Supporting Afghanistan Through the Afghanistan Reconstruction Trust Fund

By Maria Bonaventure

Afghanistan is heavily dependent upon humanitarian aid and the details of ARTF with relevant international issues are dealt with here. The importance of reinforcing relations at an urgent note with the 34 Donor countries has also been touched.

It was the biting cold in Afghanistan and elsewhere in the month of December. Fearing a human catastrophe amidst the displaced Afghans, the World Bank backed the Afghanistan Reconstruction Trust Fund (ARTF) endorsed USD 280 Million after the Taliban assumed power as the care taker Government in Afghanistan as the first dose of human aid. along with the release of the humanitarian aid, the United States which had issued sanctions on the Taliban leadership also issued guidelines for personal remittances to Afghanistan to boost the financial aid which families in Afghanistan may receive from their family members during the last winter days. This was also mooted to improve the falling economy of Afghanistan.

Very recently, the United Nations High Commission for Refugees (UNHCR) has said that more than half of Afghanistan’s population is dependent on life-saving humanitarian assistance and protection. According to the UNHCR, one in two people in Afghanistan do not know where their next meal is coming from. This statement of the UNHCR fully described the pathetic condition of a common Afghan citizen.    

It was assessed by the UN that the worsening humanitarian situation in Afghanistan has left over 20 million people, which amounted to half the population of Afghanistan in need of assistance, in the month of January this year.

After the assumption of power by the Taliban as the caretaker Government of Afghanistan, many countries suspended or significantly cut funding to Afghanistan. Under these circumstances, last month, the UN launched what it said was the “largest ever appeal” for a single country, asking for $4.4bn in funding as humanitarian aid for the economically devastated Afghanistan

When half the population of Afghanistan is looking for international support by way of aid, the month of May’22 has come to an end and nothing has changed for Afghanistan even after the passage of 9 months of the Taliban caretaker rule. The caretaker Government of Afghanistan is yet to be recognized by any other country. This March, the Special envoy for Afghanistan, Thomas West, said that there is no decision as of now about the recognition of the Islamic Emirate by Washington.

Over a week after Russia accredited a diplomat of the Taliban regime, Russia’s Foreign Ministry said that accepting the credentials of the first diplomat does not mean recognizing the current government in Kabul.

After a long diplomatic struggle, The Taliban have signed an agreement with the United Arab Emirates on managing the operation of some major airports in Afghanistan, the group’s transportation and civil aviation minister said on Tuesday, which may facilitate air travel from other countries to the international airports of Afghanistan. It may also prove to be the precursor in establishing diplomatic relationships with other nations.

When this is so, the United Nations and the donor countries launched a funding appeal of near $ 5 billion in the month of January with the hope of shoring up the collapsing basic services in Afghanistan which was felt to be the need of the hour.

The World Bank also decided on “an expanded approach” to support the people of Afghanistan after frequent requests by donors of the Afghanistan trust fund and international community.

As per the World Bank “The expanded approach will guide the provision of over $1 billion in funds from the Afghanistan Reconstruction Trust Fund (ARTF) in the form of recipient-executed grants to selected United Nations agencies and international NGOs and will remain outside the control of the interim Taliban administration.

Till February, as per the data released, the United Nations has about $135 million in the bank in Afghanistan but is unable to use it because the Taliban-run central bank cannot convert it to the afghani currency, a senior U.N. official said.

With the above in mind let us study the various details about ARTF and how the ARTF pledge can help Afghanistan.

The main purposes for which the ARTF was promoted were for to finance, among others,

  • recurrent civilian operating costs including civil servant salaries and operations and maintenance expenditures
  • invest in development fund aimed to finance individual development projects that support the national development strategy

Whereas it must be noted that the grant of USD 280 Million released, was earmarked to scale up food security and basic health services. If this amount is released for the benefit of the suffering common citizen, it may also revive the sagging economy and bring under control the price of the necessaries like food, medicines and fuel.

The major development projects the ARTF was meant for, during the year 2020-25 are among others,

  • e Payments Automation – Tax collection
  • Integration of Salaries and pension – Integration of MOF software with that of the commercial banks
  • the Digital initiative – Mobile money & RTGS
  • the ARTF third-party monitoring agent’s use of technology and
  • the geo-enabling initiative for monitoring and supervision

These projects are mainly based for the technological development of banking system in Afghanistan. Taking into consideration the political transformation Afghanistan underwent nine months ago and the present liquidity crisis looming large at the commercial banks, the above-mentioned projects may not be implemented immediately in the near future, even though these projects were halfway through under the previous regime of the Da Afghanistan Bank (DAB). Hence the portion of the funds meant for investment with the above projects may be redirected to scale up food security and payment of salary arrears of the civilian employees. If in case the balance of the funds is brought into circulation in the economy, it will rein in inflation and will bring the price of the essential commodities also under control. The same way the balance of the fund meant for the year ending 2021, amounting approximately to USD 380 Million out of ARTF pledges may be utilized as per the budgeted plans, the various committees may chalk out, by taking up with the Donors for release of the balance.

As had been mentioned earlier, the funds received may be kept as reserves with DAB and the equivalent amount may be released in the form of home currency to the UN bodies for circulation. This way, circulation of Afghani could be increased in the country, which will also improve the confidence of the citizens on the home currency.

The decree which the Taliban declared about the freedom of women in marriages must be maintained.

Right through the twenty years -when the Taliban regime was not in power- women empowerment had undergone a major change in Afghanistan. Women enjoyed limited freedom and were seen in every walk of public life. Ladies were employed in various industries and were seen in every stratum of society including politics. It will be very tough for the present regime to rein in and curtail the freedom that they have enjoyed. Here, the Taliban government must consider the prominent role played by women in politics in Pakistan and Bangladesh, both predominantly Muslim countries.

Now is the time for the Taliban to prove their sincerity to their Donors and the whole world about their intentions to serve the people of Afghanistan. By striking the right chords the Taliban may also improve the confidence of the Citizens on it and their leaders. The care taker Taliban Government must also keep in mind the yet to be released, frozen assets amounting to USD 3.5 Billion by the Joe Biden Administration.

As was mentioned in the beginning, the Taliban rulers must also take all the required steps to strengthen their international relations. They are an entity yet to be approved by United Nations (UN) & other nations and hence must adopt strategies accordingly. Mere talks or participation, be it in Organization for Islamic Cooperation (OIC) or Norway doesn’t mean recognition.

Hence the ARTF must strategize ways to channelize the ARTF funds that they may get either via UN Bodies or via proper channels of banking which may strengthen the efforts of the care taker government in getting international recognition. Every day, the world is undergoing major changes and very recently was a witness to the Russia – Ukraine war, the debacle of the Imran Khan government in Pakistan and the economic collapse of Sri Lanka.

Hence the care taker Government of Afghanistan must initiate steps promptly in getting the funds released for ARTF at the earliest before any other international issue spooks the world.

F. Maria Bonaventure is an Indian banking professional. He has served as COO with Azizi Bank, Afghan United Bank and Maiwand Bank. He has also served as Senior International Adviser with Exchanger Zone and Aryapool group.