1. Budget Reforms, Program
Budgeting
and
Sub-national Budgeting in
Afghanistan
(Presentation for Line Ministries, 2006)
Jean-Marc LEPAIN
Budget Adviser
Public Finance Specialist
Ministry of Finance, Kabul
jlepain@yahoo.fr

2. Budgeting and Development Strategy
10 Years Millennium Development Goals
National Development Strategy
5 Years
Poverty Reduction &
Development Strategy (PRSP)
3 Years Medium Term
Expenditure Framework
1 Year Budget

3. From National to Provincial Budget
ANDS
Line Ministries’
MTFF
Strategies
National Budget
Provincial Budgets

4. Budget Integration and Provincial
Budgeting
 There is only one budgeting process and
provincial budget is part of it.
 Provincial aspects of budgeting must be
integrated at all level of budget discussion.
 Programs that are part of the national budget
must have a sub-national dimension.

5. Pilot Phase of Budget Integration
Pilot Ministries have been selected:
 MRRD (program and provincial budgeting)
 Ministry of Education (program and provincial
budgeting)
 Ministry of Public Health (program budgeting)
 Ministry of Agriculture (provincial budgeting)
Pilot Provinces have been selected:
 Balkh
 Panjshir
 Kandahar

6. What is Program Budgeting ?
 Program Budgeting is a system of
managing performance and accountability
where expenditure is classified by program
and common policy objectives.
 A program is defined as a single group of
activities and projects, which consumes
resources to achieve a stated policy
objective.

7. Rationales for Program Budgeting
 Program budgeting will help align ministries’ projects and
activities with Government priorities as defined in ANDS.
 Program budgeting will help us formulate a more
realistic budget by capturing all recurrent expenditures in
projects.
 Program budgeting will simplify project management.
 Program budgeting will introduce more flexibility in fund
allocation.
 Program budgeting will better reflect activities of the
provinces .

8. What is Provincial Budgeting?
Provincial budgeting is the allocation by line-
ministries of resources by province, based
on the National Development Strategy
reflected in the ministries’ strategy at the
national and provincial level, after
consultation with the provincial authorities
and an assessment of the local needs.

9. Objectives of Provincial Budgeting
 Ensure an equitable allocation of resources across
provinces to facilitate effective service delivery.
 Increase Government level of spending in provinces to
foster economic growth and employment.
 Ensure that resources made available to provinces are
used effectively.
 Ensure that local development issues are addressed and
provincial budgets are linked to the National
Development Strategy.

10. The New Budget
Ministry of Education Balkh Panjshir Kandahar
Program 1
Salaries
Goods & Services
Acquisition of Assets
Program 2
Salaries
Goods & Services
Acquisition of Assets

11. Consequence on Ministries’
Structures
 The Ordinary and Development Budget are replaced by
one single budget.
 A Finance Department and a Policy and Coordination
Department will replace the existing structure. (ToR of
the 2 departments need to be prepared).
 The new Policy and Coordination Department will focus
on program design, policy issues and program
coordination.
 The new Policy and Coordination Department will be
responsible for most aspects of provincial budgeting.

12. Budget Consultative Process (1)
 The process to include Provinces in the budget
consultative process is still under discussion.
 Consultations with take place with Provincial
Development Committees to finalize this
consultative process.
 The consultative process will include: provincial
development forums, provincial departments of
line ministries, working groups, and provincial
development committees.

13. Budget Consultative Process (2)
At the National Level:
 Sub-national input is taken into consideration
by ANDS;
 Provinces will be represented in Consultative
Groups (which include representatives of the
donors) either by the Ministry of Economy or
by an ad hoc committee.

14. Budget Consultative Process (3)
At the provincial level:
 Provincial Development Committees (PDC)
will prepare a Provincial Development Plan
in the context of ANDS
 Ministries will prepare at the provincial
level an implementation strategy, based
on their national strategy and discuss it
with the PDC

15. Role of the PDCs
 Analyzing provincial needs in each economic
sector;
 Formulating provincial strategies for fostering
economic growth and creating employment in
line with ANDS;
 Providing input to line ministries for budget
discussion at the national level;
 Consulting with provincial department of
ministries and helping them in formulating their
implementation strategy at the provincial level;

16. From rural development to provincial
development
Budget Consultation and the Comprehensive Rural
Development Process
- District Dev.
I. Planning - District Dev.
Assembly
- District Dev.
Assembly
Assembly Private Sector
Investors
Projects
Implemented
Implementing
1. District Dev.
Partners/
1. 1. District Dev.
District Dev.
Plans
Plans Contractors
Plans
5. Contracting,
Monitoring,
- Provincial Dev.
Forum
Promoting III. Implementation of Plans
Projects
2a. Provincial
Dev. Plans Implementing
Ministries &
Agencies
2b. Provincial
Investment Plans
Provincial 3. 4. Approval of
National
Development Recommendation Plans &
Coordination
Committees of Investment Implementation
Committee
(PDCs) Plans Arrangements
1. Alignment of existing Gov. & Non-
Gov. Programmes/ Projects.
MRRD 2. Allocation of New/ Additional
Funding & Resources
3. Promotion of Private Sector
Investment
II. Approval of Plans and Implementation Arrangements

17. Development of the Provincial Development Plan
Line Ministries Provincial Level
Ministry of Finance
Central Level
Provincial
MTFF Development
Plan
Provincial
Budget
Budget
Ceilings
Ceilings LM Provincial
Implementation
Plan
Ministry
Strategy
Activity
Schedule

18. What needs to be done
(1. Provincial Development Committee)
 Align the Provincial Development Forum and the Provincial
Development Committee structure with the ANDS structure in
consultation with MRRD/NABDP (written instructions should be
provided by MRRD).
 Review draft sector (ministry) strategy through Working Groups,
prepare comments and return the feedback to ministries or Working
Groups.
 Start consultation with pilot ministries for formulating a Provincial
Development Plan that can be limited to Rural Development
(MRRD), Agriculture, and education in a first phase.
 Prepare recommendations for line ministries regional offices

19. What needs to be done
(2. Ministries)
 Provide their national strategy to their regional
department and the PDC;
 Inform provinces of the provincial ceiling;
 Provide guidance to their regional department
for consultation with the PDC;
 Prepare gap analysis and communicate to the
ministry planning department;
 Prepare implementation strategy in line with
PDC recommendations;

20. Role of the MoEco (1)
 MoEco will monitor PDCs’ activities,
analyze minutes of monthly meetings,
organize field visits and provide
instructions, guidance and support.
 MoEco should advise on the preparation of
the PDP and approve it.
 MoEco will evaluate PDCs and prepare
Year End Report of PDCs’ activities
including PDP implementation.

21. Role of the MoEco (2)
 MoEco will review line ministries’
strategies, check costing and approve
performance indicators.
 MoEco will ensure that implementation of
LM Provincial Office activity schedule goes
according to plan
 MoEco, in cooperation with MoF, will
analyze provincial expenditures, identify
trends and gaps, and formulate
recommendations for CGs.

23. Role of MoF
 MoF will provide indicative multi-year
ceiling for provincial development plans.
 MoF will comunicate to provinces fiscal
enveloppes for budget discussion
 MoF will develop expenditure norms that
will set minimum level of spending for
non-wage expenditures in key sectors.

24. Long Term View
 The new system of provincial budgeting
will evolved into a system of sub-national
budgeting that will include districts, cities
and villages.
 A system of intergovernmental transfers
will be developed.
 Expenditures assignments of line-
ministries will be revised.