State of the Afghan Economy Deteriorating Rapidly

SIGAR Quarterly Report to Congress: Afghan Economy in Fragile & Worsening Condition

Special Inspector General for Afghan Reconstruction (SIGAR)

January 29, 2016

The quarterly report notes:

– Section 1 focuses on the Afghan economy. Despite more than a decade of reconstruction and development efforts, the Afghan economy remains in fragile and worsening condition. Intractable insurgents, cutbacks in foreign military personnel, persistent emigration of people and capital, and a slowing global economy are shifting Afghanistan’s economic prospects from troubling to bleak.

– In this reporting period, Afghanistan proved even more dangerous than it was a year ago. The Taliban now controls more territory than at any time since 2001. USFOR-A reports that approximately 71.7% of the country’s districts are under Afghan government control or influence.

– The lack of security has made it almost impossible for many U.S. and even some Afghan officials to get out to manage and inspect U.S.-funded reconstruction projects. The dangers of absent oversight were exposed when a task force appointed by President Ashraf Ghani reportedly found that millions of dollars were being embezzled while Afghanistan pays for numerous nonexistent “ghost” schools, “ghost” teachers, and “ghost” students.

– A group of 93 Members of Congress have asked SIGAR to conduct an inquiry into the U.S. government’s experience with allegations of sexual abuse of children committed by members of the Afghan security forces.

– SIGAR’s work to date has saved over $2 billion for the U.S. taxpayer.

– Afghanistan’s domestic revenues paid for 40% of budget expenditures through the first 11 months of the fiscal year. The country’s large budget deficits and trade imbalances will require substantial donor aid for the foreseeable future.

– Cumulative funding for Afghanistan reconstruction increased to approximately $113.1 billion, with approximately $11.5 billion of this amount remaining in the pipeline for potential disbursement. A total of $8.4 billion of the reconstruction funding has been provided for counternarcotics efforts in Afghanistan.

– This quarter, Afghan National Defense and Security Forces (ANDSF) assigned force strength was 322,638 (including civilians), this assigned-strength number reflects a decrease of 2,078 since July 2015 and 9,306 since May 2015.

– Since 2003, USAID has spent at least $2.3 billion on stability programs in Afghanistan. 

The findings of a USAID-contracted, third-party evaluation program on the impacts of its stabilization projects raise worrying questions. The MISTI program reported, for example, that villages receiving USAID stability projects scored lower on stability—an aggregate measure of whether the projects strengthened perceptions of good governance and effective service delivery—than similar villages that received no such assistance. And some villages reportedly under Taliban control that received USAID stability projects subsequently showed greater pro-Taliban support. USAID appears to be largely indifferent to the implications of the MISTI findings.

Quarterly Report: https://www.sigar.mil/pdf/quarterlyreports/2016-01-30qr.pdf