Countries of the World/COUNTRYS.BIN/dp/0001/00014.txt

Text File | 1991-06-24 | 29KB | 450 lines

$Unique_ID{COW00014}
$Pretitle{265}
$Title{Afghanistan
Chapter 3B.   Role of the Government}
$Subtitle{}
$Author{Robert S. Ford}
$Affiliation{HQ, Department of the Army}
$Subject{government
percent
bank
development
foreign
prices
afghanistan
banks
revenue
trade}
$Date{1986}
$Log{Arabian Influenced Art*0001401.scf
}
Country:     Afghanistan
Book:        Afghanistan, A Country Study
Author:      Robert S. Ford
Affiliation: HQ, Department of the Army
Date:        1986

Chapter 3B.   Role of the Government

[See Arabian Influenced Art: Courtesy Embassy of Afghanistan, Washington DC]

     Under the PDPA, the central government controlled the public sector,
which consisted of about 85 enterprises, the banks, and government ministry
operations. The government sought to directly affect and shape the path and
pace of the entire economy's development through these institutions.
Development planning was one of the primary mechanisms by which the government
directed the economy. Just four months after the April Revolution, a new
five-year plan for 1979-84 was announced. The newly formed State Planning
Committee, however, quickly dispensed with it in favor of annual social and
economic development plans, the first beginning in 1980. The government in the
mid-1980s was still using annual plans, but it had commenced studies to
prepare a new five-year plan.

     The annual plans indicated where the PDPA wished to move the economy.
Although the government claimed to give the agricultural economy high priority
in its new development strategy, it allocated proportionally smaller amounts
to the sector than had any previous government. In the 1982 plan, agriculture
received just 10 percent of the allocations, even though agriculture provided
nearly two-thirds of GDP in 1981. The new government effectively reversed the
trend in Afghan development plans in the late 1960s and 1970s, which had
targeted larger shares of the development budgets on agriculture. During those
planning periods agricultural investment was maintained at 25 to 35 percent of
the plan total. The PDPA's annual plans for 1981 and 1982 had a different
thrust. The government aimed at increasing the state's share of national
income, but the agriculture sector, where private ownership prevailed, did not
lend itself to this goal. Much of what funding there was for agriculture in
the 1980s went to state-owned irrigation projects. The traditionally
state-owned mining and industry sectors were perceived as more appropriate for
state support. These received investment funding twice the size of agriculture
in 1981 and over three times the size in 1982. The mining sector was also
important because the government in Kabul wanted to increase bilateral trade
with the Soviet Union. Its 1982 plan called for a significant increase in
natural gas exports to the north.

     The transport and communications sectors also received increased funding
after the April Revolution. The higher levels of investment did not go to new
road construction, for only 60 kilometers were added in 1981 and only 47
kilometers of new roads were called for in the 1982 plan. Rather than build
more roads in the countryside, the government's investment went to forming
state-owned transportation organizations equipped with Soviet- and
Czechoslovak-built trucks. The government also raised the allocation for
social services to a quarter of the entire development budget, twice the
proportion of the previous decade. Most of these educational, cultural, and
health projects were located in Kabul or other major cities, and they had
little effect on the rural populations. The overall goal of the PDPA plans in
the 1980s was to improve significantly the quality of life in the cities while
for the most part ignoring the countryside. In the wartime conditions
prevailing in Afghanistan in the 1980s, the government had to place its
emphasis on the territories and economic sectors it could control. The rural
areas were not under the authority of Kabul. In any case, implementation of
the plan was highly problematic, for the Afghan resistance frequently
congested highways, disrupted traffic, and even controlled other major cities,
such as Herat and Qandahar. Development projects were concentrated in the
northern provinces of Konduz, Balkh, and Jowzjan, where government control was
more secure.

     In the 1980s the government continued to suffer severe institutional
deficiencies, which also hindered its development planning process. The
planning authorities of the central and sectoral ministries still lacked the
qualified personnel and information resources to design and implement large
development programs. Both the sectoral ministries, such as agriculture or
mines and industry, as well as the Ministry of Planning and the State
Planning Committee, were short of technically qualified staff. The government
did not have detailed statistical information on which to base its plans and
policies. In addition, after the 1979 Soviet intervention, Soviet advisers
were placed in key positions throughout the government to direct the planning
of projects and their implementation.

     In 1985 the government budget was divided into two categories of
expenditures-ordinary and development. Total government expenditures rose
steadily after World War II, accelerating in the late 1970s and early 1980s.
The sharp rises in government spending were attributable to continued hikes in
ordinary and recurring outlays, which had increased by nearly 800 percent
between 1968 and 1983. In the decade between 1968 and 1978, total government
spending increased by 420 percent, spurred in part by a 140-percent rise in
recurring outlays. In the first six years under the PDPA (1978-84), total
outlays rose by 165 percent as recurring expenditures more than tripled. The
large increase in the ordinary budget was owing mainly to increases in defense
spending. Expenditures on general administration and public order also rose
nearly fourfold. This stemmed from the establishment of new administrative
bodies, higher salaries, and larger appropriations for the police. There were
additional large increases in expenditures for education, health, and a
variety of economic services, including pensions and subsidies. The
distribution of ordinary government expenditures changed little after the 1978
revolution. The share of defense dropped from 28 percent in 1977 to 23 percent
in 1982; public administration and order rose from 15 percent to 17 percent.
The share of education and health fell from 23 to 20 percent during the same
period. By the mid-1980s the government was seeking to slow the growth of its
ordinary expenditures by adopting such measures as reduced purchases of
materials and supplies and a drawdown of accumulated stocks. Government
employees received a general cost-of-living increase, but overtime pay was
abolished. Subsidy and transfer payments were expected to rise because of
anticipated hikes in fuel subsidies and in retired civil servants' pensions.

     Development expenditures also rose rapidly from 1968 to 1982 but consumed
less of the total amount of government outlays. Between 1968 and 1978
development outlays nearly doubled, but the rate of growth slowed dramatically
after the 1978 revolution. Between 1978 and 1982 development expenditures
increased by only 32 percent. With ordinary expenditures soaring, the share of
development spending in the total government outlay fell from 52 percent in
1977 to 23 percent in 1982. Development expenditures in the first five years
of PDPA rule fluctuated considerably, as they did before 1978, because to a
large degree they were dependent on foreign aid inflows.

     Afghan development spending continued to rely on foreign assistance
because of the consistently low level of domestic revenue collected by the
central government. Revenue generation had always been a problem for the
government. Between 1939 and 1972 revenue grew by only 26 percent after
discounting for inflation. Although revenue grew much