Pubdate: Fri, 04 Jan 2002 Source: Wall Street Journal (US) Copyright: 2002 Dow Jones & Company, Inc. Contact: http://www.wsj.com/ Details: http://www.mapinc.org/media/487 Author: Guy Chazan Special Report: Aftermath Of Terror AFGHAN GOVERNMENT'S EMPTY BALANCE SHEETS POSE A PROBLEM FOR THE NEW FINANCE MINISTER KABUL, Afghanistan -- Hedayat Amin-Arsala has one of the toughest jobs in finance: trying to balance the books in a country with no taxes, no exports and no budget. As finance minister of Afghanistan's new interim administration, he serves a government so badly stretched it can't pay its own staff, let alone rebuild an economy shattered by 22 years of war. "We basically don't have any resources to speak of," says Mr. Amin-Arsala, a 59-year-old former World Bank economist. "We have very little reserves, and our revenue streams have all dried up. We're in really bad shape." There are few gold reserves to speak of and no functioning banks. Taxes aren't being paid, and customs duties are pocketed by local warlords. The government owes $66 million to civil servants, some of whom haven't been paid for six months. "We're going to be dependent on international support for even our current budget," says Mr. Amin-Arsala. Even setting up his office would have been impossible without outside help: The United Nations supplied Mr. Amin-Arsala's desk, computer and satellite phone. The national currency, the Afghani, is also in crisis. No exports mean no hard-currency revenues to back up the Afghani. Yet the presses have been churning out notes, fueling inflation. One official says the previous administration of Northern Alliance leader Burhanuddin Rabbani printed 300 billion Afghanis a month. Even the strengthening of the Afghani since the new government came to power on Dec. 22 -- from 70,000 to $1 to 25,000 now -- is causing trouble, by swelling dollar-denominated debts. Many of Mr. Amin-Arsala's woes are the result of Taliban mismanagement. The Islamic militia cared little for fiscal policy: Its war budget was a tin trunk stuffed with money and stashed under the bed of leader Mullah Mohammed Omar. Most revenue came from illegal opium exports and smuggling. At the Taliban-run finance ministry, mullahs educated at madrassas, or traditional Islamic schools, replaced qualified economists and bankers. Mr. Amin-Arsala hopes the new regime will provide enough stability to revive long-dormant plans to build roads and export pipelines across Afghanistan, binding it more tightly into the regional economy. Much speculation has centered on California-based Unocal Corp., which shelved plans for a gas pipeline linking Turkmenistan and Pakistan across Afghan territory after the U.S. launched a 1998 cruise-missile attack against Osama bin Laden's terrorist training camps in Afghanistan. Mr. Amin-Arsala says he's heard nothing so far from Unocal. But, he adds: "I'm sure they'll turn up." - --- MAP posted-by: Beth