Multilateral Development Banks: How the
United States Makes and Implements Policy

Jonathan E. Sanford
Specialist in International Trade and Finance
December 17, 2010
Congressional Research Service
7-5700
www.crs.gov
R41537
CRS Report for Congress
P
repared for Members and Committees of Congress

Multilateral Development Banks: How the United States Makes and Implements Policy

Summary
This report analyzes how the United States makes policy towards the multilateral development
banks (MDBs) and identifies ways by which Congress can shape U.S. policy and influence the
activities of the banks themselves.
In 2011, Congress may be asked to consider legislation that would authorize U.S. participation in
capital increases for the MDBs. If Congress agrees that the United States should participate in
these new capital increases, the United States will be asked to subscribe to capital stock worth
about $56.9 billion over the next several years, of which about $2.2 billion would be “paid in” by
the United States. The capital increases will substantially expand the size of the MDBs—in
several instances doubling or tripling their resources. The MDBs are planning to double or more
their annual volume of lending and to substantially expand the scope of their operations. If the
United States participates in the proposed capital increases, its financial commitment to the
MDBs will grow. If it does not participate, its level of influence in these institutions will decline.
The United States does not have enough voting power to block such increases from taking effect.
In 2009, the MDBs agreed to provide over $114 billion in assistance to developing countries. The
United States is the largest or one of the largest members in each MDB and its financial
commitments are substantial. However, because the MDBs finance most of their operations with
money borrowed in world capital markets, the actual payments the United States and other
member countries make to them is relatively small. In fiscal years 2009 and 2010, payments to
MDBs averaged about 5% (about $1.5 to $2 billion annually) of all U.S. foreign aid.
The executive branch and Congress share responsibility for U.S. policy towards the MDBs and
each has primary control over a different part of the policy process. The Administration is
responsible for negotiating with other countries and for managing day-to-day U.S. participation in
the MDBs. Congress has ultimate authority over the level of U.S. financial commitments and the
criteria that govern U.S. participation in these institutions.
Congress has authorized the President to direct U.S. participation in the MDBs, and the President
has delegated that authority to the Secretary of the Treasury. Other agencies also have reasons for
being concerned about U.S. policy and the MDBs, but there is no formal process by which
interagency views on MDB issues is coordinated.
Authorizing legislation is managed by the House Financial Services Committee and Senate
Foreign Relations Committee. The House and Senate Appropriations Subcommittees on State,
Foreign Operations and Related Programs handle the appropriations. Since 1981, MDB
legislation has become law through the regular legislative process only once. Usually it is enacted
as a rider to other legislation. Congress exercises its influence over MDB policy through its
control over authorizations and appropriations and through oversight. The authorizing committees
have included in MDB authorizing legislation many directives which affect the goal and direction
of U.S. policy. Congress has also used its control over the funding process—its “power of the
purse”—to set priorities and encourage the Administration and MDBs to consider changes in their
policies or procedures. Congress has used hearings and required reports to get information about
U.S. policy and the MDBs onto the public record and to draw the Treasury Department’s attention
to issues of pressing concern. Since the Administration knows it must come to Congress for future
authorizations and MDB funding, the views expressed by Congress through hearings have often
had an impact on the focus and direction of U.S. policy regarding particular concerns.
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Multilateral Development Banks: How the United States Makes and Implements Policy

Contents
Introduction ................................................................................................................................ 1
The Executive Branch and the MDBs.......................................................................................... 2
Treasury Department Leadership........................................................................................... 2
U.S. Executive Directors at MDBs .................................................................................. 4
Other U.S. Agencies.............................................................................................................. 4
Policy Coordination .............................................................................................................. 5
Congress and the MDBs.............................................................................................................. 7
Relevant Committees ............................................................................................................ 7
Sources of Congressional Authority ...................................................................................... 8
Authorizing Actions ........................................................................................................ 8
Power of the Purse ........................................................................................................ 10
Appropriations for MDBs, FY2000-2010 ...................................................................... 11
Congressional Oversight ............................................................................................... 14
Budgetary Issues ................................................................................................................. 16
Conclusion................................................................................................................................ 17

Figures
Figure 1. Appropriations for Foreign Aid Activities, FY2009-FY2010 ....................................... 11

Appendixes
Appendix. Acronyms Used in This Report................................................................................. 18

Contacts
Author Contact Information ...................................................................................................... 18

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Multilateral Development Banks: How the United States Makes and Implements Policy

Introduction
This report describes and analyzes how U.S. policy towards the multilateral development banks
(MDBs) is made and implemented by the executive branch and Congress.1 In 2011, the 112th
Congress will consider a number of important issues relating to funding for the MDBs. Prominent
among them will be proposals for large increases in their capital resources. This will be the first
time since 1977 that funding plans for most of the MDBs will be on Congress’s agenda at the
same time. Important questions about the purposes and functions of these institutions and the
relationship or division of labor among them are likely to arise.2
The MDBs are major players in the field of international development finance. In 2009, the World
Bank made loan commitments and commitments for other types of financial assistance totaling
more than $58 billion, while the four regional banks and the International Fund for Agricultural
Development (IFAD) made commitments totaling more than $56 billion. According to MDB
officials, the volume of MDB market-based lending will likely double in the next few years. In
order to support this increased volume of lending, the MDBs are now seeking major increases in
their capital resources, and Congress will likely be asked to approve legislation authorizing and
funding U.S. participation in those proposals.
The United States is the largest or one of the largest stockholders in each of the MDBs. It has a
great deal of influence in their deliberations, but most MDB decisions are made by a majority
vote and, hence, no country has a veto over loan or policy decisions. In recent years, U.S.
payments to the MDBs comprised about 5% (about $1.5 billion to $2 billion annually) of the U.S.
foreign aid budget. This is because most of the funds the MDBs use for their operations are raised
in world capital markets. Member country governments need to pay in only a small fraction of
their total commitment (“paid in capital”) to support the MDBs’ market-rate loan programs. Most
of the money contributed annually by the United States and other donor countries goes to support
the MDBs’ concessional rate loan programs, which mainly benefit low income countries. Most
U.S. bilateral assistance is provided on a grant basis using funds appropriated annually by
Congress.3
Making and implementing U.S. policy towards the international financial institutions (IFIs)—the
MDBs and the IMF—is a complex process in which both the executive branch and Congress play
major roles. Both share the responsibility for U.S. participation in the MDBs, but each branch has
primary control over different parts of the decision-making process. On behalf of the President,

