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August 16, 2021
International Financial Institutions: FY2022 Budget Request
For FY2022, the Biden Administration is requesting $3.28
Multilateral Development Banks
billion for the international financial institutions (IFIs). The
Of the $1.95 billion requested by the Administration for the
IFIs include the International Monetary Fund (IMF), the
MDBs, about 85% is for the World Bank. Most of these
multilateral development banks (MDBs), and associated
commitments are the annual installments of previous, multi-
multilateral trust funds focused on climate change and food
year pledges by the United States. The request includes
security. The FY2022 request for the IFIs would be a 73%
increase from the amount enacted in FY2021 ($1.89 billion,
funding for two lending facilities at the World Bank:
Figure 1), and accounts for about 5% of the total FY2022
$206.5 million for the International Bank for
State, Foreign Operations, and Related Programs budget
Reconstruction and Development (IBRD),
request.
which provides financial assistance at market-rates
(non-concessional financial assistance), and
The budget request for the IFIs comes through the Treasury
$1.4 billion for the International Development
Department, which is responsible for managing U.S.
Association (IDA), which provides grants and
participation in these institutions. Congress authorizes and
low-cost loans (concessional financial assistance)
appropriates U.S contributions to the IFIs. The Senate
to low-income countries.
Committee on Foreign Relations and the House Committee
on Financial Services are responsible for managing MDB
For the regional multilateral development banks, the
authorization legislation. The Foreign Operations
Administration is requesting:
Subcommittees of the House and Senate Committees on
$54.6 million for the African Development Bank,
Appropriations manage the relevant appropriations
which provides non-concessional financial
legislation. During the past several decades, authorizations
assistance;
and appropriations for U.S. contributions to the IFIs have
$211.3 million for the African Development
been included in the annual foreign operations
Fund, the concessional lending facility of the
appropriations or a larger omnibus appropriations act.
African Development Bank; and
Figure 1. Treasury’s International Programs Budget
$53.3 million for the Asian Development Fund,
Request
the concessional lending arm of the Asian
Development Bank.
Capital Increase at the Inter-American
Development Bank (IDB)?
The Administration did not include any appropriations or
authorizations for a capital increase at the Inter-American
Development Bank (IDB). Legislation was introduced late in
the 116th Congress (S. 4997), and again in the 117th Congress
(S. 616; S. 1169) to authorize U.S. participation in an $80
bil ion capital increase for the IDB. The legislation outlines
Source: U.S. Treasury Department, International Programs
that the U.S. portion would be about $24 bil ion, mostly
Congressional Justification for Appropriations, FY2022.
through callable capital (guarantees) extended to the IDB. In
Overview of the FY2022 Request
previous capital increases at MDBs, an agreement among
member countries in principle has preceded congressional
More than half of the amount requested for the IFIs—$1.95
authorization for U.S. participation. There is currently no
billion—is for the MDBs, which finance development
agreement among IDB members for a capital increase,
projects in middle- and low-income countries. The second
although in March 2021, member countries approved a
largest portion of the request is $1.1 billion for multilateral
resolution authorizing analytic work required to consider a
climate change and environmental trust funds, more than
potential capital increase.
seven times the amount enacted in FY2021.
The Administration has also requested funding to support
A portion of the MDB funds requested for FY2022—
low-income countries at the IMF ($102 million), debt
$476.3 million—is towards previous, unmet U.S.
restructuring for developing countries ($67 million), and
commitments to the MDBs, primarily IDA. Unmet
multilateral food security initiatives ($43 million). The
commitments are the difference between the amounts
request also includes funding for the Treasury Department’s
pledged by the United States to the MDBs and the amounts
Office of Technical Assistance ($38 million), which helps
actually provided to the MDBs from (through
developing countries strengthen their capacity to manage
appropriations) the United States. The Treasury Department
public finance and safeguard their financial sectors.
argues that paying down these unmet commitments will
https://crsreports.congress.gov
International Financial Institutions: FY2022 Budget Request
provide additional resources that can provide immediate
DSSI and/or Common Framework initiatives, or which
support to low-income countries, while also demonstrating
countries would likely be recipients of debt relief.
U.S. commitment to restoring its leadership in the
Climate Change Trust Funds
multilateral system. However, at the same time, unmet U.S.
commitments to IDA’s Multilateral Debt Relief Initiative
U.S. support for multilateral climate change and
environmental initiatives has varied over time, and the
(MDRI) are set to increase by about $300 million under the
Administration’s FY2022 request. Collectively, U.S. unmet
Administration is proposing a 670% increase in U.S.
funding for FY2022, from $139.57 million in FY2021 to
commitments to MDBs totaled $2.7 billion in FY2021, and
under the Administration’s budget request for FY2022,
$1.07 billion for FY2022. Specifically, the Administration
is requesting:
would on net fall to $2.5 billion.
