The European Commission has published a press release stating that The European Commission announced new financial assistance to the Afghan Government in the form of a State-building contract in Brussels conference on Tuesday. Through State-building contracts, the European Union provides direct budget support to countries in fragile and transitional situations.

The signing ceremony of the State-building contract took place today at the margins of the Brussels Conference on Afghanistan. The agreement was signed by the Commissioner for International Cooperation and Development, Neven Mimica, and the Afghan Minister of Finance, Eklil Ahmad Hakimi in the presence of President Ashraf Ghani.

At the signing ceremony, Commissioner for International Cooperation and Development, Neven Mimica, said: “Today’s signature is an important step forward for the EU’s development partnership with the Afghan Government. The EU is committed to increasing the effectiveness of our aid, as a sign of our confidence in the Afghan side to deliver on its reform program. As the State-building contract is indeed a contract, both sides agree to play their part. We will provide the funding on the basis of satisfactory progress in key reform areas.”

The Minister of Finance of Afghanistan, Eklil Ahmad Hakimi, said: “The State Building Contract is an effective mechanism that aligns EU’s development assistance with the Afghanistan’s reform agenda. As an on-budget funding, it gives the Government of Afghanistan the required fiscal space to implement its development priorities that will improve the lives of the Afghan people.”

This first State-building contract for Afghanistan will provide up to €200 million in direct budget support over a two-year period from 2017 onwards. It will assist the Government of Afghanistan in defining its own strategic development priorities and policies, as outlined in the new Afghanistan National Peace and Development Framework. The Afghanistan National Peace and Development Framework will be presented at the main event of the Brussels Conference on Afghanistan. It will provide a credible strategic framework for Afghanistan’s development towards increasing self-reliance. The State-building contract will support more effective budgetary management and the fight against corruption.

A robust policy dialogue on reform progress in public policies, the macroeconomic framework, public financial management, as well as on transparency and oversight, will be put in place with the Afghan Government and determine the payments under this contract. The EU will closely coordinate with other partners and disburse when specific reform targets are reached.

The European Union aims to deliver assistance in an effective and flexible way by making use of partner countries’ systems.

For the period 2014-2016, the EU strategy for Afghanistan pursued four overall objectives: promoting peace, stability and security in the region; reinforcing democracy; encouraging economic and human development; and fostering the rule of law and respect for human rights.

The current EU development assistance program (also known as the Multi-annual Indicative program) for the period 2014 – 2020 has four focal areas: agriculture and rural development; health; rule of law and policing; as well as governance and democratization. The EU’s financial support amounts to €200 million per year, or €1.4 billion for the whole period. The State-building contract is part of the current development program.

Published by European Commission