SIGAR’s latest audit of the World Bank-administered Afghanistan Reconstruction Trust Fund (ARTF) highlights gaps in the World Bank’s system of monitoring the Fund’s implementation, information-sharing, and how it determines the impact of donor contributions. The multi-donor ARTF is a partnership between 34 donors and Afghan government to improve the effectiveness of reconstruction effort and one of the largest sources of funding to Afghan government operations outside the security sector, covering roughly 40 percent of all Afghan civilian expenditures. The report, released yesterday, however, shows that the World Bank has failed to provide reasonable assurance that the ARTF funding is reimbursing only proper government expenditures. Data in the report shows that even when certain programs and projects being funded are unneeded or ill-conceived, they are continued as there is no repayment obligation and due to political pressure to spend ARTF funds despite the risk of losing future funding.
Due to restrictions by World Bank on donor and public access to how it accounts for ARTF funding, donors and their taxpayers continue to be left without information necessary to understand the activities they fund. The fund is structured as such that only the Afghan government, which is the ARTF recipient and beneficiary, can decide when and what projects discontinue, are scaled back, or redesigned.
USAID is one of the largest contributors to the ARTF, providing about $3 billion of the total $10 billion in direct assistance to the Afghan government since 2002; however, once any donor provides its contributions to the fund, neither the World Bank nor USAID can account for how those funds are spent, which lays bare serious gaps in World Bank’s monitoring system. For example, when approving reimbursements for Afghan government employees’, such as teacher salaries, the Bank does not require the monitoring agent to physically verify if the salary recipients exist, despite acknowledging the risk of “ghost workers.”
Some of the key findings of the report are as under:
— Billions of dollars of donor funds contributed to the ARTF are at risk due to continued limitations on, and lack of transparency into, monitoring and accounting of ARTF funding by the World Bank and the government of Afghanistan.
— The U.S. government, represented by the U.S. Agency for International Development (USAID), is the largest contributor to the ARTF, contributing about $3 billion of the total $10 billion in direct assistance to the Afghan government since 2002.
— Once the U.S. or any other donor provides its contributions to the fund, neither the World Bank nor USAID can account for how those funds are specifically spent.
— The World Bank is unable to accurately measure ARTF sector-level performance. Without an accurate, reliable evaluation, the World Bank will be unable to determine the impact the roughly $10 billion in donor funding has had in improving Afghan development.
— USAID told SIGAR it is no longer preferencing funds by geographic location, which would enable diversion of money and development support away from areas under the control of the Taliban or other insurgent groups. USAID did not explain why its position changed.
— A senior aide to Afghanistan’s President told SIGAR that the structure of ARTF allows for ill-conceived projects to be funded because there is no repayment obligation and dysfunctional projects are nearly impossible to eliminate.
— The Afghan Presidential aide also told SIGAR there is political pressure to spend ARTF funds, even if the programs and projects being funded are ill-conceived, unneeded, or risk losing future funding.
— World Bank officials said the ARTF does not use conditionality or other mechanisms that would restrict disbursement of ARTF funding in general because this would go against ARTF’s priority to pursue all opportunities for spending available funding on the Afghan government.
— When approving reimbursements for Afghan government employees’, such as teacher salaries, the World Bank does not require the monitoring agent to physically verify that salary recipients exist, despite acknowledging the risk of “ghost workers.”
— The World Bank cannot provide reasonable assurance that ARTF funding, which covers roughly 40 percent of all Afghan civilian expenditures, is reimbursing only proper government expenditures.
— The World Bank restricts donor and public access to how it monitors and accounts for ARTF funding, leaving donors, and their taxpayers, without important information necessary to understand the activities they fund.
— The Bank is not following its own policy to provide donors and the public access to ARTF records that should be publicly available.
— As the fund is structured, the World Bank states that only the Afghan government-the ARTF recipient and beneficiary-has the ability to decide when and what projects to scale back, discontinue, or redesign.
To view the full report, click here: https://www.sigar.mil/pdf/audits/SIGAR-18-42-AR.pdf
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