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Highlights

The United States has allocated over $72 billion to Afghanistan since 2002. With other international donors, it is focused on transitioning leadership to the Afghan government and has pledged to provide at least 50 percent of its development aid through the Afghan government budget. Improving Afghanistan's public financial management capacity is critical to this transition. In 2010, the Afghan government, consulting with donors, issued a Public Financial Management Roadmap (Roadmap), which outlines goals to improve Afghanistan's capacity to develop a national budget and expend funds. GAO reviewed (1) U.S. efforts to improve the Afghan government's public financial management capacity, including the extent to which they support Roadmap goals, and (2) the extent to which U.S. efforts have improved the government's capacity. GAO reviewed documents and interviewed officials from the U.S. Agency for International Development (USAID); Departments of State, Defense (DOD), and the Treasury (Treasury); World Bank; and Afghan government in Washington, D.C., and Kabul, Afghanistan.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
United States Agency for International Development 1. For public financial management (PFM) efforts, the USAID Administrator should establish targets, as required, for each PFM-related performance indicator in its Mission Performance Management Plan for Afghanistan.
Closed - Implemented
USAID agreed with our recommendation. However, according to USAID officials, they faced delays in establishing indicators and targets for mission-wide performance plan because (a) the mission decided to develop a new 10-year strategy, which invalidated the Performance Management Plan developed for 2011-2015, and (b) they had to wait until April 2015 for Afghan government ministers to be confirmed, following presidential elections in Afghanistan in 2014, to ensure alignment between mission strategy and the new Afghan government's priorities. Finally, in response to GAO recommendation, USAID's mission in Afghanistan established targets for the following three public financial management-related indicators in its Fiscal Years 2015 and 2016 Performance Plan and Report: (i) number of public sector entities with improved public financial management systems as a result of U.S. government assistance, (ii) number of days of U.S. government funded technical assistance in financial sector capacity provided to counterparts or stakeholders, and (iii) number of days of U.S. government supported technical assistance in fiscal policy and fiscal administration provided to counterparts or stakeholders. USAID established annual targets for these indicators from Fiscal Years 2016 through 2018.
United States Agency for International Development 2. For public financial management (PFM) efforts, the USAID Administrator should take steps to ensure that the USAID-approved performance management plan for each implementing partner includes baseline data and targets for each indicator.
Closed - Implemented
As a result of GAO's recommendation, USAID required the contractor for its existing public financial management capacity project, called Economic Growth and Governance Initiative, to include baseline and targets for each indicator in the updated performance management plan. USAID approved the completed plan, including baseline and targets for each indicator, in November 2011.
United States Agency for International Development 3. For public financial management (PFM) efforts, the USAID Administrator should ensure that implementing partners report performance data at the frequency established in the performance management plan.
Closed - Implemented
USAID agreed with the recommendation. As a result of GAO recommendation, USAID required the contractor for its existing public financial management capacity project, called Economic Growth and Governance Initiative, to report performance data on a quarterly basis for fiscal year 2012. The implementing partner generally reported performance data on a quarterly basis for all indicators related to public financial management in fiscal year 2012.

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