The draft National Development Framework (NDF) was developed and presented in April 2002 by the Afghan Interim Administration (AIA). It provides the basis for the Government’s reconstruction planning , and prioritizes programs for support. The NDF is based on three pillars, under which there are twelve national programs. These programs are being prepared through a consultative process led by key ministries and involving relevant agencies and development partners.

• Pillar One - Humanitarian Assistance and Human and Social Capital with national programs on (1) Refugee Return, (2) Education, (3) Health and Nutrition, (4) Livelihoods and Social Protection, and (5) Cultural Heritage, Media and Sports.
• Pillar Two - Physical Reconstruction and Natural Resources with national programs on (1) Transport, (2) Urban Management, (3) Energy, Mining and Telecoms, and (4) Natural Resource Management.
• Pillar Three - Private Sector Development with national programs on (1) Trade and Private Investment, (2) Public Administration, and (3) Security and Rule of Law.

In addition, the following three cross-cutting themes are to be addressed within each program

• Governance, Financial Management and Administrative Reform
• Human Rights, Security and Rule of Law
• Gender

The National Development Budget (NDB) is the central instrument of policy and resource allocation. The NDB builds on the NDF to outline a series of detailed programs, that form the core of the reconstruction effort. An integrated NDB for Afghanistan’s Solar Year (SY) 1382 (the fiscal year from March 21, 2003 to March 20, 2004) was presented at the first annual meeting of the Afghanistan Development Forum (a national Consultative Group meeting) which was held in Kabul for two days beginning on March 13, 2003.

AIA has established Consultative Groups (CGs) within which the NDB is planned, financed and implemented. There is a CG for each of the twelve national programs. Each group is chaired by a lead Ministry and includes donors, NGOs and a program focal point (secretary). The CG structure aims to encourage a fully transparent and accountable process to guide the collaborative reconstruction efforts.

The Afghanistan High Level Strategic Forum was hosted by the government in Brussels on March 17, 2003. Representatives of over 40 countries and 12 international organizations met to endorse a roadmap the government outlined for reforms in the financial, administrative, judicial, socio-economic and security sectors.

The government’s efforts to take full leadership of the reconstruction process and aid coordination have increasingly paid of, as shown by the following:

• There is only one, government-led aid coordination process.
• Consultative Groups are bringing government line ministries and donors together for substantive interactions on policies, programs, and implementation.
• The national budget process has become the focal point for decision-making on government policy and for allocation of domestic and external resources.
• Donors and other assistance partners (for the most part) have bought into these processes.

The Afghan Interim Administration (and then the Government of Afghanistan (GoA)) took steps to create and /or strengthen government systems. The Assistance Coordination Authority (now the Development Budget and External Relations Unit in MoF) provided a focal point for managing aid. The GoA set some hard conditions for the acceptance of aid, which forced donors to harmonize their activities to some extent. GoA also has a clearly expressed preference for budget support, with trust funds the preferred second choice where aid cannot be routed through the budget.

The Afghanistan Reconstruction Trust Fund (ARTF) was set up in May 2002 to provide support to the country for three main areas of expenditure: recurrent costs (e.g. salaries for teachers, health workers and police); priority investments (including capacity building. feasibility studies and technical assistance) and financing the return of expatriate Afghans. ARTF provides a coordinated financing mechanism to enable the AIA to fund budget and priority sector and investment projects and programs.

The Fund is jointly managed by the Asian Development Bank (AsDB), Islamic Development Bank (IsDB), UNDP and the WB (administrator of the ARTF). Channeling support through this multi-donor Trust Fund as key instrument of support to reconstruction has helped the government avoid addressing the distinct funding specifications of 24 donors and improve aid efficiency and effectiveness. These donors include Bahrain, Canada, Denmark, EC, Finland, Germany, India, Ireland, Italy, Japan, Kuwait, Luxembourg, The Netherlands, Norway, Portugal, Saudi Arabia, South Korea, Sweden, Switzerland, Turkey, United Kingdom and United States.

Despite early success in establishing clear policies and systems for donors to align to, the GoA’s control over aid inflows remains limited by the security situation and the combination of humanitarian, military and development assistance it receives. Approximately 75% of foreign aid to Afghanistan is channelled outside the government’s budget (e.g. in the area of security), presenting a constraint to the country’s long-term planning.

