As we have heard from his Excellency the President and other distinguished guests, Afghanistan has made impressive gains over recent years.
- Access to education and other social services continues to improve, and further gains can be expected under the Citizens’ Charter program which will provide basic services to 8.5 million citizens.
- Macroeconomic policies have remained prudent, and government remains resolute in the fight against corruption.
- Prospects for private sector development have been strengthened by the recently announced open-access policy for telecommunications, and Afghanistan’s first Independent Power Producer arrangement.
As we have also heard, enormous challenges remain in poverty, literacy, population growth, corruption, security, displaced populations and refugees returning to Afghanistan.
Analytical work carried out by the World Bank Group in support of this conference provides four messages on how we can best collectively address challenges.
Firstly, aid is critical for Afghanistan’s future.
- Fiscal resources are limited, on-budget security needs are growing, and economic growth will remain slow over coming years.
- Increased aid, especially on-budget, is needed to finance the public investments that will move Afghanistan onto a higher long-term growth trajectory. Without such investment, growth prospects are limited and conflict risks will remain elevated.
- Given limited fiscal resources, Government must ensure that all public investments, including those financed by aid, are subject to careful analysis and support a coherent growth strategy.
Secondly, Afghanistan’s growth strategy should be built on agriculture, human capital investment, and labor mobility.
- Improving agriculture productivity and cultivation is the most direct way to improve incomes and employment opportunities.
- Investing in education and health is also vital – inclusive growth is impossible when the majority of the population is illiterate and 3 million children are out of school.
- Opening new formal outwards migration channels would ensure Afghans can work in economies unconstrained by conflict, increase remittances, incentivize education, and address some of the frustrations among youth.
Thirdly, Afghanistan’s mining and hydrocarbon potential must be realized. Only extractive industries can provide sufficient government revenues and exports to offset expected declines in aid. Risks surrounding extractive industries are real, but can be managed.
Finally, institutional weakness and violent conflict are not quickly resolved. The challenge is to enable private sector investment and economic growth despite these realities.
- Investment in social transfers could shield households from the long-term impacts of negative shocks.
- Innovative financing solutions could encourage firms to invest, create jobs, and grow the economy, despite risks.
The World Bank Group is aligning:
- We expect to increase overall financial support for Afghanistan under IDA-18, reflecting our renewed focus on the specific needs of fragile states.
- IFC, MIGA, and the World Bank are providing risk-sharing instruments and guarantees to encourage international and domestic private investment in the context of ongoing fragility. We are currently working with government to expand and deepen our support in this area.
- The ARTF has played a crucial role in providing flexible financing in support of government priorities. The World Bank will work with government and the donors on the trust fund’s continued evolution, ensuring flexibility and efficiency in providing on-budget resources for pressing expenditure needs.
The international assistance together with Government’s resolve to continue needed reforms, will provide the underpinning for a more prosperous and secure future for Afghans.
We need to press forward with our support for Afghanistan.
The World Bank Group will stay the course in supporting the people of Afghanistan in these challenging times.
Working together we can help the Afghan people realize their dream of living in peace and prosperity.