London February 2, 2006 The Afghanistan Reconstruction Trust Fund (ARTF) Presentation by the Administrator Donors Meeting, February 2, 2006

London February 2, 2006 ARTF Multi-donor trust fund established in 2002 with financing from 24 donors Coordinated funding aligned with Government’s national budget and agreed priorities Single, predictable, accountable source of untied funding via two ‘windows’ Promotes transparency and accountability and reduces burden on Government while building capacity Funds essential recurrent expenditures Provides funding for priority investments

London February 2, 2006 Governance – Original, 3-tier Islamic Development Bank UNDP Asian Development Bank Donors World Bank Administrator Government

London February 2, 2006 Revised Governance Structure – as of October 2005 Government now invited to MC meetings as an observer Government invited to quarterly Donor Committee meetings in Kabul Donor Committee now includes representatives of all donors who wish to attend its meetings in Kabul

London February 2, 2006 Current Financial Picture Pledges to date – US$ 1.32 billion –US$ million this year (1384) Remaining unpaid for 1384 – US$ 77 million Commitments to date –Recurrent window US$ 813 million –Investment window US$ 247 million

London February 2, 2006 Recurrent Cost Window Predictable support to operating budget 47.3% of recurrent budget 1382; 42.4% in 1383; 43.7% in 1384 Supports salaries and service delivery in education, other sectors Leads to improved fiduciary standards

London February 2, 2006 ARTF – Fiduciary Compliance Government has financial management and audit systems supported by international firms Monitoring Agent ensures compliance with standards for –Wages (US$ 490 million to date) –Operations & maintenance (US$ 172 million to date) Government audit additional control. Ineligible expenditures have to be reimbursed from Government’s own funds. Low level of ineligibles on payroll, high level on O&M is decreasing.

London February 2, 2006 Investment Window 12 effective projects (11 disbursing) Sectors – Rural Development, Infrastructure, TA/Capacity Building, Education US$ 271 million committed US$ 131 million disbursed Ratings on development objectives and implementation, generally satisfactory

London February 2, 2006 National Solidarity Program US$ 74.2 m from ARTF committed Parallel financing with Japan, Norway, Denmark, IDA & others Highly satisfactory implementation and satisfactory progress toward development objectives Reached half of the rural communities Benefited 10.5 million people Established 11,000 CDCs Women’s participation 12,000 community projects –Irrigation, rural roads, drinking water, electrification

London February 2, 2006 National Emergency Employment Program (NEEP) Field operations begun late 2002 US$ 36.8 million from ARTF committed 1/5 of all rural households, all 34 provinces 2456 km - road rehabilitation 3124 m - other structures 24,000 ha - irrigation schemes Evolved into National Rural Access Program

London February 2, 2006 Technical Assistance and Feasibility Studies (TAFS) Finances expertise to –guide preparation/supervision of reconstruction activities –design and supervise feasibility studies First ARTF investment begun March 2003 US$ 18.5 committed Co-managed by independent, government agency and line ministries Challenge to integrate capacity building activities going forward

London February 2, 2006 Microfinance 157,000 active clients (78% women) 233 disabled clients US$ 20.1million loan portfolio $190 average loan size 98% repayment rate 17 provinces

London February 2, 2006 ARTF – The Road ahead Predictability of funds – aligning contributions with budget cycle would allow ARTF to follow a less conservative cash management rule Strengthen further fiduciary standards for ARTF and government systems Quantification of results from ARTF to demonstrate development impact to stakeholders ARTF as forum for policy dialogue

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