Detriment of loans amid rampant corruption

Monday, 18 September 2017 03:22 Written by  Heart of Asia Read 267 times

Although the National Unity Government (NUG) considers itself successful in attracting foreign aid, it has recently resorted to getting loans. Lately, Afghan government has signed a contract with the Islamic Development Bank (IDB) to receive $74 million in loan for the construction of Kabul Ring Road.


While it is right that most underdeveloped countries borrow money from international organizations and banks for their major infrastructure and development projects, the climate in Afghanistan is not yet conducive to get loans. The high level of corruption, low capacity of project implementers, and a lack of transparency significantly limit the chances of properly utilizing the loans. In the current situation, these loans can also be embezzled like the billions of dollars of aid poured into the country by the international community. In such a case, not only the money cannot be spent appropriately, but the loan will remain as a heavy financial burden for the future generations of Afghanistan. 

Prior to getting any loans, the government should ensure transparency in spending of international aid money by enhancing the capacity of relevant government institutions. Moreover, efforts should be made to restore the trust of the international community in Afghan government institutions by stamping out corruption, as well as encourage the international community not to cut assistance to the country.  This is the best option in the status quo, which leaves no burden to future generations. 

As long as corruption is not rooted out in government and partner institutions, taking loans will rather do harm than good to the Afghan economy, because they are most likely to be defrauded, and their interest rates will reach a level, which will be difficult for future Afghan governments to pay off. 

If the National Unity Government cannot secure international aid because of poor management and widespread corruption, it doesn’t have to take steps to gain mendacious popularity, which make it difficult for future generations to achieve economic self-sufficiency 


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