Cash-poor Afghanistan will delay paying civil servants: finance ministry official
By Kay Johnson KABUL (Reuters) - Afghanistan will delay paying salaries to hundreds of thousands of civil servants next month because it does not have enough money, a finance ministry official said on Saturday. The acknowledgment that it is now impossible to pay October salaries on time highlights the huge challenges facing new leader Asraf Ghani, who is to be sworn in as president of the violence-torn country on Monday after months of turmoil following a disputed election result. Alongside the fight with the Taliban insurgency, Afghanistan's fiscal crisis is the most immediate problem facing Ghani and coalition partner Abdullah Abdullah. The two agreed to a unity government last week, breaking the election deadlock. Afghanistan's treasury now holds less than the 6.5 billion Afghanis ($116 million) needed to begin processing monthly salaries, said Alhaj Mohammad Aqa, director-general of treasury in the ministry. He would not say exactly how much money the government had in its coffers, only that it was not enough to meet the payroll. "Right now, we don't have that much," Aqa said. The October shortfall will affect only civilian government workers - Afghan military and police salaries should come on time because they are paid from a separate fund, he added. Afghanistan has asked for $537 million in emergency funds from the United States to meet its budget commitments through December, but so far has not received approval, Aqa said. Even if that additional funding is approved within a week it's now too late to process the October payroll on time and government salaries will come at least one or two weeks late, he added. It will be the first time in recent years that the government has had to delay paying salaries for lack of funds, Aqa said, although he acknowledged that civil servants are often paid late because of poor administration. Next month's payroll processing was supposed to start on Saturday and payments made on Oct. 14. Payroll processing, which generally takes one or two weeks, will now start in mid-October after the Muslim holiday of Eid al Adha, Aqa said. By that time, he said, the government hopefully will have collected enough revenue -- or gotten a cash infusion from donors -- to make up the shortfall. "After Eid I hope we can start the payments, but not at one time for all government employees," Aqa said. "Maybe during the two weeks after, we can pay for them all." Foreign donors already fund more than two thirds of Afghanistan's budget, as they mostly have since the 2001 military intervention to topple the Taliban's radical Islamist regime for sheltering al Qaeda's leadership after the 9/11 terrorist attacks on the United States. The Afghan government has long struggled to raise revenue through taxes and customs duties in a country with rampant corruption. Uncertainty surrounding the departure of foreign combat troops at the end of the year, plus the election turmoil of recent months, has sent revenue collections plummeting. According to budget projections the government should have collected about 99 billion Afghanis ($1.7 billion) by the end September. Aqa said actual collections were short by 25 percent. U.S. ambassador James Cunningham recently confirmed that Afghanistan had asked for emergency money to pay its bills through the end of the year. He said any such additional funds would have to be borrowed from coming years' donor commitments. "There isn't going to be new money," he said. Any end-of-year bailout is likely to be conditional on commitments by the new government of Ghani and Abdullah to both cut government spending and find ways to increase revenue collection, he added. (Additional reporting by Mirwais Harooni; Editing by Pravin Char and Greg Mahlich)
