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Updated September 9, 2022
International Financial Institutions: FY2023 Budget Request
For FY2023, the Biden Administration is requesting $4.37
billion for the international financial institutions (IFIs). The
Multilateral Development Banks
IFIs include the International Monetary Fund (IMF), the
Of the $1.91 billion requested by the Administration for the
multilateral development banks (MDBs), and associated
MDBs, about 85% is for the World Bank. Most of these
multilateral trust funds focused on climate change and food
commitments are the annual installments of previous, multi-
security. The FY2023 request for the IFIs would be more
year pledges by the United States. The request includes
than double the amount enacted in FY2022 ($2.06 billion,
funding for two lending facilities at the World Bank:
Figure 1), and accounts for about 6% of the total FY2023
$206.5 million for the International Bank for
State, Foreign Operations, and Related Programs budget
Reconstruction and Development (IBRD), which
request.
provides financial assistance at market-rates (non-
The budget request for the IFIs comes through the Treasury
concessional financial assistance), and ‘
Department, which is responsible for managing U.S.
$1.4 billion for the International Development
participation in these institutions. Congress authorizes and
Association (IDA), which provides grants and low-cost
appropriates U.S. contributions to the IFIs. The Senate
loans (concessional financial assistance) to low-income
Committee on Foreign Relations and the House Committee
countries.
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, which
Appropriations manage the relevant appropriations
provides non-concessional financial assistance;
legislation. During the past several decades, authorizations
and appropriations for U.S. contributions to the IFIs have
$171.3 million for the African Development Fund, the
been included in the annual foreign operations
concessional lending facility of the African Development
appropriations or a larger omnibus appropriations act.
Bank; and
Figure 1. Treasury’s International Programs Budget
$43.6 million for the Asian Development Fund, the
concessional lending arm of the Asian Development
Request
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 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 that the
U.S. portion would be about $24 bil ion, mostly through
Source: U.S. Treasury Department, International Programs
callable capital (guarantees) extended to the IDB. In previous
Congressional Justification for Appropriations, FY2023.
capital increases at MDBs, an agreement among member
Overview of the FY2023 Request
countries in principle has preceded congressional
authorization for U.S. participation. There is currently no
Two components of the request account for more than 95%
agreement among IDB members for a general capital increase,
of the FY2023 IFI budget request: $1.91 billion for the
but in March 2022 the IDB Board of Governors signaled
MDBs, which finance development projects in low- and
support for a more targeted capital increase of the IDB’s
middle-income countries, and $2.30 billion for multilateral
private-sector arm (IDB Invest).
climate change and environmental trust funds.
The Administration is also requesting funding to support
low-income countries at the IMF ($20 million), debt
International Monetary Fund
restructuring for developing countries ($67 million), and
The COVID-19 pandemic and Russia’s war on Ukraine
multilateral food security initiatives ($43 million). The
have created challenges for many economies, and the
request also includes funding for the Treasury Department’s
Administration is seeking $20 million for the IMF to
Office of Technical Assistance ($38 million), which helps
provide additional support for developing countries. The
developing countries strengthen their capacity to manage
funds would go to the IMF’s Poverty Reduction and
public finance and safeguard their financial sectors.
Growth Trust (PRGT), which provides concessional
lending to low-income countries, and the IMF’s Resilience
https://crsreports.congress.gov
International Financial Institutions: FY2023 Budget Request
and Sustainability Trust (RST), which provides long-term
$550 million for the Clean Technology Fund (CTF),
financing to low- and middle-income countries to address
which provides concessional resources to be combined
long-term challenges (such as climate change and pandemic
with MDB resources to support clean energy, climate
preparedness). The $20 million for the IMF would cover the
adaptation, and sustainable land use;
subsidy cost of and make loans of up to $21 billion from
Treasury’s Exchange Stabilization Fund (ESF, an
$150.2 million or the Global Environment Facility,
emergency reserve fund of the Treasury Department). The
which provides mostly grants to developing countries to
precise breakdown between the two IMF trust funds is to be
address biodiversity, land degradation, chemical waste,
determined.
and other environmental issues; and
Debt Restructuring
$15 million for the Tropical Forest and Coral Reef
Conservation Act, which allows certain developing
The FY2023 request seeks $67 million for U.S.
countries to redirect some debt payments owed to the
participation in the G-20 Debt Service Suspension Initiative
United States to support their own environmental
(DSSI) and Common Framework on Debt Treatments
conservation efforts.