1 The MDBs include the World Bank and International Finance Corporation (IFC), African Development Bank
(AfDB), Asian Development Bank (AsDB), European Bank for Reconstruction and Development (EBRD), and Inter-
American Development Bank (IDB). Also normally included in group are the Global Environment Facility (GEF)—
whose assistance operations are managed by the World Bank—and the International Fund for Agricultural
Development (IFAD).
2 For further information on the MDBs, see CRS Report R41170, Multilateral Development Banks: Overview and
Issues for Congress
, by Rebecca M. Nelson, CRS Report RS20792, Multilateral Development Banks: U.S.
Contributions FY1998-FY2011
, by Jonathan E. Sanford, and CRS Report R41165, Global Environment Facility
(GEF): An Overview
, by Richard K. Lattanzio. Other related reports include CRS Report R40578, The Global
Financial Crisis: Increasing IMF Resources and the Role of Congress
, by Jonathan E. Sanford and Martin A. Weiss
and CRS Report R40977, The G-20 and International Economic Cooperation: Background and Implications for
Congress
, by Rebecca M. Nelson. A new quota increase for the IMF is also currently being negotiated but is not
discussed here. Concerning the IMF, see CRS Report R40578, The Global Financial Crisis: Increasing IMF Resources
and the Role of Congress
, by Jonathan E. Sanford and Martin A. Weiss.
3 For additional information on U.S. foreign aid programs, see CRS Report R40213, Foreign Aid: An Introduction to
U.S. Programs and Policy
, by Curt Tarnoff and Marian Leonardo Lawson.
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the Secretary of the Treasury is responsible for negotiating with other countries about MDB
policies and prospective funding agreements and for managing the day-to-day conduct of U.S.
participation in the banks. Congress, for its part, has the ultimate authority over the level of U.S.
financial commitments to the multilateral agencies, the general framework for U.S. policy, and
the criteria that govern U.S. participation in these institutions.
U.S. policy towards the MDBs is driven by several concerns. Humanitarian and development
goals are a central focus of U.S. policy in these institutions. However, security, foreign policy,
and economic self-interest are also major factors that shape U.S. policy and U.S. priorities
regarding the MDBs. For example, President George W. Bush indicated in 2004 and 2006 that
support for development was a key element of U.S. national security policy.4 Likewise, President
Barack Obama told the United Nations in September 2010 that “my national security strategy
recognizes development not only as a moral imperative, but a strategic and economic
imperative”5 and he signed a Presidential Policy Directive on Global Development which
emphasized those concerns.
This report discusses how U.S. policy towards the MDBs is developed and implemented in the
executive branch and the agencies that are involved. It also analyzes the three main sources of
congressional influence—legislative authority, the power of the purse, and oversight activities—
on U.S. policy towards the development banks. Finally, it examines the levels of funding
Congress has approved for MDBs, budgetary issues and the policy directives that Congress has
initiated over the years.
The Executive Branch and the MDBs
Treasury Department Leadership
The activities of the MDBs affect the core responsibilities of many U.S. government agencies.
Congress took this into account in 1945, when it passed the Bretton Woods Agreements Act
(BWAA), the law authorizing U.S. participation in the World Bank and IMF. It added language to
the bill establishing an interagency committee that would “coordinate the policies and operations
of the representatives of the United States on the [World] Bank and Fund and of all agencies of
the Government which make or participate in making foreign loans or which engage in foreign
financial, exchange, or monetary transactions.”6 This body, the National Advisory Council on
International Monetary and Financial Policies (NAC), was to coordinate the policies and
activities of the agencies whose activities fell within its purview and to recommend policy
initiatives to the President. In effect, unless the President overrode their recommendations, policy
was determined by a majority vote of agencies involved.
The initial interagency procedure did not work well, and in 1965, Congress approved a
reorganization act which abolished the NAC as a statutory committee and transferred all of its
responsibilities and authority to the President.7 In turn, the President delegated these

4 The National Security Strategy of the United States of America, September 17, 2002, introductory statement by
President George W. Bush, at http://www.informationclearinghouse.info/article2320.htm. National Security Strategy of
the United States of America
, March 2006, p. 33, at http://georgewbush-whitehouse.archives.gov/nsc/nss/2006/.
5 The White House, Office of the Press, Remarks by the President at the Millennium Development Goals Summit in
New York, New York, September 22, 2010. Available at http://www.whitehouse.gov/the-press-office/2010/09/22/
remarks-president-millennium-development-goals-summit-new-york-new-york.
6 Bretton Woods Agreements Act, P.L. 79-171, sec. 4(a). Later laws gave it jurisdiction for other the MDBs as well.
7 For a further discussion of these events and the broader scope of the U.S. policy process regarding the MDBs, see
(continued...)
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responsibilities and authorities to the Secretary of the Treasury. The President reconstituted the
NAC by executive order and added several additional agencies, but it became solely a forum
where other agencies could advise the Treasury Department about policy concerns. The NAC
rarely meets and has become largely moribund. As noted below, it has been replaced in its loan
review functions by the Working Group on Multilateral Assistance (WGMA).
The Treasury Department is the lead agency for IFI concerns and the Secretary of the Treasury
serves as U.S. Governor on the Governing Boards of each IFI. Reflecting the interest that their
agencies have in IFI matters, the Under Secretary of State for Economic Affairs serves as
Alternate Governor for the MDBs and the Chairman of the Federal Reserve Bank Board serves as
Alternate for the IMF.
The Treasury Department’s responsibilities for MDB policy are managed by the Deputy Assistant
Secretary (DAS) for Development Policy and Debt, under the general direction of the Under
Secretary for International Affairs and the Assistant Secretary for International Finance. Two
functional offices are involved. The Office of Multilateral Development Banks houses the desk
officers who monitor the activities of the MDBs, plus staff who focus on corruption,
environmental issues, development effectiveness, private sector development, labor issues, and
congressional appropriation and budget issues. The Office of Debt and Development Policy also
looks at issues such as aid effectiveness, policy coordination, governance and anti-corruption,
debt issues, social sector and millennium development concerns, and budget and legislative
issues.
According to the Treasury Department, some 15 people address MDB issues at Treasury,
although they may be assisted occasionally on particular issues by people on the country desks
and functional offices. There are also 26 U.S. staff at the U.S. offices in the MDBs, including the
executive director and alternate and personnel from the Treasury and Commerce Departments and
sometimes other agencies. Altogether, these 41 people oversee and monitor the operations of five
multilateral agencies and two other specialized bodies that employ more than 25,000 people,
approve some 700 projects and lend more than $80 billion each year, and produce thousands of
reports, studies, and analyses annually. They also provide Congress with information and respond
to congressional inquiries on MDB topics. The MDBs are currently taking steps to more than
double their annual levels of lending and to substantially expand the scope of their operations.
The United States is represented at the MDBs by executive directors, who are appointed by the
President with the advice and consent of the Senate. Though they are paid by the institutions to
which they are appointed, the U.S. executive directors (USEDs) function as the eyes, ears, and
voices of the United States within those organizations. Each USED has a small staff funded by
the bank, while the personnel seconded from the U.S. Government are paid by their agencies.8

