Manila, Dec 15, 2006 AEST (ABN Newswire) - Asian Development Bank (ASX: ATB) is providing US$60 million in grants to support the development of Afghanistan's private sector and financial market.
Despite the country's strong economy recovery in recent years, the remaining challenges are enormous. Afghanistan is still one of the poorest countries in the world, with weak social indicators.
"Sustainable economic growth and poverty reduction will require a shift from reconstruction-driven recovery to private sector-led growth," says Sona Shrestha, an ADB Economist. "A thriving private sector is also essential for promoting alternative livelihoods in rural areas that would help reduce the narcotics economy."
"Prolonged conflict and civil strife have not only destroyed the physical infrastructure, but also substantially weakened the institutional basis and human capital necessary to support private sector development."
The program will help the Government establish a clear and comprehensive legal basis for private sector development, including laws related commercial arbitration and land ownership.
To enhance competition, it will help eliminate distortions such as price controls and streamline business registration and permit procedures to ease entry into the market by private enterprises. The program will also support the government's privatization initiative aimed at disengaging government from commercial activities where the private sector would be more efficient.
Lack of access to financial services is a key constraint on private sector development. The program includes measures to strengthen financial regulation and oversight, which will in turn enhance saving mobilization and resource allocation.
The program consists of a $56 million program grant that will cover the costs of undertaking the policy reforms, and $4 million for related capacity building activities. Both will come from ADB's Asian Development Fund, through which ADB provides loans and grants to its poorest developing member countries.
The Government will contribute $300,000 equivalent in the form of counterpart staff, facilities and office space. The Ministry of Finance is the executing agency for the program, which will be carried out over about three years.
Contact
Graham Dwyer
Email: gdwyer@adb.org
Tel:+632 632 5253; Mobile: +63 920 938-6487
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