How Low Will the US Go on Foreign Assistance?

Following the termination of thousands of USAID contracts and the overnight effort to shut down the agency itself, we have taken a closer look at the stakes for multilateral development banks (MDBs) and major vertical funds related to health, food, and climate that are recipients of US funding. In a new note, we assess prospects for unmet pledges from the Biden and first Trump administrations and for pending replenishment negotiations in 2025.

The administration has yet to make public statements about multilateral organizations other than the UN, but they are being scrutinized as part of an executive order. The outlook is difficult to predict given the multiple parties involved in the decision-making process (e.g., DOGE, OMB, State, Treasury, Congress, and the courts), but the actions around bilateral aid do not auger well for these accounts. In this context, we used the following variables to drive our analysis:

• how much of the account is funded by the US and how much of that funding still requires congressional approval;
• the financial model of the account (e.g., how dependent it is on regular donor contributions)
• where the account is in the replenishment/funding cycle; and
• whether the administration has already set policy relevant to the account (e.g., climate, gender, DEI)

Based on these factors, we argue that:

• Among the most vulnerable institutions are the International Development Association (IDA), the African Development Fund (AfDF), the Asian Development Fund (AsDF), the World Food Program (WFP), the Global Fund, and Gavi, the Vaccine Alliance.
• The financial capacity of MDB hard loan windows should not suffer if the US reneges on its pledges, which are relatively small, but there is a risk that rating agencies could respond negatively.
• Even without US funding, there should still be ample MDB resources for climate mitigation, especially for middle-income countries. But resources for adaptation— which poor countries especially need—are already woefully inadequate and may be further diminished.
• The US will use its leverage to advance issues likely to be unpopular with other shareholders, including dismantling DEI programs (which have become conflated with gender policies), restricting reproductive health, and reversing climate commitments.

Below is a summary chart of our findings: