Making the Budget Work for the People

Sayed Ikram Afzali | @SIAfzali Executive Director, Integrity Watch Afghanistan

In January, the Afghan Parliament approved the National Budget 2020 with a total amount of AFN 428.3 billion (USD 5.55 billion) including an operating and development budget of USD 3.75 billion and USD 1.8 billion respectively. The majority of the Budget goes to the security sector while health, and education get only a small share (14.7% in total). Apart from being heavily unbalanced, the budget process is deeply flawed and this has allowed inefficiency, corruption, and misuse to thrive over the last nearly two decades. There are vulnerabilities at various stages of the budgeting process that systematically lead to corruption and abuse. Using incremental budgeting, the Ministry of Finance has paved the way for auction-based budgeting where public officials, especially in the Ministry of Finance, offer projects to Members of Parliament and other actors based on whoever offers the highest price. Auction-based budgeting is detrimental for an aid dependent country like Afghanistan because it reduces efficient and effective use of public resources, erodes accountability to the public and decreases donors’ and citizens’ trust in the government leading to a continuous cycle of aid-dependence and instability. The current practice has created a disconnect between resource allocation and policy objectives.

Afghanistan has to shift towards policy-based and performance-based budgeting which in turn would help to prevent auction-based budgeting. In a policy-based budgeting process, among other things, allocations are made based on policies that are viable, relevant, and working based on the mandate a government gets. Investment in current policies should be based on assessments and program evaluations to understand what works and what does not work and if programs are cost-efficient. In addition, the Government should put in place gatekeepers to prevent bad policies from making it through to the Budget.

In addition, performance-based budgeting is key to building public trust by creating budget accountability and credibility. In a performance-based budgeting process, the Government should make commitments, deliver them, and then report the progress to the public. The Government should also carry out performance audits to assess if the stated commitments have been achieved. However, recently Ministry of Finance officials have been strongly opposing the role of the Supreme Audit Office to carry out performance audits. If there wasn’t a performance review of current programs then this would lead to there being further spending on a bad investment. In addition, not assessing/reporting the status of promises made by the National Unity Government has led to a lack of accountability to the public. Efficiency, including allocative efficiency, distributive efficiency, and operational efficiency, should be taken into account in the Budget process. Both the Operating and Development Budgets should be scrutinized to ensure we make best use of the scarce resources. International standards on budget transparency should be met and annual reports to show the performance of the Government based on the promises that it has made would be critical steps to making the Budget work for the people.