Interview with Deputy Minister of Finance, H.E. Wahidullah Shahrani, The Islamic Republic of Afghanistan

May 6, 2007

His Excellency Mr. Wahidullah Shahrani was born in Kabul in 1973. He holds a post-graduate degree in money and banking from the U.K. and a post-graduate degree in economics from Pakistan. While residing in the U.K., he lectured in economics at Waltham Forest College and business and economics at Richmond College. Meanwhile, Mr. Shahrani also worked in currency trading with Thomas Cook, U.K. Immediately prior to assuming the role of Deputy Minister of Finance in January 2005, Mr. Shahrani served as the First Deputy Governor of the central bank, Da Afghanistan Bank. In his current position, Mr. Shahrani is principally responsible for the areas of budget, procurement, treasury and fiscal affairs.

Prior to being appointed Deputy Minister of Finance, you worked as Specialist in foreign currency for Thomas Cook Financial Services Company in London, and in the same time worked as part-time lecturer on business and economics. How has this transition from working in the private sector and education to working in the government sector been for you?

Working as a Deputy Minister of Finance is challenging for a number of reasons. First, because Afghanistan is a poor country and we have to manage a lot of expectations from the public. In many cases, what kind of support or aid you will get is dependent on a number of conditions; for example, reforms or the reflection of the government entity. In order to build the capacity of the government it is inevitable that we must implement a complete reform for our country. At the same time, bringing the reform requires a lot of talent and stamina. Furthermore, a number of tough decisions have to be made, so being the Deputy Minister of Finance is quite challenging.

You have been the Deputy Minister of Finance for three years now. What has been your greatest challenge of all?

One of the biggest challenges has been working with donors, the international community and other international aid organizations related to the government, in order to bring some type of effectiveness. Afghanistan has made a number of commitments with the international community and one of the main commitments is that we have agreed to go ahead with IMF and World Bank. One of our main objectives has been to reduce poverty and this requires that a lot of tough decisions be made within the government. Again, the focal point of all these decisions is the Ministry of Finance.

What is your strategy for maintaining the financial support from the international community?

We need to make sure that there will be discipline - fiscal discipline - and of course we need to accelerate capacity building efforts of the government. Furthermore, we need to increase our domestic revenue and control our current expenditure because the fiscal mobility over the medium to long-term is something that we have to be very careful about from the very beginning. Finally, we have to manage the expectations of the people as well.

You have a very difficult portfolio generating government revenue in a country just emerging from decades of conflict. What have been the most immediate challenges? And the long-term rewards?

One of the reasons we are doing a lot of work is because some of the country’s infrastructure has been in the past completely ruined. Gradually, we have been improving things. For example, I can remember that two and half years ago it was very difficult for us to fill a vacancy, but now we are in a position to fill vacancies. I can provide some more examples:

We are about to complete the Ring Road. It has not been completed yet physically, but we have the contract and the final agreement. This is the first time in the history of the country that any government has been able to complete the Ring Road. The length of the road we have built in the last four or five years has been more than the length of all roads that have been built in the past eighty years.

In addition, this is the first time that the government has established its presence in more than 50% of the entire rural areas. The government is committed to developing a number of projects in all rural communities and affiliated communities, and eventually we should cover the whole country in the next three years.

Also, we have a very successful program – the National Solidarity Program – which has been regarded as a success worldwide.

Another area of achievement is communication. The area of communication has made significant progress, from mobile telephones to physical land lines. Furthermore, in regards to media, we have a very free media which is able to feature many aspects of Afghanistan culture and society.

Finally, this year in Afghanistan we have over six million children going to school. We have seen more high school graduates and more graduates of universities and colleges. There is also a new trend in the more conservative and traditional areas of Afghanistan. Parents and community elders are approaching the government and requesting that schools be built in their communities so that they may send their children to school. Therefore, we need to work on supplying qualified teachers to such communities. As you can see, overall in the past five years, we have achieved quite a lot.

Indeed a great deal has been achieved in a relatively short time. How are communication channels being pursued to ensure that all relevant bodies of government, both those located in Kabul and provincial bodies, are informed of the the decisions that must be made and the continuous changes, challenges and achievements?

Regarding the Ministry of Finance, we have over 53 units in all the provinces and partial units in all the districts. Most of the provinces are linked to the capital by internet and we communicate on regular basis. The reason why we have a great deal of support from international financial institutions is because three or four years ago, it was extremely difficult to get a report of government expenditures in the provinces. Now, with the help of technology and by increasing the number of our finance officers in the provinces, we get all reports of government expenditures from the provinces within 28 days of the disbursement date. The World Bank, which monitors all of our accounts, has given us favorable evaluations each year. Therefore, we have been focusing more on the people since we have built the capacity to a certain extent, and have also been able to use new communication devices and mechanisms for sharing the information.

What is your assessment of long-term aid coordination and effectiveness and how do you see the donors’ contributions to the core development budget of Afghanistan? Specifically, how much of a role has Japan played towards the progress and/or development of Afghanistan?

After the United States, Japan is the second largest donor country to Afghanistan, and the largest contributor to the ADB (Asian Development Bank). We share especially good relations with Japan because it is not only the second largest contributor, but also because it is highly active. Since 2002, Japan has pledged USD 1.45 Billion, and its dispersement rate remains the highest among our development partners. We have been able to benefit from Japan’s contributions in a number of areas such as government, infrastructure, education and health, public services and agriculture. I can also say that Japanese aid has been significant in terms of the National Solidarity Program and other programs related to social protection that aim to reintegrate disabled people into society as active members of their communities.

At the Berlin and London conferences, we made a commitment of USD 150 Million for a period of three years. There are two more years of this commitment remaining, and Japan is proving to be very effective by using its influence to support the development and reconstruction process of Afghanistan. Moreover, Japan has given a lot of support to Afghanistan through multilateral channels.

Although the commission will pay for the next two years, the need for help in Afghanistan is enormous. We love the continuity of Japanese aid, and we will ask to further increase the annual contribution. The capacity of the government has been gradually increasing along with our expenditures, which is why we are very keen on aid effectiveness - especially after the Paris Declaration. If Japanese regulations permit, we would like to channel a significant amount of aid through the government budget channels for three reasons. Firstly, to make the government more accountable, secondly, to establish government ownership, and thirdly, because by doing so we can build the capacity of our institutions.

What challenges do you envision for the near future?

For the past three years, the main challenge was to achieve security. Now, after the Berlin Conference, and in particular the London Conference, we stand in an innovative position, one in which we can achieve a lot from the international community.

Yet, we have two key challenges. The first challenge is the capacity of the government institution. The second is how to launch, advance and accelerate the reform of the new government institution. We have adopted a new approach which is providing assistance to the ministry to develop its own vision and strategies. Therefore, in the future, budgetary allocations can be made into other sectors and the concept of provincial budgeting, where the real needs of people living in different regions is reflected, can be attained.