Recommendation 17

HM Government Acknowledged

The Government agrees with the Committee on the importance of doing what it can to help mitigate the impact of the humanitarian crisis on the Afghan people. This has been one of the UK’s highest priorities since last August. The Government delivered on its pledge to spend £286 million in financial year 2021/22. The Government agrees on the importance of sustaining aid to Afghanistan, and has committed the same amount again for this current financial year. Afghanistan is the UK’s largest bilateral ODA programme, and is likely to represent about 30% of the UK’s total humanitarian spending this year. The Government has worked closely with partners, including international and national NGOs and civil society groups, to adapt its approach to the situation inside Afghanistan and to inform its response. This has included drawing on experience of delivering aid to countries in conflict, and of dealing with regimes that lack legitimacy. The UK Government has played a leading role in mobilising wider international resources for Afghanistan. In March 2022, the UK co-hosted an international pledging conference for Afghanistan with the UN, Qatar, and Germany, which raised $2.4 billion for the humanitarian response this year. The UK has been a leading voice in encouraging the rapid repurposing of the $1.5 billion which was left in the Afghanistan Reconstruction Trust Fund at the World Bank, helping build a consensus to make that money available both for the humanitarian response and to support basic services. The Government agrees with the Committee that now is not the right time to resume direct bilateral development funding. Other leading donors agree. For the year 2022–23, the UK will maintain emergency humanitarian support through UN agencies, whilst increasing programming to NGOs who will support health, agriculture and livelihoods; and, where girls are going to school, education. The UK will also build capacity in local NGOs involved in its response, recognising their ability to reach remote locations, access vulnerable groups, and increase the capacity and sustainability of local partners. The Government agrees with the Committee on the importance of trying to help restart the Afghan economy, to try to avoid a cycle of repeated humanitarian crises. The UK is working closely with the US and other interested partners to identify ways to improve liquidity and the wider economy in Afghanistan. This is not straightforward, as the commercial banking system in Afghanistan has historically had limited links to Western banks. Western banks need to make commercial decisions on whether to engage with Afghan banks, and the market offers significant risks and limited rewards. The Government agrees with the Committee on the need to think creatively about aid provision, and the UK has been influential in the establishment of mechanisms to try to help ease Afghanistan’s liquidity crisis. This includes co-leading a working group with the World Bank on Payment System Modalities for Humanitarian Aid Delivery in Afghanistan. The UN and World Bank, with US and UK support, have proposed a Humanitarian Exchange Facility, a mechanism that would allow money to flow into, and Afghan businesses to send money out of, Afghanistan. Unfortunately, the Afghan Finance Ministry and Central Bank Governor have so far rejected this proposal. The Government agrees on the need to keep working with the US and other partners to try to increase liquidity, and is exploring options for technical assistance to help re- establish a functioning, independent Afghan Central Bank. It is important to note that Afghanistan’s foreign reserves can only be accessed by those who are entitled to give instructions on behalf of the Afghan Central Bank. The Government continues to monitor who is entitled to access Afghanistan’s reserves, in accordance with international l