(Common Framework) and the Paris Club, a group of
governments (excluding China) that negotiate debt relief for
Potential Policy Questions for Congress
developing countries. The G-20 established the DSSI in
April 2020 in response to the COVID-19 pandemic by
The FY2023 budget request for the IFIs more than
providing for the temporary suspension of debt payments
doubles the amount enacted in FY2022. Why is U.S.
until the end of 2020 for the world’s poorest countries
support of the IFIs a good use of U.S. taxpayer funds?
(those eligible for IDA assistance). Originally set to end on
How would requested FY2023 funds help developing
December 31, 2020, the DSSI was extended through
countries respond to the health and economic effects of
December 2021. According to the World Bank, 48 out of 73
COVID-19? How are IFIs supporting manufacturing,
eligible countries participated in the initiative before it
delivery, and distribution of vaccines?
expired. From May 2020 to December 2021, the initiative
suspended $12.9 billion in debt-service payments.
What are the needs of LICs for debt relief? How should
the United States prioritize requests for debt relief? To
While DSSI provided temporary debt restructuring, the G-
what extent are private investors and China participating
20 (including China) and the 22 members of the Paris Club,
constructively in debt negotiations?
comprising 39 creditors, endorsed a new “Common
Framework for Debt Treatments beyond the DSSI” in
Under the Administration’s budget request, U.S. unmet
November 2020 to provide permanent debt forgiveness.
commitments to the MDBs would increase from $2.9
Rather than the temporary suspension of debt payments
billion to $3.2 billion. Unmet commitments are the
allowed under the DSSI, the Common Framework is aimed
difference between the amount pledged by the United
at addressing unsustainable sovereign debt burdens by
States and the amount provided (through appropriations)
negotiating debt treatments that will reduce the net present
by the United States. How do unmet financial
value (NPV) of low-income countries official debt burdens.
commitments to the IFIs impact U.S. leadership in the
Countries are also expected to seek comparable treatment
global economy? Should the United States seek to clear
from private sector creditors. DSSI debt relief, by contrast,
its unmet commitments and does the Administration
is NPV-neutral. Potential options under the Common
have a plan to do so?
Framework include extending the duration of sovereign
debt and in extreme cases, debt write offs or cancellation.
How does the Administration evaluate the effectiveness
of multilateral environmental funds and determine the
The Treasury Department has not provided a detailed
appropriate level of U.S. commitments to these funds?
breakdown of how the $67 million would be allocated to
DSSI and/or Common Framework initiatives, or which
Traditionally, the IMF has provided short-term financing
countries would likely be recipients of debt relief.
during economic crises and the World Bank has
provided longer-term financing for economic
Climate Change Trust Funds
development. Is longer-term financing from the IMF
U.S. funding for multilateral climate change and
duplicative of the World Bank’s work?
environmental initiatives has varied over time, and the
Administration is requesting $2.3 billion for FY2023, up
Funding for the Green Climate Fund had been split
from $274 million in FY2022. Specifically, the
between the Treasury Department and the State
Administration is requesting
Department; for FY2023 the Administration is proposing
a consolidation of funding under the Treasury
$1.6 billion for the Green Climate Fund, which is
Department. What are the implications of such a shift?
established within the framework of the United Nations
What is the role of the State and Treasury Departments
Framework Convention on Climate Change (UNFCCC)
for U.S. participation in the Fund?
to assist developing countries in adaptation and
mitigation practices to counter climate change
What would be the impact of a capital increase at the
(previously the funding request was split between the
IDB, and should the United States support this?
Treasury and State Departments; this consolidates the
Rebecca M. Nelson, Specialist in International Trade and
request under just the Treasury Department);
Finance
https://crsreports.congress.gov
International Financial Institutions: FY2023 Budget Request
IF11902
Martin A. Weiss, Specialist in International Trade and
Finance
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https://crsreports.congress.gov | IF11902 · VERSION 3 · UPDATED