In March, the Biden Administration released its budget request for Fiscal Year 2025 (FY25), and on June 12th, the House Appropriations Committee approved its FY25 State, Foreign Operations, and Related Programs (SFOPs) bill. While the Biden Administration's budget request meets existing commitments to the MDBs, the House bill fails to meet many MDB commitments and includes harmful climate provisions that would weaken the U.S.’s ability to push for better environmental impacts at the MDBs. Though the upcoming election means that appropriations negotiations may be even more difficult than last year’s contentious process, Congress should meet the existing commitments to the MDBs and exclude provisions that would lead the U.S. to renege on its climate commitments. Furthermore, Congress must push for stronger social, environmental, and accountability policies as conditions for potential Congressional support of general capital increases (GCIs) at the Inter-American Investment Corporation (IDB-Invest) and the European Bank for Reconstruction and Development (EBRD).
MDB commitments in the FY25 President’s Budget Request (PBR)
The FY25 PBR for the Treasury Department includes $1.93 billion for existing commitments to the World Bank and the regional multilateral development banks (MDBs). We call on Congress to appropriate the funding needed to meet U.S. commitments to the MDBs, including:
- $1.43 billion for the final contribution to the 20th replenishment of the International Development Association (IDA20).
- $54.6 million for the fifth of eight installments for the 7th capital increase at the African Development Bank (AfDB).
- $206.5 million for the last of six installments for a capital increase at the World Bank’s International Bank for Reconstruction and Development (IBRD).
- $43.6 million for the 12th replenishment of the Asian Development Fund (ADF).
- $197 million for the second of three installments for the 16th replenishment of the African Development Fund (AfDF).
BIC encourages Capitol Hill to meet these existing commitments to preserve the US’s leadership role and ability to improve these institutions’ policies and practices.
GCI Authorization Requests in the FY25 PBR
The FY25 PBR also includes requests for authorization and contributions for two GCIs. GCIs inject new shareholder capital into the MDBs so the institutions can increase the volume of their lending. The request calls for a $75 million contribution and authorization of a $3.5 billion GCI for IDB-Invest, the private sector lending arm of the Inter-American Development Bank (IDB). The GCI, approved by shareholders in March 2024, comes as the IDB implements its New Institutional Strategy, a series of reforms intended to increase the IDB’s overall impact. The request also calls for a $50 million contribution and authorization of a €4 billion GCI for the EBRD. This GCI, approved by shareholders in December 2023, comes as the EBRD revises its Environmental and Social Policy and Access to Information Policy. As these institutions engage in reforms and policy reviews, we call for Congress to push for stronger accountability and transparency standards if they authorize these capital increases.
MDB provisions in the House FY25 SFOPs bill
In June, the House Appropriations Committee approved its SFOPs appropriations bill, which contains $1.55 billion for existing commitments to the World Bank and the regional MDBs. The bill includes climate provisions that would weaken the U.S.’s ability to meet its climate commitments and excludes MDB oversight provisions that inform how the Treasury must engage with the MDBs. Below are some of the key provisions and gaps within the House’s FY25 SFOPs bill:
- The House bill appropriates $1.1 billion for the last installment of the U.S. pledge to IDA20, over $300 million lower than needed to meet this year’s obligation. Reneging on the pledge will decrease the ability of the U.S. to push for stronger environmental, social, and accountability policies during the ongoing negotiations for the IDA21 replenishment package.
- The House bill also appropriates over $20 million less than what is needed to meet this year’s obligations for both the AfDF and the AfDB. Failing to meet these commitments will hinder the U.S.’s ability to improve these institutions’ policies and practices.
- The House version does not authorize the GCIs at IDB Invest and the EBRD. Should Congress decide to include these authorizations in the final package, Congressional support should be conditioned on requiring both banks to improve their social, environmental, and accountability policies.
- The House bill includes provisions that prohibit contributions to certain international environmental funds such as the Green Climate Fund and the Clean Technology Fund, blocks the use of funds for implementation of the Paris Agreement and loss and damage attributed to climate change, and prevents the application of Treasury’s Fossil Fuel Guidance for MDBs. BIC calls on Congress to remove these provisions to support the United States’ climate commitments.
- The House SFOPs bill fails to include oversight provisions that inform how the Treasury must engage with MDBs. The enacted FY24 SFOPs bill includes provisions that require the Treasury to push for additional oversight and analysis of large dam projects, withhold support for projects that would damage intact tropical forests, and only support projects that implement the best practices regarding environmental conservation, cultural protection, and empowerment of local populations. However, these provisions are absent in the FY25 House bill, and BIC calls for their inclusion in the final bill.