KABUL, Afghanistan — Ashraf Ghani, Afghanistan’s current president, has promised to crack down on corruption if given an increase in aid. President Ghani has asked the U.S. for $537 million in emergency funds for this year to pay off civil workers and to run the country.
When President Ghani assumed the presidency, he inherited a country rife with difficulties. Of these problems, one of the greatest issues is the dire fiscal situation which is a result of the following setbacks.
First, there is not enough tax revenue to keep the country running efficiently. Low income is the cause of the shortage in taxes. According to Reuters, by the end of September 2014, the government should have had $1.7 billion in tax dollars. However, the collected amount was short by 25 percent. As a result, the government has been unable to pay civil workers their salaries. With smaller wages, the citizens pay less taxes and with fewer tax dollars, the country cannot function in an effective manner. For instance, monetary resources are imperative to fight off the Taliban insurgency by training and supplying the Afghani army.
Second, the flow of aid into Afghanistan has significantly declined, particularly due to corruption and poor transparency. Ghani has helped to fix this situation by reopening the Kabul Bank scandal case.
The Kabul Bank scandal had a significant part in the decline of aid from international donors. In 2010, the Kabul Bank collapsed when nearly $1 billion went missing. The penalties that the perpetrators received reflected the rampant corruption that exists within the country’s government. For instance, Kabul Bank’s founder Sherkhan Farnood and former CEO Khalilullah Ferozi were given a mere five years in prison despite embezzling $810 million. Furthermore, former president Hamid Karzai’s brothers, who were involved, were released without serving any time for returning the money they had stolen.
The significant part of President Ghani’s move toward cleaning up corruption is his willingness to reform a key institution in Afghanistan, which has the potential to ultimately lead to positive rippling events throughout the country and possibly the entire region.
Rebuilding the reputation of the banks will allow people to trust the institution more. An increase in trust will allow citizens to put their money into the banks and furthermore, formalize the entire banking system. When citizens have a reliable bank to deposit their money, it becomes easier to keep track of how much they have earned and therefore, taxes will be easier to collect. The more taxes in the government system, the more resources it will have to fund the programs the citizens need.
– Christina Cho
Sources: The Guardian, BBC News, Reuters