(...continued)
Jonathan E. Sanford, U.S. Foreign Policy and the Multilateral Development Banks, Westview Press, Boulder,
Colorado, 1982. See also Barbara Upton, The Multilateral Development Banks: Improving U.S. Leadership, Center for
Strategic and International Studies Washington Paper 178, Praeger, Westport, Connecticut, 2000. Also relevant is
Catherine Gwin, U.S. Relations with the World Bank, 1945-92, The Brookings Institution, Washington, DC, 1994.
8 By law, an official from the Commerce Department is stationed in the office of each USED, to address procurement
issues and assist U.S. firms with the complexities of bank procedures. USAID used to post someone at the USED office
in the World Bank, to facilitate policy coordination, but it has abandoned this practice in recent years. Under the
MDBs’ Articles of Agreement, MDB executive directors have fixed terms of service, generally three to five years. As a
practical matter, though, they serve at the pleasure of the President of the United States.
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The Treasury Department has the lead role in the formulation of U.S. international economic
policy. Because the work of the IFIs affects so many aspects of its core responsibilities, managing
U.S. participation in those institutions provides opportunities for the Department to also address
some of its larger concerns. Developing countries are important trading and investment partners
for the United States and the United States wants to promote growth, stability, economic reform,
and better living conditions in these countries. International debt and international investment
issues are significant concerns. The impact that world economic trends might have on
international trade, banking, or security markets can also affect Treasury’s core responsibilities.
These issues are often on the agenda, in many guises, at the MDBs.
Other U.S. Agencies
Among other U.S. agencies, the State Department devotes the most time and resources to MDB
concerns.9 It is the only other U.S. agency that follows MDB activity on a comprehensive and
detailed basis. The Under Secretary of State for Economic Affairs serves as alternate U.S.
governor at each MDB. The State
Department sometimes has difficulty,
though, coordinating its various
U.S. Executive Directors at MDBs
viewpoints on MDB issues. The
Economic and Business Bureau, which
World Bank Group
Ian H. Solomon
manages its involvement, is interested
in the ways MDB activities and policies
African Development Bank
Walter C. Jones
affect U.S. relations with developing
countries and with other international
organizations. The Department’s
Asian Development Bank
Robert M. Orr
regional bureaus, by contrast, are
mainly concerned about the ways U.S.
European Bank for Reconstruction and
James Hudson
policy and votes on specific loans may
Development
affect U.S. relations with individual
countries and they may seek ways of
Inter-American Development Bank
Gustavo Arnavat
minimizing the potential negative
impact that U.S. votes might have on
Source: Web pages for each MDB.
those relationships.
The U.S. Agency for International
Development (USAID), a semi-independent agency that is now largely integrated with the State
Department policy process, also participates in interagency discussions about the prospective U.S.
position on individual loans. It has some responsibilities for monitoring the way MDB operations
impact environmental conditions in developing countries, though scarce resources often limit its
capacity to exercise that function. Together with the Bank Information Center (BIC), it co-chairs
the monthly meetings of the Tuesday Group, a gathering of representatives from non-
governmental organizations where concerns about the environmental and humanitarian aspects of
pending MDB loans can be raised. It takes its name from the day of the week on which meetings
occur. USAID’s impact on U.S. policy is limited, however, and NGOs generally address their
concerns directly to the Treasury Department and the MDBs.
Other U.S. agencies also play a role in the policy process regarding the MDBs. The Department
of Commerce participates in policy discussions and is attuned to the U.S. commercial and trade

9 For a further discussion of the State Department’s role and concerns, see Sanford, note 8, pp. 89-90.
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implications of MDB operations. It has staff in the office of USED at the World Bank to identify
procurement opportunities for U.S. firms and to monitor procurement issues. The U.S.
Department of Agriculture (USDA) is also involved. It can offer insights into agricultural policy
issues, but its main concern is the impact of MDB agriculture programs on U.S. agriculture and
bilateral food aid programs.
Additional agencies, such as the Office of Management and Budget (OMB), the Transportation
and Energy Departments, Environmental Protection Agency (EPA), the U.S. Labor Department,
U.S. Trade Representative (USTR), Export-Import Bank, Oversees Private Investment
Corporation (OPIC), and the Federal Reserve Bank Board, also have functions that are affected,
to varying degrees, by the MDBs. Treasury officials report that, for the most part, their
representatives rarely attend interagency discussions.
Policy Coordination
At present, there is no formal interagency procedure or mechanism for coordinating U.S. policy
on bilateral and multilateral aid. Several efforts have been made over the years, but they have
been unable to overcome the factors—different viewpoints and each agency’s reluctance to give
up policy control—that complicate inter-agency cooperation in this area. On three occasions,
Congress tried without success to require the executive agencies which manage foreign aid
programs to coordinate their policies and operations. Understanding why these earlier efforts did
not succeed might help inform any future efforts to promote coordination in this area.
The creation of the NAC in 1945 was the first attempt. It failed because the participating agencies
were more concerned about maintaining control over their activities than they were about finding
a more unified approach. Vesting authority over a host of programs in the hands of a five-member
Cabinet-level committee also proved impractical.10
The second attempt was the establishment of the Development Coordinating Committee (DCC).
After the NAC became an advisory panel in 1965 and authority over U.S. bilateral aid programs
was taken from its control, many in Congress and the Administration began talking about the
need for a new mechanism to consolidate priorities and coordinate U.S. foreign aid.11 The Senate
Foreign Relations Committee sought, on several occasions during the 1970s, to abolish the U.S.
bilateral aid program and to transfer its functions and resources to the MDBs.12 However, other
committees blocked its initiatives.
In 1973, Congress created the DCC as part of its “New Directions” initiative. Chaired by the head
of USAID, it was supposed to create “a system for coordination of United States policies and
programs which affect United States interests in the development of low-income countries.”13 It
required the President to coordinate aspects of U.S. bilateral and multilateral aid policy through
the DCC chair. In 1979, Congress again directed the President to strengthen coordinating
procedures for foreign aid and the President signed an executive order making the DCC the
central forum for that process. In both instances, however, the Treasury Department chose not to
cooperate, citing the authority it held from the President to manage U.S participation in the IFIs.

10 Sanford, note 8, pp. 94-95. Reports by the Budget Bureau (predecessor to the present Office of Management and
Budget) in 1951 and 1961 reached these conclusions, as did a study describing the process that was published by the
National Academy of Public Administration in 1971.
11 Sanford, note 8, pp. 95-96.
12 See, for example, the Senate version of the Foreign Assistance Act (FAA) of 1971, in S. Rept. 92-404, pp. 20-21.
The House version of the bill rejected the Senate initiative, in H. Rept. 92-761, p. 20.
13 The Foreign Assistance Act (FAA) of 1961, P.L. 87-195, Sec. 640B, as amended by the FAA of 1973, P.L. 83-189.
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The executive order in 1979 did not amend the1965 order. A subcommittee of the DCC was
created in 1979 to coordinate interagency views on multilateral aid. Treasury chaired the panel.
The Working Group on Multilateral Assistance (WGMA) is now the main interagency staff
committee that advises Treasury officials about prospective MDB loans.14 The DCC and NAC
have essentially become dormant, though the legislation creating the DCC is still law.
The third attempt was the creation of the International Development Cooperation Agency
(IDCA). Congress created IDCA in 1980 and gave it the authority to coordinate multilateral and
bilateral aid. The Secretary of the Treasury was required to comply with IDCA policy
determinations, unless he found compelling financial or other non-developmental issues that
required him to do otherwise. The Treasury Department found that this exemption covered all
MDB matters. IDCA soon became an agency that existed in name only. Congress abolished it in
1998, transferring to the Secretary of State any residual authorities the law had previously
allocated to its Director.15 Neither the chair of the DCC (the head of USAID) nor the IDCA
director had the political weight necessary to overturn decisions by the Secretary of the Treasury
regarding the MDBs or to secure Presidential support for their views.
Today, 24 U.S. agencies have some type of foreign assistance function. Various mechanisms to
coordinate U.S. foreign aid policy have been proposed, but there are too many differences among
the agencies and none has been adopted.16 A case could be made, however, that the Secretary of
State has some authority to coordinate U.S. foreign assistance activities by virtue of the residual
authorities (assigned to the Secretary by law) that were embodied in the DCC and IDCA
legislation. Language in two executive orders also gives the Secretary of State authority to advise
the Treasury Secretary about development policy issues relating to the MDBs.17
The recently completed Presidential Study Directive on Global Development Policy was intended
to address the issue of policy coordination and a cross-agency review of U.S. development
assistance programs. The resulting Global Development Policy, unveiled in September 2010, does
not appear to address the authority issues that have undermined previous efforts to coordinate
U.S. policy on bilateral and multilateral aid.18 The new policy did establish, however, an
International Policy Committee on Global Development, to establish priorities and coordinate
policy across the executive branch.

