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FY16 State and Foreign Operations Appropriations

Policy wonks usually bemoan the lack of a functional budget and appropriations process. This year, however, CGD’s policy outreach team is (reluctantly) crossing its fingers for a continuing resolution—an outcome that seems increasingly likely with only eight legislative weeks before the end of the fiscal year. The House and Senate FY16 State and Foreign Operations bills are in, and well, they are none too pretty. While we were able to find a few bright spots, both chambers’ slashing of funding to the international financial institutions (IFIs) present a rather dire picture for US development policy in the coming fiscal year.

Read on for our low (and high) lights. And thanks to the folks at USGLC for their always excellent analysis by-the-numbers.

Top-Line Numbers (all $ in millions)

International Financial Institutions (IFIs)

Oof. As far as the 150 account is concerned, one of the greatest casualties of the continued failure to address sequestration is US contributions to the IFIs. Both House and Senate bills fall desperately short of the President’s request for multilateral assistance, putting US leadership in institutions like the International Monetary Fund (IMF) and multilateral development banks in serious jeopardy. As Scott Morris points out, this is a bit ironic given lawmakers ostensible concerns about the global influence of China and other emerging market economies.

House Appropriators disbursed their limited allocation to send clear messages about priorities, opting to fund much of the request for the World Bank’s IDA, along with modest contributions to the Asian and African Development Funds, while zeroing out the Climate Investment Funds and well…everything else. The Senate bill appears more conflicted, but the end result isn’t much better. Without sufficient funds to go around, the Senate’s version reduces funding to the IFIs by 50 percent (HALF!!) nearly across the board. Looking for a bright spot? You can visit Title X of the Senate bill for authorization of IMF quota reform. (We might be more excited, but the authorization also appeared in last year’s Senate bill and failed to gain traction.)  Overall, it’s pretty grim.

U.S. Agency for International Development (USAID)

USAID wouldn’t fare too badly under either bill, though the Senate would provide better overall funding levels. Of particular note are the chambers’ different levels for operating expenses (OE).

The Senate bill provides $1.28 billion for USAID OE, an increase above the House and FY15 enacted numbers, if below the President’s request. However, the Senate Report language would limit hiring for new positions, supporting only hiring for attrition purposes (though would consider reprogramming requests for new positions). It strikes us as shortsighted to limit new hiring if USAID is to continue to make good on its efforts over the past two administrations to become more than a contracting pass through and a real center of development expertise.

The Senate bill emphasizes transition plans for country assistance strategies. Interesting. Let’s hope that (some) aid helps drive economic growth. But instead of the pilot program in Sec. 7083 to decrease assistance for two countries receiving aid in five years (which seems a tad arbitrary), we’d rather see an evidence-based assessment of where USAID’s money is and isn’t working—and a subsequent reallocation. As one example, should USAID consider reallocating resources from those countries with relatively small budgets but high overhead costs and inability to scale?

It was great to see thoughtful language in the Senate Report encouraging USAID to allocate funds for domestic resource mobilization and to continue with procurement reform at all stages of the contracting process.

Global Health

As has been the case in recent years, global health programs fare well in both chambers. With discord in only a few areas, the House and Senate bills provide funding considerably above the President’s request, and at or above FY15 levels for the majority of programs.

Both bills include nods to strengthening developing country health systems to bolster resilience and capacity to respond to disease. The importance of this kind of preparedness was highlighted by the devastating impact of the Ebola outbreak in West Africa. Neither bill makes specific mention of the $300 million PEPFAR Impact Fund unveiled in the President’s budget, intended to leverage data and reward countries that target areas facing the highest burden of HIV/AIDS. But while not an actual endorsement, House report language encouraging PEPFAR to continue to develop and use good data to inform its work reads as at least nominally supportive of PEPFAR’s efforts in this area.

Millennium Challenge Corporation (MCC)

President Obama’s FY16 budget request included a significant boost for MCC. We heralded the administration’s vote of confidence in the agency, but given the tough environment, remained skeptical that Congress would deliver.

It looks like we were right to have our doubts. But here’s the glass-half-full version: MCC is well positioned to receive at least as much funding as in FY15, a bit more if the Senate’s number prevails. The House report contains new language that could actually help the agency demonstrate its value for money through requirements to highlight estimated economic rates of return and report programmatic changes. And the Senate report notes continued support for the MCC’s mission, declaring (in slightly more formal terms) the now-classic message “it’s not you, it’s the 302(b).”

Overseas Private Investment Corporation (OPIC)

The Senate would reauthorize OPIC for another year. The House, while appropriating funds for OPIC, does not authorize it. Regardless of the appropriations process, here’s hoping Electrify Africa and its three-year OPIC authorization passes soon.

Both chambers would keep OPIC’s Administrative Expenses funding flat, which would not allow for expanded personnel, something the 200-odd person agency could desperately use and the President’s Budget requested. And sure to be controversial, OPIC’s carbon cap would again be lifted (Sec. 7080 in both bills), with the House lifting the cap permanently and the Senate for a year following an amendment from Senator Leahy limiting the lift to FY16 only.

Other Items of Note:

·       Surprising hints of bipartisanship during Senate-side amendment votes on the Green Climate Fund and family planning.

·       The Senate included an allocation of $76.7 million for Power Africa (Sec. 7060(f)).

Disclaimer

CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.