Afghanistan's Donor Dependence

The United States has allocated over $72 billion to secure, stabilize, and rebuild Afghanistan since 2002, and the President requested over $18 billion for these purposes for fiscal year 2012. GAO has on numerous occasions raised doubts about the Government of the Islamic Republic of Afghanistan's (GIRoA) ability to fund its public expenditures--funds spent to provide public services to the Afghan population, such as security, infrastructure projects, and government salaries. In 2005, we reported that Afghanistan had limited resources and recommended that the Secretaries of State and Defense develop plans for funding the Afghan national security forces (ANSF).1 In 2007 and 2008, we reported that it was essential to develop future funding requirements for the ANSF and a strategy for transitioning these responsibilities to GIRoA.2 In 2008, Congress also mandated that the Department of Defense provide a long-term plan for sustaining the ANSF, including future funding requirements. The Department of Defense, however, has yet to provide the Congress an estimate of the cost to sustain the Afghanistan National Security Forces.3 In 2011, we again recommended that the U.S. and international partners develop estimates of the future funding needed to grow the Afghan National Army.4 We have also raised concerns about Afghanistan's inability to fund planned government expenditures without foreign assistance and raised questions about the sustainability of U.S.-funded efforts to build and enhance Afghanistan's road, agriculture, and water infrastructures.5 During a related engagement, we reviewed U.S. efforts to strengthen Afghanistan's public financial management, a critical capability for Afghanistan's fiscal sustainability.6 The international community, including about 50 donor countries and international entities such as the World Bank and the United Nations, has also provided significant support to help stabilize and rebuild Afghanistan. At international conferences in London (January 2010) and Kabul (July 2010), officials from some of these countries and organizations committed to supporting Afghanistan but also raised issues about Afghanistan's donor dependence. Because of the wide range of interest in this topic, we conducted a review of issues related to Afghanistan's donor dependence, including U.S. funding for Afghanistan, under the authority of the Comptroller General to undertake work on his own initiative. In September 2011, we briefed the staff of the Senate Committees on Armed Services and Foreign Relations and House Committees on Armed Services and Foreign Affairs on the interim results of our work. This report provides preliminary observations based on our analysis of U.S. agencies and others' reports on (1) Afghanistan's estimated total public expenditures; (2) estimated public expenditures funded by donors, including the United States; and (3) Afghanistan's domestic revenues.

(1) Afghanistan's estimated total public expenditures. Afghanistan's estimated total public expenditures more than doubled from solar year (SY) 2006 to 2010, growing from $5.5 billion to $14.3 billion, an increase of 160 percent. Over this 5-year period, about 79 percent of Afghanistan's estimated total public expenditures of $54 billion were off budget. (2) Donor funding. The United States and other donors funded about 90 percent of Afghanistan's estimated total public expenditures from SY2006 to 2010. In particular, donors funded on average 57 percent of on-budget expenditures and 100 percent of off-budget expenditures. Over this period, the United States provided 62 percent of estimated total public expenditures, while other donors provided 28 percent. The United States funded an estimated 90 percent of Afghanistan's total security expenditures during this time period. The United States funded an estimated 39 percent of Afghanistan's total non-security expenditures during SY2006 to 2010. (3) Afghanistan's domestic revenues. The domestic revenues of GIRoA grew by an average annual rate of 30 percent from SY2006 to 2010, increasing from an estimated total of $0.62 billion to $1.66 billion. Customs duties and taxes such as income and property taxes provided the largest share of domestic revenues. However, domestic revenues funded only about 9 percent of Afghanistan's estimated total public expenditures from SY2006 to 2010. This report does not include conclusions or recommendations.