VZCZCXRO0996
PP RUEHDBU RUEHIK RUEHYG
DE RUEHBUL #0933 0800923
ZNR UUUUU ZZH
P 210923Z MAR 07
FM AMEMBASSY KABUL
TO RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY 0394
RUEHC/SECSTATE WASHDC PRIORITY 6958
INFO RUCNAFG/AFGHANISTAN COLLECTIVE
RUEHZG/NATO EU COLLECTIVE
RUEHML/AMEMBASSY MANILA 1567
RUEAIIA/CIA WASHINGTON DC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RHMFIUU/HQ USCENTCOM MACDILL AFB FL
RUEKJCS/JOINT STAFF WASHINGTON DC
RUEKJCS/OSD WASHINGTON DC
RUEKJCS/SECDEF WASHINGTON DC
RUEHGV/USMISSION GENEVA 6701
RUCNDT/USMISSION USUN NEW YORK 3783

UNCLAS KABUL 000933 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EB/IFD/OMA, EB/IFD/ODF, SCA/FO, AND SCA/A 
DEPT PASS AID/ANE 
DEPT ALSO PASS OPIC AND TDA 
TREASURY FOR ABAUKOL, JCIORCIARI, LHULL 
NSC FOR AHARRIMAN 
OSD FOR BREZINZSKI 
 
E.O. 12958: N/A 
TAGS: EFIN EAID PREL AF
SUBJECT: AFGHANISTAN'S PROGRESS ON THE 1386 BUDGET 
 
 
(U) This message contains SENSITIVE BUT UNCLASSIFIED information. 
Please protect accordingly. 
 
1.(U)  SUMMARY:  The Government of Afghanistan is developing its 
1386 budget in a professional and timely manner.  The process, 
though not yet complete, is a substantial improvement upon last 
year, which resulted in the budget being delayed by many months. 
The Ministry of Finance, charged with the responsibility of 
preparing the budget, was able to obtain Cabinet approval and 
provided the draft to the Parliament on February 8, four days after 
the statutory deadline.  The Parliament is currently reviewing the 
budget, but is unlikely to complete its approval process by the 
March 21 constitutional deadline.  END SUMMARY. 
 
2.(U)  The Ministry of Finance (MOF) Budget Department is 
responsible for developing and rationalizing the budget.  A key part 
of this process involves consultations with the International 
Monetary Fund (IMF) to ensure the budget envelope is consistent with 
Afghanistan's IMF program.  MOF Budget Department officials began 
budget preparation much earlier this year to avoid major delays, and 
the Budget Department plans to begin the process even earlier for 
Afghan Calendar year 1387. 
 
3.(U)  The budget was approved by the Cabinet and then presented to 
Parliament on February 8, four days after the deadline.  (The Public 
Finance and Expenditure Management Law requires that Parliament 
receive the budget 45 days before the end of the fiscal year.)  This 
minimal delay was, in part, due to consultations with donors on 
increased security spending.  The Joint Coordinating and Monitoring 
Board (JCMB) meeting in Berlin, January 30-31, which required the 
participation of several key government officials at a time when the 
budget was being finalized, was another factor in the delayed 
submission. 
 
4.(SBU) The Parliament is supposed to approve the budget by March 
21, the beginning for the new fiscal year.  (Note: Article 98 of the 
Constitution states that if the new budget is not approved in time, 
the budget of the previous year is applied until the new budget is 
passed.)  In its review, Parliament has raised questions about a 
disparity between the government's independent auditing department 
and the MOF about the amount of government expenditures.  Parliament 
also asked questions regarding the rate of budget execution of the 
1385 development budget.  Some Members have also questioned proposed 
provincial-level budget allocations. 
 
5.(SBU) COMMENT:  While the 1386 budget has not yet been approved by 
Parliament, the Government of Afghanistan (GOA), particularly MOF, 
has made a serious and professional effort to produce the budget on 
time.  This is a substantial improvement upon the process last year. 
 Post will continue to track parliamentary engagement in the budget 
process. 
 
NEUMANN