Sector Program Grant Aid to Afghanistan

March 22, 2006

The Government of Japan has decided to extend a sector program grant aid of 2.6 billion yen (approximately US 24.3 million dollars) to Afghanistan. Notes to this effect were exchanged on March 18 (Sat) in Kabul between Mr. Norihiro Okuda, Japanese Ambassador to Afghanistan, and Mr. Mahmoud Saikal, Deputy Minister of Foreign Affairs of Afghanistan.
To rebuild the national infrastructure devastated by the civil war that lasted over 20 years, Afghanistan has exerted efforts to enhance its capacity on crisis management through such means as the reconstruction of the basic political system, the provision of basic governmental services and the stabilization of its economy. Starting from 2004, the country has implemented a long-term strategy aiming at constructing an economically self-sustainable nation through security improvement, growth promotion led by the private sector, elimination of the drug economy, further enhancement of governmental structure and other measures, and formulated last year a Poverty Reduction Strategy Paper (PRSP). The Afghanistan government viewed this Paper as an Afghanistan National Development Strategy (ANDS), which laid out the development programs over the next five years, and presented interim ANDS to the international community at the London Conference on Afghanistan held at the end of January this year. Hence, Afghanistan is expected to launch full-fledged efforts for the improvement of its economic structure. However, the ailing agriculture, the basic industry, and the lack of a distribution system, continue and the economic situation in Afghanistan still remains harsh.
Japan has been playing a leading role in the nation-building of Afghanistan by, for example, hosting the International Conference on Reconstruction Assistance to Afghanistan (Tokyo Conference) in January 2002. Japan implemented assistance totaling one billion dollars from September 2001 to November 2005, covering every field from the political process and the security improvement to reconstruction. At the London Conference held at the end of January this year, Japan announced its intention that it would extend to contribute 450 million dollars to assist the successful completion of ANDS.
This sector-program grant aid is intended to assist effectively the efforts for the efficient use of the budget and for control of public expenditure, one of the goals of ANDS. The grant will be used to purchase goods to be imported to improve the country's economic structure. The counterpart funds will be used intensively for projects concerning the reintegration of ex-soldiers and returnees.

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