Afghan government struggles to spend donated funds

For Afghanistan's government, getting foreign money to build desperately needed roads, schools, wells and clinics isn't the hard part. Spending it is. Hundreds of millions in donor funds have not been paid out for things like jobs programs, health clinics and drinking water systems in the past five years.
Afghan officials say much of the money comes with too many strings attached, or arrives later than promised, but they are also working within a bureaucracy that is both inefficient and rife with corruption. In the last fiscal year, which ended March 20, the Afghan government was able to disburse about $937 million, or just 40 percent of its original development budget of about $2.3 billion. The government got much of that money in previous years and has simply been rolling it over, budget after budget.
This fiscal year, the government responded by slashing its development budget 40 percent, said Ahmad Jalali, director of the budget department of the Afghan Finance Ministry. "If it was me, I would have cut it by about 80 percent," he said. "Because I know: What they can spend is what they can spend. They can't spend more than this." Making the system more efficient is especially important as the US and its allies begin drawing down their troop levels, leaving the Afghan government with greater responsibility in providing services and overseeing security.
The Afghan government says the Finance Ministry is getting better at identifying things like duplicate awards for the same project, unrealistic timetables and inaccurate accounting. Excluding such items, along with undisbursed donor funds and the cash deficit, the Afghan budget for the last fiscal year shrinks to about $1.5 billion and disbursement jumps to 66 percent of the adjusted budget, according to ministry figures.
But the government's development spending has still remained flat about $900 million to $1 billion for each of the last four years while donations have increased. Jalali said much of the foreign aid is difficult to spend because of the conditions it comes with. He said education and rural development programs get lots of money, but other programs, such as countrywide hospital upgrades and a highway to the western city of Herat, have gone wanting. And when a road project can't be built because of security problems, the money budgeted for it often can't be transferred to other areas.
The US Agency for International Development, or USAID, spent more than $1.6 billion in Afghanistan in US fiscal year 2009, the last full year for which figures are available, but funnelled only about 20 percent of the money through the Afghan government. The British government was able to place 37 percent of its funding, or about $126 million (77 million pounds), directly into the Afghan development budget in the British fiscal year that ended earlier this month.