14 The principal focus of interagency scrutiny seems to be a determination whether or not the United States is required
to oppose specific MDB loans because they conflict with standards or mandates that Congress has enacted. The
Treasury Department posts on its web page information as to how the U.S. representatives voted on particular MDB
loans and the reasons why they did so. Only votes in opposition to loans are explained. See Office of International
Affairs, Loan Review Notes, http://www.treas.gov/offices/international-affairs/multilateral_banks/data.shtml. Currently,
information about all votes since January 2004 is available.
15 Foreign Affairs Reform and Restructuring Act of 1998, Sec. 1411-1412, enacted as Division G of the Omnibus
Consolidated and Emergency Supplemental Appropriations Act, Fiscal 1999, P.L. 105-277, October 21, 1998.
16 For a discussion of this issue, see CRS Report R40756, Foreign Aid Reform: Agency Coordination, by Marian
Leonardo Lawson and Susan B. Epstein, and CRS Report R41173, Foreign Aid Reform, National Strategy, and the
Quadrennial Review
, by Susan B. Epstein.
17 In the executive order that delegated authority for IFI matters to the Secretary of the Treasury, E.O. 11269, February
14, 1966, the President specified in Sec.3(c), that “Nothing in this order shall be deemed to derogate from the
responsibilities of the Secretary of State with respect to the foreign policy of the United States.” To the extent that U.S.
policy in the MDBs is part of U.S. foreign policy, this would seem to give the Secretary of State a meaningful role. In
1979, added Sec. 7 to E.O. 11269, specifying that the Secretary of State “shall advise both the Secretary of the Treasury
and the appropriate United States representatives [at the MDBs] on the development aspects of matters relating to those
institutions and their activities.” In 1999, E.O. 13118 replaced the words “Director of the International Development
Cooperation Agency” with “Secretary of State.”
18 For reference, see note 7.
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Congress and the MDBs
Responsibility for managing the day-to-day participation of the United States in the MDBs lies
with the hands of the Executive Branch. However, Congress has authority to set the terms for
U.S. participation in these institutions—including how U.S. executive directors shall vote on
specific types of loans—and to determine whether the United States will participate in and
contribute money towards new MDB funding plans and whether it will support amendments to
the MDBs’ Articles of Agreement or other basic changes in their organization. These authorities
give Congress a major role in the policy process concerning U.S. participation in the MDBs. The
authority of Congress in this area is less extensive than is its authority over U.S. Government
programs, since it cannot earmark funds or direct the MDBs to approve or disapprove loans for
certain countries or purposes. Nevertheless, because it has an authoritative and independent role
in the U.S. policy process, the influence of Congress in this area is significant.
Relevant Committees
Several committees have responsibility for legislative functions affecting U.S. participation in the
MDBs. The Senate Committee on Foreign Relations (SFRC) and House Committee on Financial
Services (HFSC) have jurisdiction over MDB authorizing legislation. On the Senate panel, the
Subcommittee on International Development and Foreign Assistance, Economic Affairs, and
International Environmental Protection has responsibility for MDB legislation. On the HFSC, the
Subcommittee on International Monetary Policy and Trade has similar jurisdiction for MDB
concerns. However, in both the Senate and House, the leadership of the full committees has
maintained an active interest in MDB and IMF issues and they often now also receive a good deal
of attention at the full committee level. The House and Senate Appropriations Committees deal with
MDB issues primarily through their respective Subcommittees on State, Foreign Operations, and
Related Programs. In sum, Congress has about a dozen staff on the various committees, plus some
staff in the personal offices of a few Members, who monitor the MDBs and facilitate the legislative
process for related legislation. Issues involving the MDBs and IMF are generally only one of many
subjects within their areas of responsibility.
In recent decades, Congress has had difficulty enacting legislative proposals relating to foreign
affairs through freestanding legislation, and the Administration and the leadership on both sides in
both chambers have preferred that such measures be included as riders on “must pass” legislation.
MDB legislation was also the subject of partisan controversy during the 1970s and 1980s. Only
once since 1980 has Congress enacted legislation to authorize U.S. participation in an MDB
funding plan through regular order as a separate bill.19 This means, among other things, that
public debate in Congress about MDB issues is often limited and policy initiatives are sometimes
inserted into MDB legislation at the subcommittee or committee level with limited broader
congressional review.
On a few occasions, authorizations for some regional MDBs have been approved in one or the
other chamber as part of a compromise package of legislation approved by unanimous consent.
More often, though, MDB and IMF authorizations have been enacted as amendments to larger
and more comprehensive bills—in many instances, omnibus or year-end supplemental
appropriations legislation—that are likely to pass because they contain funding for important or
popular programs. On at least three occasions, MDB authorization bills were enacted by

19 The exception was an IDB capital increase in 1989 in which the regional countries agreed to the adoption of
significant reforms in IDB procedure that the United States and other donors had sought for many years.
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reference, without the actual text of their legislation appearing in the bill that was debated and
passed by the House and Senate.20
In 1981, Congress started inserting its policy directives on the MDBs and IMF in one statute, the
International Financial Institutions Act (IFI Act), rather than including them separately (as had
been the prior practice) to the original enabling legislation for each bank. The IFI Act has over
twenty-five titles that specify policy goals or requirements for U.S. participation in the IFIs. Some
provisions are still included in the original MDB membership acts, however, or in other
freestanding legislation.
Sources of Congressional Authority
Authorizing Actions
Unless Congress passes legislation to authorize such actions, the United States cannot join or
agree to participate in any MDB funding programs or vote for any changes in fundamental MDB
rules and procedures. The Bretton Woods Agreements Act (BWAA), which authorized the United
States to join the IMF and World Bank, set the model for U.S. participation in all MDBs. It states
that “[u]nless Congress by law authorizes such action, neither the President nor any person or
agency shall on behalf of the United States” propose any changes in the U.S. quota in the IMF,
subscribe any additional shares of stock (i.e., make a financial commitment) in the World Bank,
agree to any amendments to the Articles of Agreement of the Bank or Fund, make any loans to
the Fund or Bank, or approve any distribution of gold by the IMF. 21 The BWAA also states that
no U.S. Governor or Alternate Governor at the Bank may vote for an increase in the capital stock
of the Bank, if this would require additional subscriptions by the United States, unless Congress
authorizes such action by law. This requirement is not included in the legislation enabling U.S.
participation in the other MDBs and the Administration has not complied with this requirement
for some time.
Congress is the only legislature, among all the countries that are major participants in the MDBs,
that has both the independence and the power to press its own views about the MDBs and U.S.
policy towards them. In most other countries, the legislature generally tends to adopt whatever
MDB legislation is proposed by their governing authorities. In countries with parliamentary