The United Kingdom hosted the London Conference on Afghanistan on January 31 – February 1, 2006 which was co-chaired by Afghanistan and the UN. Aid effectiveness was a key topic at this conference. On the first day, GoA launched its Afghanistan Compact, the successor to the Bonn Agreement (2001) which ended in September 2005 with the completion of the Parliamentary and Provincial elections. The Compact provides the framework for international community engagement in the country for the next five years. GoA also presented its Interim Afghanistan National Development Strategy (IANDS) to the international community. The strategy sets out the Government’s priorities for accelerating development, increasing security, tackling the drug trade, and strengthening governance. Participants showed strong support for increased use of government systems, like the budget, to channel their assistance to Afghanistan’s priorities.

At this conference, USA, Russia and Germany announced their intention to cancel debt owed by Afghanistan through the Paris Club.

In March 2006, Afghanistan officially endorsed the Paris Declaration on Aid Effectiveness. The principles of this declaration are already reflected in the Afghanistan Compact which was agreed between the Government and the international community at the London Conference, and was endorsed by the United Nations Security Council in February 2006.

Common guidelines, including environmental and social safeguards’ framework, for the investment and program component of the ARTF have been agreed to and are being used.

ARTF is financing a feasibility studies' fund to help AIA produce a pipeline of bankable projects in the near future.

Joint sector missions have increased sector knowledge, and considerable work has been done on public administration and other institutional issues. DFID, BMZ, EC and WB conduct joint appraisal and joint funding of activities. Specifically, support to ARTF for recurrent and development budget (approx. 15% of bilateral funds and 50% of DFID allocation).

Donors and NGO members of the twelve CGs are assisting the Government in defining benchmarks and will, in future, focus on monitoring performance against the benchmarks in close collaboration with Government partners.

GoA and the international community are establishing a Joint Coordination and Monitoring Board for the implementation of the Compact.

Afghanistan will participate in the first round of survey work (beginning in May 2006) in order to establish a comprehensive baseline and methodology for tracking implementation progress on the Paris Declaration (and its indicators) through 2010. GoA will seize this opportunity to monitor additional country-specific indicators of aid effectiveness as identified and agreed in the Afghanistan Compact.

In 2005, the World Bank, collaborating on specific issues with AsDB (procurement), DFID (state-owned enterprises), EC (highways), and IMF (revenues), completed a report which was a product of the Public Finance Management (PFM) Review.

In 2004, CIDA, DFID, USAID, UNDP, UNICEF, WB and others jointly produced a report on Subnational Administration in Afghanistan: A Guide to Government.

WB and partner institutions will prepare a Gender Assessment which will explore linkages among health, education, poverty and gender discrimination.

Afghanistan and its civil society organizations were represented at the AsDB and the Government of Japan sponsored East and South Asia, and the Pacific Regional Workshop on Harmonization and Alignment for Development Effectiveness and Managing for Results which was hosted by the Government of Thailand in Bangkok on October 19-20, 2004. The workshop prepared participants for the Second High-Level Forum (HLF-2) on Harmonization and Alignment in Paris, Feb. 28-March 2, 2005.

The Republic of Albania, a lower middle income country with a Gross National Income (GNI) per capita of US$2,060 in 2004 has experienced relatively high economic growth rates following its transition from communism to a market based economy. The Government of Albania (GoA) has carried out major institutional and economic reforms while maintaining macroeconomic stability. Despite these achievements, Albania remains one of the poorest countries in Europe. According to the Living Standards Measurement Survey (LSMS), a quarter of the Albanian population live in poverty and about 5 percent live in extreme poverty (e.g in the northeastern part of the country). The incidence of poverty is more significant among young families and persons with low levels of education.

Key bilateral donors for Albania include the EC, Germany, Greece, Italy, the Netherlands, USAID and Switzerland. Multilateral development institutions include the EBRD, IFAD, IMF, UNDP and IDA. Based on 2002-2003 gross ODA data, IDA, EC, Greece, and the United States are the country’s major donors and the share of bilateral donors is approximately 63 percent.

GoA in collaboration with development partners, produced a PRSP as the Growth and Poverty Reduction Strategy (GPRS) and launched it in 2001 as the National Strategy for Social and Economic Development (NSSED). The GPRS which rests on two pillars: governance and strong economic growth (with education, health care, and infrastructure as priority areas) was presented to the Boards of the World Bank and the International Monetary Fund (IMF) in June 2002. The objectives of the GPRS are to (i) maintain real GDP growth of 22-25 percent during 2002-2004; (ii) reduce the number of people living in poverty; (iii) improve infrastructure and related services such as supply of portable water, sewage and electric power; (iv) reduce infant and maternal mortality rates; and (v) increase the level of 8-year (elementary) and secondary education and average schooling period.

