The Failure Of Public Finance Management In Afghanistan
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The Failure of Public Finance Management in Afghanistan
Author: Mohammad Qadam Shah
language: en
Publisher: Taylor & Francis
Release Date: 2025-07-24
In rebuilding conflict-affected states, a major portion of foreign aid focuses on reforming public finance management systems and supporting annual budgets. However, how budgets are allocated and how reforms take shape in practice remain critical questions. This book analyzes the politics of reform and budget allocation in the most expensive liberal state-building effort in history: Afghanistan. Through a detailed political economy analysis, it explores the origin, continuity, and evolution of Afghanistan’s centralized public finance management system. Such centralization, readopted in the 2004 Constitution, constrained local participation, perpetuated inequities, and undermined predictability and transparency. Key reforms including the “Provincial Development Planning Guideline” and “Provincial Budgeting Policy” aimed to address these shortcomings but failed due to political resistance, elite capture, and structural inefficiencies. The analysis reveals informal dynamics behind the allocation of discretionary development budget consisting of the Afghan central government’s political considerations (political relationship, political importance, and strength and weakness of local administrations) and lobbying strategies of local actors. This dynamic enabled the central government to continue to use public funds for purchasing political legitimacy to remain in power. Afghanistan’s case highlights the limits of externally driven state-building that prioritizes centralization over local dynamics. The book offers key lessons on inclusive governance, structural barriers, and sustainable public finance reforms in conflict-affected states. It appeals to donors, development experts, and researchers in public finance, foreign aid, security, and development studies.
Islamic Republic of Afghanistan
Author: International Monetary Fund. Middle East and Central Asia Dept.
language: en
Publisher: International Monetary Fund
Release Date: 2015-12-01
This 2015 Article IV Consultation highlights that Afghanistan remains a poor fragile state that is far from self-reliance. Significant fiscal and banking vulnerabilities emerged in 2014. Domestic revenue collection fell below its 2013 level because of lower growth, declining imports, and lower compliance, while operating expenditure increased. The treasury cash balance fell to dangerously low levels in the second half of 2014, and domestic payment arrears and unfunded allotments emerged. The future path of the economy is highly dependent on the authorities’ delivering on their economic reform commitments, continued donor support, and improvements in security.
Better Aid Managing Development Resources The Use of Country Systems in Public Financial Management
This report takes stock of progress in strengthening public financial management systems and provides recommendations on how best to facilitate achieving the 2010 targets set out in the Paris Declaration.