The Failure of Public Finance Management in Afghanistan: Lessons for Other Conflict-Affected States

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Mohammad Qadam Shah

The Failure of Public Finance Management in Afghanistan

Lessons for Other Conflict-Affected States

Mohammad Qadam Shah

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English

Routledge
24 July 2025

Political structure & processes; Public administration; Development economics; Political economy; Public finance accounting

Series: Routledge Explorations in Development Studies

In rebuilding conflict-affected states, a major portion of foreign aid focuses on reforming public finance management systems and supporting annual budgets. However, how budgets are allocated and how reforms take shape in practice remain critical questions.

This book analyzes the politics of reform and budget allocation in the most expensive liberal state-building effort in history: Afghanistan. Through a detailed political economy analysis, it explores the origin, continuity, and evolution of Afghanistan’s centralized public finance management system. Such centralization, readopted in the 2004 Constitution, constrained local participation, perpetuated inequities, and undermined predictability and transparency. Key reforms including the “Provincial Development Planning Guideline” and “Provincial Budgeting Policy” aimed to address these shortcomings but failed due to political resistance, elite capture, and structural inefficiencies. The analysis reveals informal dynamics behind the allocation of discretionary development budget consisting of the Afghan central government’s political considerations (political relationship, political importance, and strength and weakness of local administrations) and lobbying strategies of local actors. This dynamic enabled the central government to continue to use public funds for purchasing political legitimacy to remain in power.

Afghanistan’s case highlights the limits of externally driven state-building that prioritizes centralization over local dynamics. The book offers key lessons on inclusive governance, structural barriers, and sustainable public finance reforms in conflict-affected states. It appeals to donors, development experts, and researchers in public finance, foreign aid, security, and development studies.

By: Mohammad Qadam Shah
Imprint: Routledge
Country of Publication: United Kingdom
Dimensions: Height: 234mm, Width: 156mm,
ISBN: 9781032658520
ISBN 10: 1032658525
Series: Routledge Explorations in Development Studies
Pages: 190
Publication Date: 24 July 2025
Audience: College/higher education , Professional and scholarly , Primary , Undergraduate
Format: Hardback
Publisher's Status: Forthcoming

1. State Building and Public Finance Reform in Conflict-Affected States 2. The Origins of Afghanistan’s Fiscal Capacity (1747-2001) 3. Enduring Centralization: Public Finance Reforms and the Struggle for Decentralization in Afghanistan (2001–2021) 4. Deconcentrated Planning and Budgeting in Action: Evaluating Afghanistan’s PDPG and PBP Performance (2016-2019) 5. Unveiling Informal Dynamics: The Politics and Strategies Behind Afghanistan’s Discretionary Development Budget Allocation 6. Informal Dynamics in Action: The Tale of Four Afghan Provinces 7. The Taliban’s Return to Power in 2021: Governance, Humanitarian Aid, and Public Finance 8. Lessons for Other Conflict-Affected States

Mohammad Qadam Shah is Assistant Professor of Global Development at Seattle Pacific University, USA.

Reviews for The Failure of Public Finance Management in Afghanistan: Lessons for Other Conflict-Affected States

This book offers a critical examination of Afghanistan’s public finance system, illustrating how political motives, rather than technical reforms, dictated the distribution of public funds. By employing a historical institutional approach and drawing on extensive fieldwork, the author reveals how centralized planning persisted despite numerous attempts at reform, shedding light on the complex dynamics that shaped Afghanistan’s state-building process. This insightful analysis is essential for anyone studying the intersection of politics, aid, and governance in conflict-affected states. Scott Fritzen, President, Fulbright University Vietnam Mohammad Qadam Shah’s The Failure of Public Finance Management in Afghanistan is essential reading for anyone interested in public finance reform under challenging conditions. This book offers a meticulously researched explanation of why the reconstruction effort in Afghanistan from 2001 until 2021 ultimately failed to prevent the Taliban’s return to power. Qadam Shah’s book emphasizes that the main reasons for the failures of post-conflict reconstruction lie in timeless questions about public administration and the perils of centralized public administration. It is an impassioned and thoughtful call to devote more attention to getting public administration reform ""right"" to promote peace and prosperity in conflict-affected states. Ilia Murtazashvili, Professor, Graduate School of Public and International Affairs; Associate Director, Center for Governance and Markets, Campbell Visiting Fellow at the Hoover Institution, Stanford University