Editor in Chief: Moh. Reza Huwaida Friday, March 29th, 2024

Democratizing the Budget Preparation Process

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Democratizing the Budget Preparation Process

The Parliament of Afghanistan has for the second time rejected the budget bill for the fiscal year 1391. The skirmishes between the parliament and the Ministry of Finance regarding the budget and its details have been a hotbed of controversies. With the budget going for the vote on the floor of the parliament, the uproar of the parliamentarians was accompanied by hordes of red cards that showed the MPs' opposition to the proposed bill.

In their initial reactions to and comments on the proposed budget bill, many parliamentarians had fiercely opposed what they called unbalanced and biased approach of the bill to the national level budget appropriations. Of particular concern to the parliamentarians was the allocation made in the budget for the presidential palace, including the budget line for the personal security of the president.

Another issue of contention was the $80million allocation for the bailout of the New Kabul Bank. Many MPs have opposed the bailout of the bank by money from the public exchequer while hundreds of millions of bank's money is still to be recovered.

The largest fault that the parliamentarians have found with the budget bill is the unbalanced appropriations at the national level. Many of them have voiced deep concern about what they see as outright bias towards many regions and provinces of Afghanistan with disproportional budget allocations for many provinces that, in their view, goes against the principles of fairness.

On closer investigation, however, many of the concerns of the parliamentarians seem to be well-founded. The Ministry of Finance, as the responsible agency for the preparation of the national annual budget, has shown it also in previous years that fairness in allocation of national budget is not always a guiding principle of the ministry.

On many occasions, we have been witness to the ministry's favoritism shown towards many provinces and regions while many other provinces and regions that do not fit into the cultural, social, ethnic, economic or linguistic profile of the ministry have been left out in the open.

The examples are plenty. A number of far-flung provinces in the northeast, north and central Afghanistan have, year after years, have been allocated budgets far below what they should get. The Ministry's rationale for the allocation of larger budgets to other provinces range from security to development related matters as well as the ostensible need to fight insecurity and insurgency by pumping in development funds.

President Karzai himself a few years ago directed the Ministry of Finance to channel much larger share of national budget to the troubled provinces and regions in the south and east. The president's assumption was that by way of channeling more money into these regions and provinces, the government of Afghanistan would be better placed to deal with and manage the security and governance related challenges in these regions.

However, more than 3 years after the president's decree, the situation and conditions in these regions in terms of development and security have gone from bad to worse. Channeling bulk of the development and even "ordinary budget" to these regions has not only helped them better cope with the economic, social and political challenges but has contributed to the widening of regional and provincial disparities.

The Ministry of Finance should heed the parliament's call for a re-examination of the national budget and take effective steps towards assuaging many concerns that both the MPs and the general people have.

Democratizing the budget preparation process
Afghanistan and its government need to democratize the way the draft budget is prepared. In many other countries, it is customary and even legally mandatory that the Executive agencies responsible for the preparation of the draft budget carry out extensive consultations with not only with lower-level Executive agencies but also with the public at large, civil society and specialized think tanks.

The executive agencies also seek input from organizations and institutions outside the government and place their approach on a basis of wide-ranging consultations. In Afghanistan, we need to change the way the annual budget draft is prepared and ensure that the whole process does not remain only in the hands of a few persons with even lower-level Executive agencies at the provincial and district level unable to have their say in the preparation of the draft budget.

Towards these objectives, we need to create the necessary prerequisites at three distinct levels. The first is creating the necessary legal frameworks. It should be built into the Constitution and the pertinent laws that the way the budget draft is prepared should be reformed towards allowing for larger input from a wider segment of stake holders into the budget preparation process.

In this reformed mechanism, of course, the role and the say of the Executive and Legislative agencies at the provincial and even district level should be strengthened. At these sub-national levels, the provincial councils as well as the district councils should have a much greater say in what the provincial level Executive agencies including the provincial Moustofiat (provincial level office of the Ministry of Finance) propose to the center as the requested annual budget for the entire province.

At a higher level, it should be ensured that the Ministry of Finance does take into much more serious consideration the individual provincial budget requests. Currently, the Ministry of Finance has the exclusive authority in changing and overruling the provincial budget requests. The entire system of budget preparation from the district to the provincial and onwards to the central level should be regulated by a set of reformed laws.

Another approach to the reforming of the budget draft preparation process is to decentralize this process in a way that the provincial level Legislative and Executive agencies can have the charge of revenue generation as well as drafting and executing a part of their annual budget.

In other words, the current system that is heavily top-down needs to be reformed bottom-up with the result of genuine empowerment of provincial level Executive and Legislative agencies. In any case, we would need a true empowerment of these provincial level agencies. Currently, the system remains dysfunctional and the arrangements are ad hoc and haphazard.

In order to lessen and bridge the regional disparities and alleviate the suffering of forgotten and downtrodden regions and provinces, reforming the budget drafting and execution process is paramount. That will be the single most important instrument in the hands of the government as well as the people to create positive change towards these goals.

As the volume of foreign aid going through the government of Afghanistan increases and as the government increasingly replaces many development responsibilities of the private sector and the non-governmental, aid community, undertaking such reforms only increases in urgency.

The author is the permanent writer of the Daily Outlook Afghanistan. He can be reached at outlook afghanistan@gmail.com

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