ABSTRACT
The new Afghan government inherited an empty treasury in December 2001. The Afghanistan Interim Administration (December 2001-July 2002) and the subsequent Transitional Government (July 2002-December 2004) did not have adequate income to finance their operational costs and to pay the wages of government employees. The economy was devastated because of a protracted conflict that had been occurring since 1978. Local commanders and strongmen controlled border customs and other provincial revenue sources. Donors were reluctant to fund Afghan government employees’ wages and operational costs. Meanwhile, the flow of aid to Afghanistan was uncertain.