The GPRS is connected and harmonized with the sector development strategies (e.g. in health, and decentralization). In April 2004, GoA published its second progress report on the implementation of the NSSED which included the priority action plan for 2004-2007. The NSSED (a dynamic document) has evolved into the basic document of mid-term (2004-2007) and long-term (2004-2015) government policies that combine the main agendas of GoA for reducing poverty, guaranteeing sustainable economic growth, achieving the MDGs, integrating the country into NATO, the EU and the region. A department of the NSSED (DoNSSED) has been established within the Ministry of Finance to coordinate all NSSED-related activities.

A group of donors (CIDA, DFID, IMF, Italy, Netherlands, Organization for Security and Cooperation in Europe (OSCE), UNDP, UNICEF, USAID and the World Bank) met on several occasions to discuss the GPRS process and the donors' role. Donors provided inputs to the GPRS process in several forms.

Donor coordination began in 1999 through the Friends of Albania (an informal group of development partners) and evolved in 2003 into a Donor Architecture in which the donor community agreed to allow the EC, UNDP, OSCE and the WB to lead the coordination process (reporting to all donors regularly) based on the work of numerous Sector Working Groups (SWGs). These four lead donors had four distinct but complementary mandates. They formed the Donor Technical Secretariat (DTS) to manage the coordination process. The EC, being the largest donor, became the permanent Head of the DTS.

In the first quarter of 2005, the donors agreed to commence work with GoA to formulate a Harmonization Action Plan (HAP) design by December 2005 and develop it in 2006. A Paris Declaration indicator baseline (2004-2005) is being produced and together with quarterly monitoring, the database will give trends by sector and by donor.

Donor coordination in Albania is undergoing a rapid transition from a donor-led approach to country-owned coordination. It is concentrated in the Prime Minister’s Office supported by Ministries of Finance and European Integration. The Deputy Prime Minister chairs the Quarterly Donor-Government Roundtables now. At this meeting, reports on coordination efforts in the sectors are presented. The DTS convenes Development Counselor Meetings in preparation for the Roundtables.

The Government Technical Secretariat (GTS) consisted of representatives of the core ministries – Finance (budget, public investment), Economy, European Integration (Community Assistance for Reconstruction, Development and Stabilization (CARDS) programming), Interior (public administration) and Council of Ministers (policy coordination, national integrated strategy) under the leadership of the Prime Minister’s office. The GTS was instrumental in drafting the Integrated Planning System (IPS). The GTS and DTS met regularly as the Joint Technical Secretariat (JTS) during the IPS design phase. The JTS coordinated government and donor cooperation on the IPS reform and facilitated roundtables.

In May 2005, GoA launched the IPS which aims to integrate the various policy frameworks (NSSED, Stabilization and Association Process, MDGs, etc.) into a single medium-term development plan in 2007. The IPS also envisages a new architecture for donor coordination and management of external assistance.

As a result of the July 2005 Parliamentary elections, the Democratic party-led coalition formed a new Government in September 2005. It will focus its efforts to wipe out corruption, fight poverty, and move Albania closer to European integration. The new government confirmed its commitment to the implementation of the NSSED and the Integrated Planning System (IPS).

In November 2005, the new government approved a reworked IPS and created two new inter-ministerial committees which supersede the GTS inter-ministerial coordinating role. They are the Prime Minister-led Committee on Strategic Planning and the Deputy Prime Minister-led Committee on Government Modernization. The new functions at the Prime Minister’s Office on IPS, NSSED, and Donor Coordination will take over the concrete work of the GTS. The IPS is a state-of-the-art internal coordination system to translate vision, strategy and policy into multi-annual budgeting, objective-based programming, implementation and monitoring/evaluation of impact.

In January 2003, Albania started negotiations with the EU for a Stabilization and Association Agreement (SAA). Negotiations have advanced since then and focus on political, institutional, and economic issues.

Implementation of the Albania Public Administration Reform Project (PARP) was managed successfully from within an existing GoA institution (i.e. the Council of Ministers (CoM)). The project implementation reports of the Unit for Implementation of the Public Administration Reform Program (UIPARP) are good practice models for tracking all stages of project execution (e.g. TOR preparation, procurement, contracting, and contract execution).