20 In 1985, sec. 101(1) of the Further Continuing Appropriations Act, 1986, P.L. 99-190, stated that the bill H.R. 2253,
as reported by the Senate Foreign Relations Committee on April 19, 1985, was enacted into law. That bill (which called
itself the Multilateral Development Bank Act of 1985) included authorizations for IDA, the AfDF, IBRD and the
Special IDA Facility for Africa, as well as several policy initiatives. In 1987, Title II of the Foreign Operations, Export
Financing and Related Operations Appropriations Act, 1988, enacted by reference the bill H.R. 3750, as introduced on
December 11, 1987. It contained authorizations for IDA, the AsDF, AfDB and membership in MIGA, as well as many
policy initiatives. In 1988, Sec. 555 of the Foreign Operations, Export Financing and Related Operations
Appropriations Act, 1989, enacted the bill H.R. 4645, as reported by the House Financial Services Committee on
September 22, 1988. It contained authorizations for the IBRD and AfDF, plus several policy initiatives.
21 Bretton Woods Agreements Act, P.L. 79-171, approved July 31, 1945, Sec. 5. Before 1965, the requirement that
Congress must give its assent before the U.S. Governor may vote for any increase in Bank capital stock, including new
funding plans that did not include participation by the United States. At the time, the U.S. share in the Bank was
sufficient to block all capital increases unless the United States voted in the affirmative. In all the other development
banks, U.S. law requires that the U.S. Governor obtain congressional assent before he can commit the United States to
subscribe additional shares of capital stock but it does not prohibit him from voting for resolutions at the MDBs that
would approve capital increases in general. If the capital stock of an institution is increased but the United States does
not participate in that increase, the U.S. voting share declines. In recent decades, the U.S. share in all MDBs except the
IDB has declined to the point where capital increases can go into effect without U.S. participation, so approval of the
Board resolution rather than subscription of new shares may be the key step determining the U.S. ownership share and
the level of U.S. influence.
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systems, the legislature is controlled by the Prime Minister and his Cabinet and committees often
have relatively little authority. In most presidential systems, the Executive has the predominant
voice in the policy process. In the United States, by contrast, Members of Congress and
congressional committees have other sources of information besides those provided by executive
branch agencies, and Congress has often adopted legislation the Administration has not requested
(usually as amendments to pending MDB bills) specifying ways the United States shall use its
voice and vote in the MDBs or directing the Secretary of the Treasury to advocate specific
changes in MDB policies or operations.22
Over the years, Congress has enacted into law at least 95 directives (many of them overlapping)
requiring the Secretary of the Treasury to instruct U.S. Executive Directors to take specific
actions within the MDBs. It has required the Secretary to consult with other countries about
possible coordinated action within the MDBs on specific policy proposals or issues. It has also
directed the Secretary to consult with the relevant committees before U.S. executive directors
may vote to support certain kinds of initiatives.
Many of these directives require that the U.S. representatives at the MDBs oppose many kinds of
loans. These include, for example, loans to countries whose governments violate internationally-
recognized human rights, expropriate property owned by American investors without adequate
compensation, support international terrorism, or fail to cooperate in the suppression of illegal
drug trafficking or trafficking in persons. They also include directives that the U.S.
representatives oppose loans for the production of certain agricultural or mineral products that are
in oversupply in world markets and compete with U.S. output, and loans for education or
healthcare projects where poor people would be charged a user fee for basic services. Directives
have also been enacted requiring the U.S. representatives at the MDBs to oppose, subject to
various requirements, MDB loans to Serbia, Burma, Zimbabwe, Sudan, Belarus, and Sri Lanka,
and to oppose participation by Cuba or the Palestinian Liberation Organization in the MDBs.
Generally, the United States abstains in order to show opposition, though it may cast a negative
vote for emphasis in particular situations.
Others also require the Administration to pursue certain goals or to advocate particular policies in
the MDBs. These can include efforts to include measures relating to workers rights, greater
emphasis on the needs of the poor in various situations, more efforts to restructure debts of
impoverished countries, increased emphasis on integration of women in the development process,
or more attention or increased MDB assistance to countries such as Haiti, East Timor, Tibet,
Cambodia, Mongolia and Ukraine.
Several initiatives by Congress, which were originally opposed by the Administration and resisted
by the MDBs themselves, have elicited broader international support and led to significant
reforms or changes in MDB operations. In 1964, for instance, the HFSC proposed in IDA
replenishment legislation that the IBRD should transfer some of its excess net income to IDA
each year. The Administration persuaded the House to delete that proposal from the bill.23 In
1968, the SFRC included the same recommendation in another IDA bill. It dropped the proposal,
though, after the Bank agreed to make “voluntary” transfers of this sort. These transfers have

22 U.S. Treasury Department, Department of the Treasury Compilation of Legislative Mandates Applying to U.S.
Participation in the IFIs,
10th Edition, June 2010. An internal document, 248 pages in length, this compilation
organizes and presents all the legislated requirements in order to help staff comply with the laws as they examine
pending or prospective MDB loans.
23 This is called the Reuss-Fulbright plan. See House Committee on Banking and Currency, H. Rept. 88-1093 (1964),
pp. 5-7, and Congressional Record February 25-26, 1964, pp. 3537-3539 and 3638-3656. Senate Foreign Relations
Committee, S. Rept. 91-166 (1969) pp. 13-15.
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become a regular practice and the IBRD is one of IDA’s largest donors. In 1967, the House
adopted legislation requiring the U.S. representatives at the Inter-American Bank (IDB) to
propose the establishment of an independent and comprehensive audit mechanism that would
report to the executive board.24 The IDB and Administration originally opposed the amendment.
In 1973, Congress adopted similar legislation directing the U.S. representatives at the World Bank
and Asian Development Bank (AsDB) to propose the establishment of autonomous audit and
evaluation units.25 All the MDBs now have such units that report directly to their executive board
and these are generally considered to be important elements of their operations. In 1989,
Congress adopted legislation specifying that, in two years, the U.S. representatives at the MDBs
would oppose all loans that might have a negative effect on the physical environment unless the
MDBs created mechanisms to evaluate the potential environmental impact of their projects and to
report such information to the public well in advance of board consideration of each loan.26 The
Administration opposed the amendment, but it was enacted anyway. After difficult negotiation
with other countries and with MDB management, the MDBs created procedures to accomplish
these objectives and they subsequently expanded and enhanced their attention to environmental
concerns.
Power of the Purse
Control over Funding Levels
Congress also uses its control over the funding process—its “power of the purse”—to set
priorities and to encourage the Administration and the MDBs to consider changes in their policies
or procedures. The appropriations subcommittees examine the annual funding requests submitted
by the Administration and determine, subject to final decisions by the full committee and
Congress as a whole, how much money should be spent each year for every program or activity in
their areas of responsibility. They also decide whether conditions or restrictions need to be placed
on the availability or use of appropriated money in order, from their point of view, to make
programs more effective or to achieve some desired policy goals.
Appropriation Legislation. Overall, the MDBs account for a relatively small portion of the total
U.S. foreign assistance budget. As Figure 1 shows, contributions to the MDBs amounted to about
5% of the total appropriated for foreign assistance activities in fiscal years 2009 and 2010. The
total amount appropriated for foreign assistance programs averaged about $34.49 billion annually
during those years, while appropriations for MDB programs averaged about $1.77 billion.
Previously, the share allocated for MDBs was higher, but the increased funding for bilateral
development and economic aid in recent decades has decreased the share going to the MDBs. The
amount appropriated for food aid in fiscal 2009 and 2010 was slightly larger than that for MDBs.
U.S. bilateral development aid accounted for more than one-third of the total for the recent
period. Economic aid programs allocated for foreign policy objectives accounted for about one-

24 This is called the Selden Amendment; P.L. 90-88, adding sec. 14 to the Inter-American Development Bank Act,
P.L.86-147. Congress had previously included a similar requirement for an independent audit mechanism in the Social
Progress Trust Fund Act, which created an IDB-administered trust fund to address social needs. The Group of
Comptrollers of the IDB (now Office of Evaluation and Oversight) was created soon after the Selden Amendment was
enacted.
25 This is another Selden Amendment; FAA of 1973, adding sec. 301(e) to the FAA of 1961. The U.S. General
Accounting (now Accountability) Office (GAO) had been encouraging the MDBs to establish independent audit and
evaluation units for some time. The World Bank had created such a unit, but it was given more independence in 1975,
partly as a consequence of the U.S. legislation.
26 This is called the Pelosi Amendment; Sec. 521 of the International Development and Finance Act of 1989, P.L. 101-
240, adding sec. 307 to the IFI Act of 1977.
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quarter of all U.S. foreign aid for those years, as did military or security (anti-drug, anti-terrorism,
and peacekeeping) aid. Foreign assistance channeled through U.N. agencies and other non-MDB
international organizations accounted for about 1% of the total. Food aid is included here for
comparative purposes.
On the whole, MDB programs
Figure 1. Appropriations for Foreign Aid Activities,
have faired less well than many
FY2009-FY2010
other foreign assistance
programs in the share of their
budget requests that were
included in final funding
legislation. Between FY 2000
and FY 2010, appropriations for
MDB programs amounted to
about 90% of the amount
requested. By contrast, the
amount appropriated for U.S.
bilateral development aid during
the same period was about
105% of the request, while the
ratio for politically-oriented

bilateral economic aid was 92%,
Source: Computed by CRS from data in Committee reports.
military/security aid was 99%,
and non-MDB international
organizations was 115%.27
Appropriations for MDBs, FY2000-2010
IDA, the World Bank’s
(Millions of Dollars)
concessional aid program,

