- Technical analysis (e.g. cost-effectiveness analysis) can be used to evaluate individual project proposals and also to make more general prioritization decisions.

- Ruthless culling of projects with lower benefits and/or which do not have good prospects for rapid completion will improve the timeliness, efficiency, and effectiveness of sector programs.

- Complementarities need to be factored into prioritization decisions (e.g. there is no point in having a police force that is not adequately armed, clothed, equipped, and provided with vehicles and fuel).

- Correcting geographical and other disparities (for example in terms of police coverage) may help guide prioritization.

# **6.4. Budget Execution for Effective and Efficient Utilization of Funds**

Effective and efficient utilization of funds to achieve stipulated purposes is a key element of the PFM system, including in the security sector. As we have argued, a general principle is that all elements of a sound budget execution process should be applied to the security sector, in the same way as to the rest of the budget. Security expenditures in Afghanistan’s Core Budget are essentially subject to similar control mechanisms, accounting and reporting requirements, and procurement arrangements as in the rest of the Core Budget. The main difference is the absence of a strong internal audit function—a role that in the case of the civilian budget is to a large extent played by the Monitoring Agent of the ARTF (see World Bank, 2005b, Volume I, Box 6.2). The absence of such a mechanism—albeit extraordinary and temporary—in the security sector means that there is a weaker control framework despite the application of other elements of the Core Budget execution process.

Security spending in the External Budget occurs completely outside these Government processes. This carries serious disadvantages with respect to the quality and consistency of information flows, and also procurement. Another major problem has been the variety of salary levels, payment channels, and top-up arrangements in the security sector, which risk fragmenting the accountability and loyalties of security sector staff. The shift of ANA salary payments and food expenditures for the ANA onto the Core Budget represented a major improvement in this regard.

With respect to procurement, it is possible to follow sound procurement procedures despite the actual or perceived obstacles in defense or other security sectors, and good procurement practices will reduce vulnerability to corruption (see Section 5.1). In particular, competitive procurement with adequate transparency and oversight is critical. With the recent passage of a new Procurement Law that meets international standards, donors funding security through the External Budget should move toward using sound internationally acceptable procurement procedures, either those provided for in Afghanistan’s Procurement Law or similar procedures. This is also important in the case of procurement of supplies, security services, etc. by international military forces in Afghanistan.

There is also a rather formidable agenda for generating and effectively utilizing monitoring information (Section 3.3). This can start with small steps and make progress incrementally over time. One promising option is to generate and regularly monitor basic financial data on on security sector expenditures in the Core Budget, and encourage donor partners to provide similar information on as consistent a basis as possible for External Budget expenditures in the security sector. Staffing data, which have suffered from inconsistencies, need to be 32