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Informing reforms

one report at a time

When Afghanistan’s President Ashraf Ghani met then EITI Chair Clare Short in December 2014, he said that his government’s first priority for the extractive industries would be to ensure that a robust institutional framework and strong government systems were in place. Afghanistan’s latest EITI report, published on 6 February 2016, highlights some initial progress and helps identify where further reforms are needed.

Afghanistan’s fourth report, covering 1391 and 1392 in the Afghan calendar, shows that government revenues from the extractive industries amounted to AFS 4,252 million (USD 62 million) in 2012 and AFS 2,028 million (USD 30 million) in 2013. By contrast, the US Geological Survey identified USD 1 trillion-worth of natural resources in 2010 in Afghanistan. As in previous years, the report illustrates that much work is needed if these resources and reserves are ever to translate into revenues to outstrip donor funding. It is estimated that Afghanistan received USD 3.9 billion from international donors in 2013 alone.

Identifying the gaps

According to Dr Omar Zakhilwal, EITI Champion and Special Economic Advisor to the President, “the EITI can play a crucial role in directing the country’s extractive sector to a reliable path”. The latest report includes an important number of recommendations for the Government of Afghanistan on areas including record-keeping, the separation of roles between government agencies, implementing international accounting standards, and bringing clarity to the status of artisanal and small-scale mining.  

Among the findings of the report underpinning these recommendations are possible revenue losses from uncollected taxes in the provinces, lack of clarity over which government entities receive taxes from companies, deficiencies in company filings of financial records and contracts, and potentially important tax revenues from lapis lazuli production that do not seem to be reflected in government accounts. 

From Reports to Reforms

Regional Director and Deputy Head of the EITI International Secretariat Eddie Rich noted that “through the process of developing this report and as a result of its findings, the Government of Afghanistan has an important tool that it can use to support and guide its reform of the sector.”

At its meeting in Brazzaville on 15 April 2015, the EITI Board decided that Afghanistan should remain an EITI Candidate until it can demonstrate compliance with the EITI Standard through Validation, the EITI’s quality assurance mechanism. Afghanistan’s next Validation is scheduled for October 2016.