Total
Total
Share of
Percent
accounts for about 70% of the
Requested Appropriated
Requests Appropriated
money requested and over 72% of
IDA
$10,911
$10,112
69.7%
92.7%
the money appropriated during the
past decade for MDB programs.
GEF
$1,058
$801
6.8%
75.7%
Congress appropriated about 93%
AsDB
$14
$14
0.1%
100.0%
of the funds the Administration
AsDF
$1,410
$1,070
9.0%
75.9%
sought for IDA. The appropriation
rates for the AfDF and IFAD—
AfDB
$44
$40
0.3%
89.6%
both much smaller programs—
AfDF
$1,410
$1,360
9.0%
96.5%
were higher, respectively about
IDB
$26
$26
0.2%
100.0%
97% and 103% of the
Administration’s budget request.
IIC
$152
$84
1.0%
55.3%
Appropriations for the paid-in
MIF
$248
$149
1.6%
60.1%
portion of capital subscriptions for
EBRD
$215
$215
1.4%
100.0%
the African Development Bank
IFAD
$164
$169
1.0%
103.0%
(AfDB), AsDB, IDB, and
European Bank for Reconstruction
total
$15,652
$14,040
100.0%
89.7%
and Development (EBRD) were
also close to the amounts
Source: Calculated from data in CRS Report RS20792, Multilateral
Development Banks: U.S. Contributions FY1998-FY2011.
requested. Other programs,

27 Calculated by the Congressional Research Service, using annual data published by the appropriations committees.
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however, were funded more slowly. The GEF and AsDF each received appropriations during the past
decade which amounted to about 76% of the Administration’s total budget request. The IDB’s
Multilateral Investment Fund (MIF) had appropriations amounting to 60% and the Inter-American
Investment Corporation (IIC) had appropriations amounting to 55% of their budget requests.
The lower appropriation rate for some MDB programs is due to the fact that, when Congress does
not fund a particular MDB funding request, the Administration will come back in a future year to
request appropriation of the remaining money. Repeat budget requests for the same activities is
less common for bilateral aid programs. MDB programs that are deemed to be of lower priority
(perhaps because of the region being helped or controversy about their program) are more likely
to need repeated budget requests than are programs with a broader base of congressional support.
The amount the Administration requests for each MDB program each year is determined by the
amount the United States has agreed to contribute through its participation in an MDB funding
agreement. If Congress does not appropriate funds according to the schedule specified in a
funding agreement, the United States falls behind in its payments. Payments not made on time are
called arrearages. Payments not appropriated in one year will be requested by the Administration
in a future year, as the U.S. commitment to an MDB funding agreement remains the same
whether or not Congress has yet appropriated the funds. The higher the appropriation rate for an
MDB program, the more likely it is that Congress appropriated funds the first time those funds
were sought. The lower the rate, the more likely it is that Congress deferred budget requests for
several years before it finally appropriated the money needed to complete the U.S. pledge to a
particular MDB funding plan.
In addition to their valuation of each program’s relative priority in the annual funding process, the
appropriation committees may also withhold or condition funding for a particular program based
on their judgment as to whether funds are being appropriately and efficiently used. These
restrictions have sometimes been procedural in nature. In 1976, for instance, the appropriations
committees added to the law a requirement that none of the money appropriated for MDBs could
be contributed to any MDB that denied the U.S. representatives on its executive board access to
information about the amounts and borrowers for all loans, including staff loans.28 In 1980, they
approved legislation specifying that none of the money appropriated for MDBs could be paid to a
bank that denied U.S. representatives access to documents its management had created.29
Congress has frequently used the appropriation process to send the MDBs messages about its
views on their lending practices. For example, in 1990, following the Tiananmen Square incident
of 1989, Congress attached a rider to the fiscal 1991 appropriation for IDA reducing the U.S.
payment to IDA by an amount equivalent to the U.S. proportional share of any loans the World
Bank approved for China after the beginning of 1990.30 In the same act, Congress also stipulated
that 25% of the funds appropriated for the IBRD would not be available until the Secretary of the
Treasury submitted a detailed report to the appropriations committees explaining what steps the
World Bank was taking to support energy and forestry conservation and family planning
activities.31 In 2001, Congress said that the appropriation for IDA would be available for

28 Foreign Operations, Export Financing and Related Agencies Appropriations Act, 1997, sec. 506, P.L. 94-441. This
provision was later enacted in all subsequent foreign operations appropriation acts.
29 Continuing Appropriations Act, 1981, P.L.97-96, 369, sec 520.. This provision was included in all subsequent
foreign operations appropriations acts.
30 Foreign Operations, Export Financing, and Related Programs Appropriations Act, 1991, Title III, P.L. 101-513.
31 Ibid.
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commitment only if the Secretary directed the U.S. executive director to oppose any IBRD loan
to India for water and sewerage projects if the loans did not prohibit the use of scavenger labor.32
On a few occasions, Congress has appropriated more for MDB programs than the Administration
has requested. One example, noted above, has been the increased funding provided for IFAD
during the past decade. In 1976, Congress increased from $15 million to $25 million the initial
U.S. contribution to the AfDF, on grounds that it believed the United States should play a larger
role in that agency than the Administration did at the time. In 1984, after the Administration said
that the United States would not participate in a special IDA facility for Africa, Congress
authorized and appropriated almost $140 million for it.
Congress has also used the appropriation process to address MDB organizational issues. In 2007,
the World Bank began considering proposals to change the administrative procedures it used to
prevent corruption in its operations. In late 2007, Congress adopted language in fiscal 2008
appropriations legislation withholding 10% of the money appropriated for IDA until the Secretary
of the Treasury reported to the appropriations committees that specific steps had been taken to
enhance the transparency of those procedures and to implement proposed reforms.33 The World
Bank is now considering whether to make changes in its procurement procedures, replacing its
centralized system of procurement controls with new systems adopted by each borrower country
(“country systems”) that employ anti-corruption standards that were less rigorous than those the
Bank currently uses. In 2007, in the same appropriations legislation, Congress specified that
another 10% of the money appropriated for IDA must be withheld until the Secretary certifies that
the Bank continues to have strong centralized procurement procedures and that any pilot projects
for country systems would use the same anti-fraud and anti-corruption requirements the Bank
currently has in place.34
Authorization Legislation. Congress has also sometimes used financial leverage, if less
frequently, during the authorization stage of the congressional funding process in order to pursue
policy goals. In 1970, for instance, the Senate adopted a floor amendment cutting almost $1
billion from IDB authorizing legislation. The cuts were reconsidered and restored 14 months
later, after the IDB made some administrative changes. In 1993, the majority leadership of the
HFSC decided not to authorize part of the proposed U.S. contribution to the 10th replenishment of
IDA, pending a decision by the World Bank that it would create a facility to investigate
complaints that it may have hurt people by not complying with its own rules. After the Inspection
Panel had been created on acceptable terms, the HFSC included language in the next
authorization bill, which was enacted, to authorize the remaining portion of the U.S. contribution
to IDA. Likewise, in 2009, the HFSC chairman declined to act on pending legislation that would
authorize U.S. participation in the 15th IDA replenishment unless the Bank changed what he
believed were some anti-labor provisions of its Doing Business report. After some delay, the Bank
agreed to make those changes and Congress adopted the IDA 15 legislation.

