1. Helping GIRoA Implement Its Nationwide Provincial Budgeting Pilot 9 Aug 2011

2. Why is Provincial Budgeting important? It is a GIRoA designed and led effort that strengthens a substantive governance role for a significant level of Afghan government other than the center By providing governance roles for a wider range of subnational GIRoA officials to perform, it allows our field personnel to increasingly orient their efforts around supporting them It is now a policy with wide-ranging GIRoA ownership, nationally and subnationally 2

3. What the Provincial Budgeting pilot is and is not (as of 7/11/11) Above all, it represents what key GIRoA actors could agree was implementable this year Provides a greater provincial role in the formulation of the five pilot ministries parts of the national budget (no change to how budgets are executed) Only affects the GIRoA development budget, not the recurrent budget (i.e., salaries and O&M) Does not invite unconstrained provincial budget inputs – uses existing national programs (shown on the next slide) to require alignment with sectoral approaches already agreed between GIRoA and donors Does not represent the devolution of full-fledged budget authority to provinces – the Ceilings briefed at the Transition conference are best understood as notional resource envelopes to require prioritization 3

4. Proposed Nationwide Ceilings For Each Pilot Ministry Provincial Directorate (Ceilings may be greater for provinces in the first tranche to transition) Pilot ministries Program to be used for allocation and execution Provincial Line Directorate Ceilings MAILHLP$0.5m MRRDNRAP$0.5m HealthBPHS$0.5m EducationEQUIP$0.5m IDLGTBD$0.5m 4

5. Potential issues worth flagging Additional donor resources? – Multiple donor meetings have taken place during June and July without donors offering additional resources (even in the context of Transition) – and this did not stop MoF Zakhilwal from stating on 9 Jul that GIRoA has taken the decision to go forward with the pilot for all provinces. The pilot program will be implemented with or without additional donor funding Assuming GIRoA is limited to current funding, all that is necessary for PB to be implemented is confirmation that the national programs identified are (or can be made) consistent with provincial input into the pilot ministries formulation of projects under those programs WB/ARTF has given a preliminary green light with respect to the 3 of the 5 identified programs that use the ARTF, but more detailed discussions are necessary (and are being pursued by the MoF) Similarly, the USAID programs (PBGF and of BPHS) require more detailed discussion 5

6. Training plan Phase 1 was the May 17-18 Provincial Budgeting symposium Phase 2 will be a series of MoF/pilot ministry-led regional trainings from mid-July to mid-August, with provincial officials traveling to regional locations – MoF will receive some support from USAIDs EGGI program – Additional support will be provided by IPA, Treasury OTA & IJC Simultaneously, IPA and OTA will use a combination of VTCs and field visits with Platforms/Task Forces/PRTs to provide US civilians sufficient training to support provincial GIRoA counterparts. The Embassy is also working through the Senior Governance Group with ISAF, IJC and the NATO SCR to offer similar trainings for non-US PRTs. 6

7. Training Calendar – Current calendar and updates available on the provincial budget website MissionGIRoA Trainers Afghan Dates (3 training & 2 travel days)ProvincesInternational TrainersInternational TC DATEInternational Training Date Team 1 Najimullah Qasimi, Qasim Shinwari Sayed Fahimullah Ebady, DinMohammad Nasrat,Mohammad Omar Nohi, Shah mahmod Karokhail 16 - 20.07.11 Bamian &Daikondi Kirk Schmidt & Najla Farzana7/14/20117/18/2011 in Bamyan Team2 Abdul Momin Mansoor, Esmail Ahady, Fawad Nabizai, Mohammad Daud, Abdul Saboor Jarrar, Ajab khan Nasiri, 18-22.7.11Nuristan, Laghman, Kunar & Nangarhar Kirk Schmidt7/14/20117/20/2011 in Nangarhar Team3 SayedFahimullah Ebady,Mohammad OmarNohi,Mohammad Fawad Nabizai & Mohammad Daud August 14 – 16 in Kabul Panjshair,Parwan,Kapisa,Kabul & Ghazni 7/21/20117/27 Kabul Team 4 Abdul Momin Mansoor, Din Mohammad Nasrat,Mohammad Esmail Ahady & Shah Mahmood karokhail Logar, Wardak, Paktika, Paktiya and Khost Lynda Roades 7/21/20118/3 Kabul Team5 Sayed Fahimullah Ebady, Mohammad Fawad Nabizai,Mohammad Esmail Ahady,Mohammad Daud & Ajabkhan Nasiry Hold Badakhshan, Takhar, Baghlan, Kunduz, Kirk Schmidt 7/28/20118/2 in Mazar Team 6 Momin Mansoor,Qasim Shinwari, Mohammad Omar Nohi, Din Mohammad Nasrat & Shah Mahmood Karokhail Samangan, Balakh,sare pul,Jowzjan & Faryab Kirk Schmidt 7/28/20118-3 in Kunduz Team7 Abdul Momin Mansoor,Mohamad Daud, Din Mohammad Nasrat & Shah Mahmood Karokhail HoldZabul, Uruzgan, Kandarhar & Helmand Kirk Schmidt & Lynda Roades8/4/2011 Aug 10-18 in RC – S & Aug 20 in Helmand Team8 Najimullah Qasimi, Qasim Shinwari,Mohammad Fawad Nabizai,Mohammad Omar Nohi and Ajab khan Nasiri Badghis, Ghor, Farah, Hearat & Nimroz Lynda Roades8/11/2011 August 21-27 in Heart and Farah 7

8. Concluding points To repeat, the current pilot represents what GIRoA has thought is implementable now; this is only the first step Possible next steps in subsequent years – Inclusion of more ministries – Expansion to the recurrent budget – Use of more equitable formula-based allocations (for either the recurrent or the development budget) – Change to role of province in budget execution (incl. procurement and increased expenditure authority) – Role for Provincial Councils, providing representative accountability For GIRoA, most important aspect of pilot is showing provincial capacity in a core governance process – a foundation for further reforms For the US/internationals, most important aspect is that it provides sustainable GIRoA focal point for our governance efforts beyond Kabul 8