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Afghanistan economy grew nearly 14 percent in 2007, new report says

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By RAHIM FAIEZ
Associated Press
April 2, 2008

KABUL, Afghanistan – Afghanistan’s legal economy grew nearly 14 percent in fiscal year 2007, but the surge was hampered by corruption, insecurity and the lack of electricity, a new report said Wednesday.

The country’s economic growth is expected to drop to 9 percent annually in 2008 and 2009, so long as foreign donor support continues and there is not another drought, according to the report by Asian Development Bank.

The government’s ability to run the country effectively is seriously affected by pervasive corruption at all levels of administration, as well as by challenges posed by Taliban and other insurgents, especially in the country’s south.

The government must combat corruption, overcome infrastructure bottlenecks and implement structural reforms in order to stimulate the private sector, it said.

“Private sector growth is needed for any economic resurgence, yet this is hampered by intermittent power supplies, poor land titling, corruption, insecurity and limited access to finance,” the report said.

More than two-thirds of foreign assistance to Afghanistan is not channeled through the government, “which is a serious fiscal policy constraint, hampering expenditure prioritization, government development management and overall aid effectiveness,” it said.

Another report released last week found that too much aid money meant for Afghanistan is wasted, with a vast amount being spent on the high salaries, security and living arrangements of foreign workers.

The Agency Coordinating Body for Afghan Relief, an alliance of 94 international aid agencies, said that since 2001, the international community has pledged US$25 billion in help but has delivered only US$15 billion.

Of that US$15 billion, some 40 percent of it _ or US$6 billion _ goes back to donor countries in corporate profits and consultant salaries, the ACBAR report said.

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Written by afghandevnews

April 5, 2008 at 3:19 pm

Posted in Economy

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