By Jon Hemming

KABUL, Oct 30 (Reuters) - Afghanistan has made achievements in delivering development to its people, but needs to do more to tackle worsening insecurity, drug production and corruption which threaten further progress, the World Bank said on Tuesday.

After nearly three decades of war, Afghanistan's economy is largely propped up by international donations as the government attempts to deal with the revived Taliban insurgency, widespread corruption and record-breaking opium production.

These three main problems form a vicious circle whereby drug production funds the insurgency and encourages official corruption, which both allow more drugs to be produced.

"I am again deeply impressed by how far Afghanistan has come in delivering development benefits for its people," said World Bank Managing Director Graeme Wheeler.

"More girls are at school than at any time in Afghanistan's history, child mortality has been reduced substantially, and the government's national community development program is bringing development to over 18,000 communities," he said.

"I am concerned, however, that increased insecurity, drug production, and corruption are putting at risk further advances in state-building and other areas critical for growth and employment generation," he said in a statement.

MANY YEARS TO GO

In the past year, the number of security incidents is up 24 percent, opium production has risen by 34 percent and Afghanistan had slipped to 172 out of 180 countries in Transparency International's corruption perception index, Wheeler said.

"Tackling the challenges of widespread poverty, rebuilding institutions destroyed by two decades of war, and overcoming problems of security, narcotics, and corruption will require intensified efforts by Afghanistan and its partners for many years," the statement said.

With international military forces partially engaged in reconstruction efforts and more than 100 aid and non-governmental organisations with an annual budget of more than $100 million, Afghanistan has suffered from a lack coordination between donors.

This has meant that some projects overlap, have been ill-conceived, or were not coordinated with the Afghan government which has lacked funds or manpower to staff schools and health clinics, for example, once they have been built.

The World Bank has instead encouraged donors to channel funds to the government through an externally audited reconstruction trust fund it administers, arguing that strengthens state institutions.

"An assessment of Afghanistan's public financial management system based on international standards has been positive," the World Bank said. "Accordingly, donors, including the World Bank, have increased their support channelled through Afghanistan's national budget."

But many donors, including the biggest of all, the United States' economic and development agency, USAID, have remained outside the system.

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