32 Kenneth M. Ludden Foreign Operations, Export Financing, and Related Programs Appropriations Act, 2002, P.L.
107-115, Title IV. The IDA appropriation was also made available only if the Treasury Secretary pressed the World
Bank to give heavily indebted poor countries greater access to IDA grant assistance.
33 Consolidated Appropriations Act, 2008, P.L. 110-161, sec. 668. Specifically, the law said that the funds shall be
withheld until the Bank has made publicly available the financial disclosure forms of senior staff, it had established a
plan for regular internal audits of its internal management and operational controls and made the reports from that
process available publicly, it had made public any reports by its internal investigatory office regarding corruption in
specific projects, it had sufficiently augmented that office’s operational staff, and it had implemented the
recommendations of a commission headed by Paul Volcker that had examined the Bank’s investigatory procedures.
34 Ibid.
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Congressional Oversight
Congress has also had an impact on U.S. policy towards the MDBs through exercise of its
oversight authority. As noted, congressional committees routinely hold hearings to elicit
information about topics affecting the MDBs and to cast light on issues which they believe need
more attention or where they desire to promote change.
Hearings
The authorization and appropriations committees generally hold hearings on the Administration’s
funding requests for the MDBs. This enables Administration witnesses to explain why they believe
Congress should provide the resources necessary to fund U.S. participation in MDB funding plans.
Hearings also provide committee members with opportunities to raise issues of concern where
legislation or changes in U.S. policy might be needed. Public witnesses are frequently invited,
particularly for authorization hearings, to present additional views. These hearings provide public
information about U.S. policy and the MDBs, which might not otherwise be readily available. In
many instances, because Congress now rarely discuss MDB issues in floor debates, these hearings
serve de facto as the major forum for congressional discussions about MDB issues and U.S. policy
towards the multilateral banks.
Committees sometimes use hearings to obtain further information about events or issues of particular
concern. In 1990, for example, the HFSC held hearings about MDB lending to China in order to
evaluate relevant issues and discuss U.S. policy in the wake of the Tiananmen Square incident of
1989.35 In 1998, the HFSC held a hearing to explore the implications of the Asian and Russian
economic crises for the world financial system and U.S. interests.36 In 2000, five committees held
hearings to review the findings and recommendations of a congressionally-established advisory
committee about steps the IMF and MDBs might take to improve their effectiveness and
accountability.37
Broader oversight hearings have also been held. For example, in 1985, during a period of debate
within Congress and the Administration about the future of U.S. policy towards the MDBs, the
HFSC held eight separate hearings addressing key issues and the MDBs’ role U.S. foreign and
economic policy. As the international debt crisis of the 1980s gathered momentum, the Reagan
and Bush I Administrations gradually took a more positive view of the multilateral agencies. In
1992, the Bush I Administration agreed to a new funding plan for IDA that was larger, in real
terms, than any replenishment approved before or since that date.

35 House Committee on Banking, Finance, and Urban Affairs. Subcommittee on International Development, Finance,
Trade, and Monetary Policy, World Bank Lending to the People’s Republic of China, May 8, 1990.
36 House Committee on Banking and Financial Services, International Economic Turmoil, Sept. 14-16, 1998.
37 Senate Committee on Banking, Housing, and Urban Affairs, Final Report of the International Financial Institution
Advisory Commission
, March 9, 2000; House Committee on Appropriations, Subcommittee on Foreign Operations,
Export Financing, and Related Programs Appropriations, Foreign Operations, Export Financing, and Related
Programs Appropriations for 2001. Part 4: Testimony of Members of Congress and Other Interested Individuals and
Organizations
, March 30, 2000; House Committee on Banking and Financial Services, International Financial
Architecture
, March 23, 2000. Joint Economic Committee, Reform of the IMF and World Bank, April 12, 2000;
Senate Committee on Banking, Housing, and Urban Affairs, Subcommittee on International Trade and Finance,
Reform of the International Monetary Fund, April 27, 2000; Senate Committee on Foreign Relations, Meltzer
Commission: The Future of the IMF and World Bank
, May 23, 2000; Senate Committee on Banking, Housing, and
Urban Affairs, Subcommittee on International Trade and Finance, Reforms of the World Bank and Other Multilateral
Development Banks, June 8, 2000.
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Committees also sometimes hold hearings in order to put issues on the public policy agenda and
to build support for new policy initiatives. Between 1985 and 1994, as the international debt crisis
gathered force, the HFSC held 13 separate hearings and other committees held another ten
hearings to assess its likely impact on the world financial system and on developing countries.
Between 1983 and 1990, congressional committees held 12 separate hearings on the MDBs and
environmental concerns, a topic that previously had not been addressed significantly by the
MDBs or included in U.S. policy. Congress enacted several initiatives affecting U.S. policy on
MDB debt and environmental concerns as a result of these hearings. Between 2004 and 2006, the
SFRC held five hearings on issue of possible corruption in the MDBs. These helped stimulate
public and press attention to the subject, and Congress adopted legislation requiring the
Administration to seek major reforms. The President of the World Bank took steps to address
some of these issues in 2005 and the Bank’s Executive Board adopted a comprehensive anti-
corruption strategy in 2007. To varying degrees, the other MDBs later followed suit.
Required Reports
Congress requires the Administration to submit periodic reports on particular topics relating to the
MDBs. The information provided by these reports helps Congress exercise oversight over U.S.
policy and the MDB program. Before 1998, information about the activities of the MDBs was
often difficult to get. Through reporting requirements, Congress required the Administration to
make information about MDB operations and policies available to the public and to pay attention
to particular congressional concerns.
In 1945, Congress required in the BWAA that the Administration submit annual reports via the
NAC on the operations and policies of the international financial institutions. In subsequent years,
Congress added requirements that the Administration explain how the U.S. executive directors
voted on several issues, steps taken in pursuit of particular policy goals, and other concerns.
Without information provided by executive agencies, Congress has difficulty exercising effective
oversight of U.S. policy and the IFIs themselves. However, if the Administration concludes that a
reporting requirement is too burdensome, it may cease making the report. There is often little,
particularly for the authorizing committees, that Congress can do to force a resumption, short of
cutting funding for MDB programs. By 1992, Congress had added many detailed provisions to
the annual NAC reporting requirement, and the Administration decided—on grounds that the
burden was too heavy compared to available staff resources—to stop doing the NAC report.38
In 1998, Congress simplified the NAC reporting requirement, dropping the detailed provisions and
requiring instead a general review of the operations of the MDBs and the success and goals of U.S.
policy. A report was submitted in 1999 using the new format. In 2010, the Treasury Department
published a new NAC report for fiscal 2009, which discussed the current international economic
issues, the roles played by the IFIs in meeting those challenges, and the goals of U.S. policy.
With the resumption of the NAC report, it now appears that the Administration is meeting all the
major IFI reporting requirements enacted by Congress.39 The internet has had an important
impact on effectiveness of these reporting requirements. Until recently, most required reports
were sent to the relevant committees in typescript form and the committees usually filed them
without giving them broader circulation. In recent years, though, Treasury has begun posting most

