ADB to increase Afghanistan reconstruction funding

The Asian Development Bank (ADB) is to increase funding to Afghanistan to support essential reconstruction work and economic development.

ADB will now provide US$ 548 million in financing for 2011-2012, as compared with US$ 386 million under the planned phase-out. This money will be used to help "address cost overruns" linked to a national ring road, and some irrigation and energy projects which were not included when ADB prepared its operations program.

ADB's assistance in Afghanistan is centred on three multi-tranche financing facilities covering transport, energy, and irrigation. Along with the ring road, ADB is aiming to complete the construction of a railway line connecting Mazar-e-Sharif to the border town of Hairatan, which handles half the country's imports, and to make further improvement in electricity transmission and distribution over the next two years.

The increase comes after the ADB's Board of Directors agreed to temporarily suspend a planned phase-out of exceptional allocation of its Asian Development Fund (ADF) - ADB's concessional financing facility - to Afghanistan in 2011 and 2012, making additional funding available.

Commenting on the new agreement, Juan Miranda, Director General of ADB's Central and West Asia Department said, "A significant drop in assistance from ADB has been avoided. We are one of the largest development partners in Afghanistan. This will cancel out the potentially disruptive effects on ADB operations, which are so important for the reconstruction and development of the country."