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Afghanistan Reconstruction Trust Fund to Support the Afghan Government's Development Agenda with anticipated US$2.6 billion over next 3 years

January 29, 2010

London, January 29, 2010 ─ Representatives of donor countries met today to discuss one of the main vehicles for international cooperation in Afghanistan: the Afghanistan Reconstruction Trust Fund (ARTF), administered by the World Bank. Supported by 31 countries, the fund has mobilized over US$3.6 billion since it was established in 2002, and has now become the main financing vehicle for Afghan development priorities. Donors and government recognized that the mechanism – which delivers all its assistance through the Afghan government – now represents a vital tool for aid coordination in Afghanistan. Discussions focused on results to date, and future investment plans.

At the meeting, agreement was reached that allocations from the fund will now follow a clear Afghan government strategy, with an estimated financing envelope of around US$2.6 billion for 2010-2013. This represents a 32 percent increase in available funds over the past three years.

“It is the Afghan government which has to respond to the people,” said HE Omar Zakhilwal, Minister of Finance, Islamic Republic of Afghanistan, “and it’s the Afghan government which has to be trusted with the resources. Working closely with the World Bank, we have greatly benefited from the ARTF which puts the responsibility on us – the Afghans – to come up with the solutions.”

In laying out its new ARTF strategy, the Afghan government focused on priorities in the agriculture, infrastructure and irrigation sectors. The ARTF has already begun its work in agriculture, with the initial planting of 1,130 hectares of new horticultural orchards (grapes, apricots, almonds and pomegranates) in 11 provinces. In the critical area of power distribution, ARTF funds are ensuring that the electricity now on-stream from Uzbekistan reaches around 100,000 households in urban population centers.

To date, the major share of ARTF financing – for roads, schools and local infrastructure – has been channeled through the Government of Afghanistan directly to rural communities across Afghanistan, where over 80 percent of the population lives. Donor contributions have supported the construction of over 11,000 kms of rural access roads built with local labour under the National Rural Access Program (NRAP). NRAP has helped connect over 27,000 villages to markets and has generated significant employment. Afghan communities are also the focus of the National Solidarity Program (NSP). Donors through the ARTF have provided the NSP with over US$600 million to date, helping over 22,000 communities to rebuild vital local infrastructure in line with local needs and priorities.

ARTF contributions are also used to finance Afghanistan’s education program. The EQUIP program for basic education finances school construction, school upgrades and around 9,500 school management committees across all provinces of Afghanistan. The committees, or school shuras, are made up of local community members, forge partnerships with local government to manage basic education needs. The support helps provide the 6.3 million children that have returned to school, of which 2.2 million are girls, with decent schools infrastructure and teaching standards.

“ARTF donors have an important stake in the functioning of the Afghan government,” said Nick Krafft, World Bank Country Director for Afghanistan. “ARTF donors are financing around half of the total civilian wage bill, in particular supporting the work of teachers and doctors across the country. ARTF donors are also financing a quarter of the government’s core development spending, in critical areas like education, rural development and national power supply.”

The ARTF also represents a vital mechanism for donor coordination which will be further improved through implementation of the Financing Strategy and will serve to bring all the key donors in the Afghan aid effort together behind Afghan priorities. 
Background information on the Afghanistan Reconstruction Trust Fund (ARTF):

The ARTF was set up in May 2002 to provide coordinated financial support to Afghanistan. The fund has two windows: the recurrent window channels funding for the recurrent costs of government, including salaries for teachers, health workers, and civilian staff throughout the country. The investment window channels funding for government investment projects under the ANDS: such as agriculture and rural development, justice, private sector development, capacity development, education, urban development, transport and energy.
Since early 2002, 31 donors have contributed US$3.6 billion (as of December 21, 2009). Just under US$1.9 billion has been disbursed to the Government of Afghanistan to help cover recurrent costs, such as civil servants’ salaries, and over US$1.2 billion had been made available for priority investment projects. 
The ARTF is managed jointly by the Asian Development Bank, the Islamic Development Bank, the United Nations Development Program, and the World Bank. Representatives of the Ministry of Finance participate in the monthly Management Committee meetings as observers. A Monitoring Agent ensures proper fiduciary management of all recurrent cost financing under the ARTF.

Media Contacts
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Derek Warren
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Erik Nora
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