38 The report for fiscal year 1992 was submitted in 1996.
39 There are still a dozen or so reporting requirements that are not being met. Most of them are antiquated, dating from
the 1980s, though some might still be useful. Once a reporting requirement is enacted, it is difficult to rescind because
groups that supported the original legislation often rise to its defense even if it is obsolete and of little value.
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the required reports on MDBs and the IMF on its web site, along with information about the way
U.S. representatives have voted on recent loans and policy statements on a variety of issues.40
This, together with the fact that the IMF and MDBs are much more transparent in their policies
and operations, has done much to help Congress and the public to better understand the MDBs
and U.S. policy towards them.
Budgetary Issues
Several budgetary questions associated with U.S. subscriptions to MDB capital might be relevant
to congressional consideration of MDB legislation in 2011. Until 1982, Congress appropriated, in
annual installments consistent with the funding plan, the full amount of money needed to pay the
purchase price of the U.S. shares. Since fiscal 1982, Congress has appropriated funds only to
cover the paid-in share of new MDB capital subscriptions. The question is how the United States
should handle through its national budget the contingent liability associated with subscriptions to
MDB callable capital.
In 2004, then-Director of the Congressional Budget Office (CBO) Douglas Holtz-Eakin told
Congress that the current budgetary treatment for U.S. financial commitments to the various IFIs
does not recognize the magnitude of those commitments in a consistent fashion.41 He noted that
the financial backing and budgetary treatment for the IFIs differs for each institution. He said that
Congress might want to consider whether all these institutions should be treated alike and
whether future efforts to better account for the risks associated with U.S. involvement in these
institutions should address past contributions or only those subscribed for future years.
The MDBs fund their market-rate loan operations through the sale of bonds in world capital
markets. Those bonds are backed by the subscribed capital of their member countries and this
backing enables the MDBs to borrow and relend money at attractive rates. Bond purchasers need
to be confident that the banks’ member countries will make good their obligations if the need
should arise. As a member country, the United States subscribes a certain share of the capital
stock of each MDB, and its subscription helps provide backing for the banks’ borrowings.
Only a small portion (3% to 5%) of a new subscription to MDB capital is paid to the bank. Most of
the cost of the new shares is subscribed as callable capital. The MDBs use it to help back their
borrowing in world capital markets but member countries do not normally need to pay this portion
of their subscription cost to them. MDBs may call on their members to pay in callable capital only if
the bank has become bankrupt and—having exhausted all other assets—it still needs money to pay
their creditors. The MDBs have triple-A creditor status and most analysts believe the likelihood that
they will go bankrupt is quite small. Nevertheless, U.S. subscription to MDB callable capital are a
contingent liability; the question is whether and how the U.S. budget should acknowledge that
liability.
Through fiscal 1981, roughly $10 billion was appropriated to cover U.S. callable capital
commitments to the World Bank, about $1 billion for the AsDB, and $2.5 billion for the IDB.
Appropriating callable capital has sometimes led to awkward situations. On a few occasions,
Congress used budgetary authority intended for MDB callable capital to fund other programs.
Several times, callable capital was cut from an appropriations bill and someone claimed

40 See U.S. Treasury, Multilateral Development Banks, at http://www.treas.gov/offices/international-affairs/
multilateral_banks/.
41 Statement of Douglas Holtz-Eakin, CBO Director, The Costs and Budgetary Treatment of Multilateral Financial
Institutions’ Activities
, testimony before the Senate Committee on Banking, Housing and Urban Affairs, May 19, 2004.
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(wrongly) that he had saved the taxpayer a great deal of money. Callable and paid-in capital must
be subscribed on a fixed ratio. The Treasury Department found sometimes that it could not
purchase new MDB shares because Congress had appropriated the paid-in portion, but it had
provided no authority for subscribing the callable portion as well.
In fiscal 1982, the appropriations committees changed the system. Congress still continues to
appropriate the amount needed for the paid-in portion of a new MDB subscription, but, rather than
appropriating funds, Congress includes language in the appropriations act authorizing the Secretary
of the Treasury to subscribe new callable capital up to a certain dollar value. No money has been
appropriated since 1981 to cover the callable portion of U.S. subscriptions to the MDBs and
budgetary figures do not take these contingent obligations into account.
Since 1981, the United States has joined the EBRD and the AfDB and it has also become a
participant in the World Bank’s and IDB’s investment guarantee facilities (the MIGA and IIC).
The amount appropriated before 1982 is probably sufficient to handle a modest call on callable
capital that might emanate from the World Bank, the ADB or the IDB. No action by Congress
would be required. In the case of the EBRD, AfDB, MIGA, and IIC, however, any call on callable
capital would trigger a request that Congress appropriate money to cover the U.S. share of the
callable capital being called. Congress may want to consider whether money needs to be
appropriated to cover such possibilities. Congress might also want to consider whether its current
budgetary treatment of the contingent risk from MDB callable capital is sufficient or whether it
might be changed.
Conclusion
As noted at the beginning of this report, the Administration is likely to recommend in 2011 that
Congress enact legislation that would facilitate U.S. participation in a major expansion of the
multilateral banks’ capital stock. Congress may want to look carefully at this legislation and at the
ways in which the MDBs intend to use these major increases in their financial resources in order
to determine how they might affect or further U.S. policy concerns. Understanding the ways by
which the executive branch makes and implements U.S. policy towards the MDBs may be helpful
in this regard. Likewise, a fuller understanding of the ways in which Congress has dealt with
MDB legislation in the past and of the sources of congressional influence may be useful as
Congress reviews the prospective MDB legislation next year.
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Appendix. Acronyms Used in This Report
AfDB

African Development Bank
IFC
International Finance Corporation
AfDF
African Development Fund
IFI
International Financial Institution
AsDB
Asian Development Bank
IFI Act
International Financial Institutions Act
AsDF
Asian Development Fund
IIC
Inter-American Investment Corporation (IDB)
BIC
Bank Information Center
IMF
International Monetary Fund
BWAA
Bretton Woods Agreements Act
MDB
Multilateral Development Bank
DAS
Deputy Assistant Secretary
MIF
Multilateral Investment Fund (IDB)
DCC
Development Coordination Committee
MIGA
Multilateral Investment Guarantee Agency
EBRD
European Bank for Reconstruction and
NAC
National Advisory Committee on International
Development
Financial and Monetary Policy
EPA
Environmental Protection Agency
NADBank
North American Development Bank
FAA
Foreign Assistance Act
NAFTA
North American Free Trade Association
FSO
Fund for Special Operations (IDB)
NATO
North American Treaty Organization
GEF
Global Environment Fund
NSC
National Security Council
G-20
Group of 20 Countries
OESC
Organization for Economic Cooperation and
Security (“Helsinki Accords”)
HFAC
House Foreign Affairs Committee
OMB
Office of Management and Budget
HFSC
House Financial Services Committee (formerly
SFRC
Senate Foreign Relations Committee
House Banking Committee
IBRD
International Bank for Reconstruction and
USAID
U.S. Agency for International Development
Development
IDA
International Development Association
USDA
U.S. Department of Agriculture
IDB
Inter-American Development Bank
USED
U.S. Executive Director
IDCA
International Development Cooperation Agency
USTR
U.S. Trade Representative
IFAD
International Fund for Agricultural Development
WGMA
Working Group on Multilateral Assistance


Author Contact Information

Jonathan E. Sanford

Specialist in International Trade and Finance
jsanford@crs.loc.gov, 7-7682


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