Solutions?

Transparent in Recruitment Process:

The recruitment agencies of government should have plan to select those professional staff in the procurement and budget departments to bring efficiency and effectiveness. Fortunately, government in the last month announced some procurement vacancies for free competition we will consider that how much the new recruit system will bring the efficiency and effectiveness in the procurement system.

Assign Responsibilities:

Assigning the authority is very important for the ministers to find responsibility and authority ratio this problem should be remain the same President knows as much as better on this kind of problems because, during a transition process, he said one day in his speech “what authority is given to you that much responsibilities should be given to you”. So the giving the authority with responsibilities can impact on budget deployment.

Creating better and modern system:

The current system in all the fields of government agencies from the beginning is not acceptable, moreover, the existing bureaucracy and paper in the organization is not acceptable as well for the public. This system should be replaced by a modern and systematic shape of financial deals.Changes of new system create transparency and will also create a fast work environment for the employers.

The write is a Finance Manager at High Peace Counsel (JPIC), Social Activist and a regular contributor of Social Activities. He holds Bachelor in Business Administration (BBA) Finance Specialization.

Follow him on twitter as: @k_ahmad90.