Fiscal Challenges/Risks & Transparancy

1. Fiscal Challenges/Risks & Transparancy Fiscal Policy Unit Ministry of Finance January 10, 2012

2. Outline • Fiscal Challenges / Risks • Fiscal Sustainability • Increased Security Expenditures • Operating & Maintenance costs • Others • Fiscal Transparency (OBI context)

3. Fiscal Challenges / Risks

4. Fiscal Challenges / Risks (Con’d) • Significant growth in the size of Afghan Security Forces and its associated costs • 2014 Transition and its adverse economic impacts on Afghan economy • Associated Risks with mining revenue (i.e Security)

5. Fiscal Challenges / Risks • Lack of Aid Predictability effects fiscal planning (particularly the government’s priorities) • Operating & Maintenance Costs (all accumulated assets in past 10 years have to be properly maintained in both security and non-security sectors) • Security sector Operating & Maintanance costs US$ 3.7 Billion • Civilian Operating & Maintance cost of US$ 1.3 Billion

6. Fiscal Transparency (Open Budget Index – OBI)

7. Why fiscal Tranparancy is important? • Citizens have access (including journalists) to documents and they can be involvement in budget preparation process • Journalists can aware the public about the government’s fiscal operations (revenue collection, expenditure execution, financing the deficit) • Public can hold the government accountable • The management of tax payer’s (public’s) money AND • If it was not able to deliver better public services • Better information for decision-makers • Minister, DM and DG, Cabinet, and Parliament

8. What is the Open Budget Index? • OBI Survey conducted every two years by International Budget Partnership (NGO from USA). Compares over 80 countries. • Review of budget documents released over a one year period (September to September). • Recently released 2010 OBI Review looked at documents released between mid September 2008 and mid September 2009. • Next 2012 Review (Sept 2010 and Sep 2011.

10. OBI Documents MoF currently releases

11. Questions