A SWAp is being prepared as a pilot in the transport sector.

The Infrastructure Steering Group held a donor coordination meeting on SWAps in Tirana in September/October 2004.

A Memorandum of Understanding (MoU) on the “Development of the South East Europe Core Regional Transport Network” between all Western Balkan countries was signed on June 11, 2004. This MoU confirms the commitment of Western Balkans countries to work together to (i) enhance regional transport within an agreed regional framework and core network, (ii) have reciprocal consultations on transport policy, and (iii) introduce an institutional framework that facilitates sustainable investments in the sector.

Albania is expected to fully graduate from IDA by 2008.

Nearly half of Bangladesh's population lives below the poverty line. The Government of Bangladesh (GoB) has prepared I-PRSP (viz. The National Strategy for Economic Growth, Poverty Reduction and Social Development) and the full PRS is scheduled to be available by December 2004. The PRS is built around four pillars: broad-based economic growth, social sector development, social inclusion and good governance. These are rooted in the PRS’ explicit emphasis on decentralization and rationalization of government functions and transparency. In mid-2005, GoB is scheduled to complete its MDG Progress Report.

In 2003, a new Procurement Regulation was introduced which takes into account the harmonization efforts of the Multilateral Development Banks (MDBs) and their minimum requirements for local procurement. The regulation is applicable for all entities using public resources for procurement. MDBs and bilateral donors are encouraged to use the Government’s new regulations.

In the area of financial management and accountability, reforms are also being pursued in budget and expenditure control and government audit. Progress has also been achieved in the area of capacity enhancement and technical assistance. Namely donors have agreed on guidelines for donor funded foreign training activities.

The Task Force on Public Financial management is the core joint team of donors and GoB to steer harmonization issues.

The Government recognizes primary school education as a key area for development and as a means to reducing poverty. Donor harmonization efforts are currently focused on the education sector. One of the key lessons learned has been the poor coordination between Government and [among] donors and the difficulties encountered during implementation of over 20 generally poorly performing, weakly managed, low disbursing and overlapping donor-financed projects. The project by project approach to improving primary education has also had a negative impact on capacity building and human resource development in the sector.

AsDB is the lead agency among eleven development partners, to coordinate the financial and program support from EC, IDA, JICA, UNICEF and six bilateral donors (AusAID, CIDA, DFID, Netherlands, NORAD and SIDA).

Harmonization activities envisaged include: Pool account, procedures for pool-funded procurement, performance-based financing, joint implementation and supervision activities, and common audit and reporting requirements.

Harmonization features of EC support to Bangladesh are in the education as well as in the health sectors in the form of pool funding.

The Government in consultation with major donors has prepared a draft Harmonization Action Plan (HAP) which is likely to be finalized and adopted (after formal endorsement through dialogue with all development partners and stakeholders) by the end of April 2005.

GoB was represented at the AsDB and the Government of Japan sponsored East and South Asia, and the Pacific Regional Workshop on Harmonization and Alignment for Development Effectiveness and Managing for Results which was hosted by the Government of Thailand in Bangkok on October 19-20, 2004. The workshop prepared participants for the Second High-Level Forum (HLF-2) on Harmonization and Alignment in Paris, Feb. 28-March 2, 2005.

OECD/DAC Working Party has developed indicators (in a survey instrument) to monitor progress on harmonization and alignment. These indicators were field-tested in 14 countries, including Bangladesh. A draft report has been prepared.

Bangladesh is a planned Country Environmental Analysis (CEA) Pilot

In 2002 Bangladesh, Democratic Republic of Congo, India, Nigeria and Pakistan were invited to participate in the Education for All - Analytic Fast Track (EFA-AFT) initiative. However, EFA-AFT no longer exists since the Education for All – Fast Track Initiative (EFA-FTI) has evolved from a vertical program and global fund – where participation was on an invitation basis only - to a country-based and country-led process of program development and resource mobilization, with the global partnership providing tools and resources to support, fill gaps and leverage longer term financing. To this end, the FTI partnership has opened up participation to all IDA-eligible countries responding to the EFA-FTI criteria of a Poverty Reduction Strategy (PRS) and an education sector plan prioritizing Universal Primary School Completion (UPC) and endorsed by the local donor group. Bangladesh is likely to be endorsed through EFA-FTI review process in 2005.