$149.3 million for the Global Environment Facility,
International Monetary Fund
the largest multilateral trust fund focused on global
The Coronavirus Disease 2019 (COVID-19) created
environmental issues;
enormous health and economic pressures for low-income
countries (LICs), and IMF lending to LICs increased
$625 million for the Green Climate Fund, which is
dramatically in 2020—an eightfold increase from average
established within the framework of the United Nations
lending levels in 2017-2019. In response to the continuing
Framework Convention on Climate Change (UNFCCC)
financial needs of LICs, the IMF is seeking to increase
to assist developing countries in adaptation and
funding for its concessional lending facility for LICs, the
mitigation practices to counter climate change (the State
Poverty Reduction and Growth Trust Fund (PRGT). As part
Department is also requesting $625 million for the GCF
of this multilateral effort, the FY2022 budget requests a
for a total request of $1.25 billion);
total of $102 million to enable a U.S. contribution to the
$300 million toward the Clean Technology Fund,
PRGT or another (unspecified) IMF facility focused on
LICs. It has been over a decade since the United States has
which provides financial resources to invest in clean
provided new funding for the PRGT. The requested funds
technology projects in developing countries; and
would be used for grants to the LIC-facility as well as to
$15 million for the Tropical Forest and Coral Reef
cover the subsidy cost of loans from the Treasury
Conservation Act, which allows certain developing
Department’s Exchange Stabilization Fund (ESF, an
countries to redirect some debt payments owed to the
emergency reserve fund of the Treasury Department) to the
United States to support their own environmental
IMF. The precise breakdown between grants and loan
conservation efforts.
subsidy is to be determined.
Policy Questions for Congress
Debt Restructuring
The FY2022 request seeks $52 million for U.S.
Treasury Secretary Janet Yellen stresses that the FY2022
participation in the G-20 Debt Service Suspension Initiative
budget request for the IFIs seeks to restore U.S. leadership
(DSSI) and Common Framework on Debt Treatments
in the multilateral system and tackle a range of challenges,
(Common Framework). The G-20 established the DSSI in
particularly the pandemic and climate change. Questions
April 2020 in response to the COVID-19 pandemic by
Members might consider about the budget request include:
providing for the temporary suspension of debt payments
With a budget request nearly 75% more than enacted the
until the end of 2020 for the world's poorest countries
previous year, why is U.S. support of the IFIs a good use
(those eligible for IDA assistance). Originally set to end on
of U.S. taxpayer funds?
December 31, 2020, the DSSI has been extended through
December 2021. According to the World Bank, the DSSI
How would requested FY2022 funds help developing
has delivered more than $5 billion in debt relief to more
countries respond to the health and economic effects of
than 40 of the 73 eligible countries.
the pandemic? How are IFIs supporting manufacturing,
delivery, and distribution of COVID-19 vaccines?
While DSSI is providing temporary debt restructuring, the
G-20 (including China) and the 22 members of the Paris
What are the needs of LICs for debt relief? How should
Club, comprising 39 creditors, endorsed a new “Common
the United States prioritize requests for debt relief? To
Framework for Debt Treatments beyond the DSSI” in
what extent are private investors and China participating
November 2020 to provide permanent debt forgiveness.
constructively in debt negotiations?
Rather than the temporary suspension of debt payments
How do unmet financial commitments to the IFIs shape
allowed under the DSSI, the Common Framework is aimed
at addressing unsustainable sovereign debt burdens by
U.S. leadership in the global economy? Should the
negotiating debt treatments that will reduce the net present
United States seek to clear its unmet commitments and
value (NPV) of low-income countries official debt burdens.
does the Administration have a plan to do so?
Countries are also expected to seek comparable treatment
How does the Administration evaluate the effectiveness
from private sector creditors. DSSI debt relief, by contrast,
of environmental trust funds and determine the
is NPV-neutral. Potential options under the Common
appropriate level of U.S. commitments to these funds?
Framework include extending the duration of sovereign
debt and in extreme cases, debt write offs or cancellation.
What would be the impact of a capital increase at the
IDB, and should the United States support this?
The Treasury Department has not provided a detailed
breakdown of how the $52 million would be allocated to
Rebecca M. Nelson, Specialist in International Trade and
Finance
https://crsreports.congress.gov
International Financial Institutions: FY2022 Budget Request
IF11902
Martin A. Weiss, Specialist in International Trade and
Finance
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