KABUL — Afghanistan’s central government is nearly broke and needs a $537 million bailout from the United States and other international donors within “five or six days” to continue paying its bills, a senior Afghan finance official said Tuesday.
Crippled by a growing budget shortfall, the Afghan government has spent hundreds of millions of dollars of easily accessible reserve funds this year, said Alhaj M. Aqa, the director general of the treasury at the Finance Ministry.
The government was barely able to cover its September payroll for more than 500,000 national and provincial employees, he added. And with its October payroll deadlines approaching, Aqa said the country’s financial challenges are now “critical.”
Officials blame the financial woes on the ongoing stalemate over who won the election to replace outgoing President Hamid Karzai.
“We hope they will pay for us, and we are asking at once,” Aqa said of ongoing discussions with the U.S. government and other international donors. “They are asking me when I need it, and I told them this week or we will have a problem.”
If additional money is not allocated, Aqa said, the government will have to begin deferring payment of bills for items ranging from fuel for government vehicles to official stationery. The fiscal crisis could also hamper the government’s ability to feed more than 350,000 Afghan soldiers and police officers, Aqa said. Salaries for police and army personnel are not at risk because they are paid with funds that come directly from the U.S.-led coalition.
A senior U.S. Embassy official in Kabul acknowledged discussions between Afghan and American officials over how to resolve the impending crisis. In a statement, the embassy said that it is “working to find ways to help the new government meet some of its challenges and priorities using resources already allocated.”
Earlier this year, before the Obama administration faced major foreign policy crises in Ukraine and Iraq, Congress made initial moves to limit U.S. spending in Afghanistan. At the time, the administration was growing impatient over Karzai’s refusal to sign a long-term security agreement with the United States.
But U.S. military leaders and diplomats have since appeared more receptive to the country’s needs. At this month’s NATO summit, for example, the international coalition approved spending $5.1 billion each year in support of Afghan security forces through 2017 — $1 billion more than was initially planned.
Still, although U.S. officials stressed they do not envision the Afghan budget problems requiring a new appropriation from Congress, any additional assistance could prompt fresh scrutiny of future American spending in the country.
An official with the World Bank said the organization was also “part of the discussion” but declined to comment further.
The Afghan government’s request for additional funds would help it pay its bills until the end of the budget year in December, Aqa said.
Afghanistan’s government has an annual operating budget of about $7.6 billion, about 65 percent of which comes from international assistance. The current fiscal crunch is a result of a 25 percent shortfall in Afghanistan’s domestic revenue collection from taxes and customs tariffs this year, Aqa said.
He said the gap was created by the country’s nearly year-long presidential contest, which has reduced foreign investment and made Afghans skittish about spending money.
In April, eight candidates competed in an election to replace Karzai. But no candidate received more than 50 percent of the vote, forcing a June runoff between former finance minister Ashraf Ghani and former foreign minister Abdullah Abdullah.
Amid allegations of widespread fraud, the outcome of that contest is in doubt because of disagreements between Ghani and Abdullah over the possible formation of a unity government.
Ahmad Shekib Mostaghni, director of communications for the Foreign Ministry, said officials are optimistic that international assistance will be forthcoming.
He noted that Ghani and Abdullah have signaled in recent days that they are close to striking a deal on a new government. Mostaghni said international donors have been hesitant to commit additional funds until the election is resolved.
“Because of the concern of the international community, some of the financial assistance promised has been delayed, but we are working very hard,” Mostaghni said. “Everyone knows the issues and problems of the election [have] had many negative impacts, and all officials in the government are concerned about these fiscal problems.”
According to the World Bank, Afghanistan will need more than $7 billion annually for the next decade to sustain a functional government, maintain infrastructure, and fund the Afghan army and police.
Since the fall of the Taliban in 2001, the U.S. government has appropriated $104 billion rebuilding and supporting the Afghan government, military and public services, according to the Special Inspector General for Afghan Reconstruction.
About $16 billion of it remains unspent, and the United States is expected to appropriate an additional $5 billion to $8 billion per year for at least a decade, John F. Sopko, the inspector general, said in a speech last week at Georgetown University.
“The bottom line: It appears we’ve created a government that the Afghans simply cannot afford,” Sopko said.
But Aqa said he’s optimistic the fiscal crisis won’t stretch into next year because, he said, lawmakers will readjust spending priorities before the completion of next year’s budget.
“We will manage it, if we receive $537 million,” Aqa said. “Next year, we will not have any problem because we make a budget based on our estimation of domestic revenue and donor funding. This only affects this year.”