Budget Update Mustafa Mastoor, Director General Budget, MoF

Outline Budget -Donor Financial Review budget

Core Development Budget 1386 Vs 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

1387 Core Development Budget Execution 27%

Execution: Discretionary Vs Non Discretionary -Top 50 projects represent 75% of the Core development budget so far 36% contracted and 22% disbursed

Core Development Budget 1386 Vs 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 Donors' Pledges by Conference + Supplemental Pledges (figures in USD million) PledgesTokyoBerlinLondonRomeParis Supplemental PledgesTotal Announced4,5008,20010, ,840N/A44,400 After Verification with Donors5,1335,5658, ,26821,82055,555 Source: Ministry of Finance, Budget Dept. Pledge Table, Dec 2008

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

ANDS prioritization Vs five year projection 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

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

Thank You