FY2013 MDB Budget: Stay the Course

The Obama administration’s FY2013 budget request may be a mixed bag for the overall international affairs budget, but its message on U.S. engagement in the multilateral development banks (MDBs) is clear: stay the course. This is likely because most of the sticky MDB budget decisions were made last year, when Congress considered and ultimately supported the once-in-a-generation general capital increases (GCIs).  For FY13, the administration proposes $2.6 billion for these lending institutions – an amount almost identical to the FY12 appropriation.Here is what a few of the accounts look like:With the exception of the environmental trust funds, most of the fluctuation within accounts reflects an effort to fulfill multi-year commitments to various Banks and Funds and to preserve U.S. shareholdings (and influence) across the institutions.  A few notable nuggets:

• All MDB lending window requests (the IBRD, IDB, AfDB, and AsDB) keep the United States on track to meet its GCI commitments.

• The Asian Development Fund (AsDF) request fulfills the fourth and final installment of the ninth replenishment.

• The International Bank for Reconstruction and Development (IBRD) request includes a first year payment of $70 million for a selective capital increase (SCI), which accounts for the 60 percent jump from the FY12 appropriation. The SCI is necessary to maintain U.S. shareholding above 15 percent, below which the United States would lose its unique veto power.

• While the Asian Development Bank (AsDB) doesn’t see a notable increase from last year, the request includes a modest bump ($213,000) to cover arrears from the 0.2 percent across the board rescission in FY2011.   Without this payment, the United States risks losing its influence as largest shareholder – a position it shares with Japan – at a time when other countries are eager to increase their shareholding and influence in the AsDB.

• The World Bank Environmental Trust Funds (the Global Environment Facility, Clean Technology Fund and Strategic Climate Fund) receive slight increases over the FY12 appropriated levels, but the Clean Tech Fund request of $185 million is still a far cry from the original $400 million requested by President Bush in FY2009 and raises doubts about whether the Obama administration will meet its Copenhagen commitments to provide roughly $30 billion between 2010-2012 for adaptation and mitigation in developing countries.

The administration has regularly endorsed multilateral engagement as an efficient and effective development tool and many of the MDB accounts managed to get strong bipartisan support in Congress last year.  So I hope these requests are able to “stay the course” as the budget process continues.  But plenty of uncertainty remains.  As my colleague Connie Veillette points out, the political dynamics of an election year mean that this budget and the priorities it sets out may look far different by the time the budget process concludes.  And the recent announcement that World Bank president Robert Zoellick will step down at the end of his term in June leaves the White House with some tough decisions that may impact Congress’s decision about future MDB funding.  Stay tuned.