December 2, 2014 / 9:50 AM / in 3 years

Afghan projects, officials in limbo with delay of cabinet

KAREZMIR, Afghanistan (Reuters) - On the outskirts of Kabul, contractor Saif-ul Rahman Sherzad overlooks a half-finished road leading to Afghanistan’s north and pronounces much of the $5 million spent on it a waste.

Afghanistan's president Ashraf Ghani gestures during a news conference in Kabul November 6, 2014. REUTERS/Omar Sobhani

Afghanistan’s government has not released the funds needed to lay two more layers of asphalt to finish the road, meaning the coming winter snow and ice will likely destroy most of the work already done, Sherzad said.

He blamed the shortfall on the government’s delay in appointing ministers, more than two months after President Ashraf Ghani was sworn in following an election dispute that ended in a power-sharing deal with rival Abdullah Abdullah, who took up a prime-minister-like new role as chief executive.

“The new government is busy dividing positions among themselves and does not care what situation the country is in,” said Sherzad, owner of Elyas Wais Construction and Road Company.

The delay in forming a cabinet has raised worry that the government could break down in squabbling, adding to the many troubles of a country mired in war with the Taliban.

Failure to agree on new ministers threatens to dent aid-donor confidence just as the country is appealing for more funds to meet a budget deficit.

Afghanistan depends on foreign assistance for two-thirds of its $7.6 billion budget. It is having trouble meeting its own share of the budget because political uncertainty has dented business and tax revenues.

Revenue collection was down 24 percent in January-October compared with a 15 percent rise last year to $1.8 billion. The government faces a shortfall of $375 million, said Finance Ministry spokesman Abdul Qader Jilani.

“The cabinet must be in place as soon as possible,” Jilani said.

CHALLENGES AHEAD

Ghani’s ascent to power has fueled hope the former World Bank technocrat would work with Abdullah, also known as a pro-Western reformer, to improve weak and corrupt government.

With the United States and its allies withdrawing most troops by the end of this year and long-time leader Hamid Karzai out of office, the time seemed ripe for a revamp.

Yet, Ghani and Abdullah are heading to an international conference in London this week without naming one cabinet member. Ghani initially promised a line-up in 45 days.

Officials and businesses complain the delay is holding back projects and hurting the economy.

“No one is responsible for anything,” said Khan Jan Alokozai, deputy of Afghanistan’s Chamber of Commerce and Industries.

Existing ministers had stayed in place, but they had no power to hire or fire and under Afghan law, they could only serve for 60 days. That deadline forced Ghani on Sunday to sign a decree naming ministry deputies acting ministers.

The president has sought to reassure the nation that he and Abdullah are working well.

“There is no disagreement between us, but we needed time to assess and examine individuals,” Ghani said in a speech, promising to introduce ministers “within two to four weeks”.

He and Abdullah have announced they had agreed on criteria for choosing the cabinet, including that it would include four women and would have no former ministers.

But some officials say their work is in limbo.

“Some $75 million worth of projects are on hold due to the budget deficit and it is due to the absence of the cabinet,” said Ahmad Shah Waheed, deputy minister of Public Works.

“Government officials do their jobs with complete disinterest because they are not sure whether they are going to stay or be replaced.”

Mustafa Sadiq, head of Omaid Bahar fruit processing company, said he had laid off a quarter of his employees because business was down by 60 percent compared with last year.

“There is a struggle between the president and the chief executive,” Sadiq said. “We will have two governments ... I‘m not optimistic.”

Additional reporting by Mirwais Harooni. Writing by Kay Johnson; Editing by Maria Golovnina and Robert Birsel

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