World Bank lends Afghanistan $166 million for reconstruction

Afghanistan will receive $166 million in interest-free credits from the World Bank to reconstruct post-war communities, strengthen local governance, provide water to farms and aid the Government in increasing the efficiency of its customs and transit regime.

The Bank's Board of Executive Directors in Washington yesterday approved an interest-free loan of $95 million to expand Afghanistan's World Bank-supported National Solidarity Program (NSP), which was launched in 2002.

The NSP, which strengthens local governance and provides resources for reconstruction and development, is so far being implemented in over 3,000 of Afghanistan's 20,000 villages. Community Development Councils, elected through secret ballot, lead local participation in deciding how the grants will be spent.

The World Bank will also provide $40 million in interest-free credit in support of Afghanistan's emergency irrigation rehabilitation project, an urgent response to the Government's plan to rehabilitate the national irrigation system in the country's five river basins.

New interest-free financing of $31 million is also being directed toward an emergency customs modernization and trade facilitation project to install customs and communications infrastructure at border crossing stations, inland clearance depots, transit checkpoints, and Kabul airport, the Bank said.

Customs revenues contributed nearly $50 million to Afghanistan's tax revenues in fiscal year 2002, amounting to 60 per cent of total revenue. The Bank projects that this amount could be much higher with a more efficient customs and transit regime.

The NSP and irrigation loans have a grace period of 10 years.