Executive Summary

Encouraging Start for Nation Building

Afghanistan's nation rebuilding and reconstruction process has come a long way in a short time. An interim administration was installed following the Bonn Agreement in December 2001. The first recurrent (ordinary) budget was announced together with the National Development Framework in April 2002. The Emergency Loya Jirga was held in June 2002 followed by the installation of the transitional government led by President Hamid Karzai. A new constitution was prepared by November 2003, went through difficult deliberations at the "constitutional Loya Jirga" starting in December 2003, and was finally approved in early January 2004. The new constitution is notable, among other things, for designating Islam as the national religion, the centralized power of the presidency, and gender equality in principle. The first national population census is being carried out to pave the way for national elections to be held by June 2004.

Throughout this period, Afghan authorities have demonstrated a strong ownership in the recovery and reconstruction effort. Despite the still overall uncertain security situation in the country, the authorities represented by President Karzai have so far demonstrated a strong commitment to a free and competitive economic system, and private-sector-driven growth.

The present reconstruction effort is two-pronged: it is focused on rebuilding critical physical infrastructure on the one hand, and also on rebuilding public sector institutions from the remnants of Sovietstyle planning to ones that promote market-led development. But macroeconomic planning and management at present is hampered by poor information, weak systems of service delivery, and laws and regulations that need to be reviewed and, if need be, revised. Therefore, this volume aims to covers the efforts being made in this context.