Last week’s midterm elections handed Democrats both chambers of Congress, potentially opening a pathway for renewed US leadership on global development priorities. The impact of US foreign assistance cuts has been devastating, especially in fragile and conflict-affected states where US assistance saved millions of lives and improved millions more. The timing for those cuts could not have been worse, as other bilateral aid collapsed, fertilizer and fuel prices skyrocketed, and borrowing costs and debt service piled up for the poorest countries.
Given vastly weakened US institutional capacity and limited appetite from the current administration for development assistance, this is not the time to begin a major renegotiation of bilateral assistance architecture. Even supporters of bilateral funding concede USAID is unlikely to return during the next Congress.
The fastest way for a new Congress to rebuild an ambitious US development footprint is to double down on the multilateral institutions the United States already leads, including the World Bank, the regional development banks, and the IMF. This would get money to those who most need it quickly and effectively, and would signal renewed US support for multilateralism and international cooperation.
The international financial institutions (IFIs) offer advantages that bilateral US programs currently cannot: scale, speed, and leverage. In addition, the Trump administration remains actively engaged in the IFIs. In a speech in April 2025, Treasury Secretary Scott Bessent said that “America First” seeks to expand US leadership in the IMF and World Bank, not retreat from them. His “back to basics” agenda calls for a sharper focus on core mandates, including the poorest countries. This philosophy has also led to scaling back some commitments, which is why Congress needs to act, but we still see potential for bipartisan cooperation.
Bilateral capacity is thin; multilateral capacity is not
CGD’s tracking over the past two years shows how little bilateral delivery capacity is left. The dismantling of USAID threw “an enormous wrench in the gears” of the US assistance apparatus.
The State Department kept only a fraction of USAID’s staff to manage billions in programming and is now building new procurement and oversight systems from scratch. Only around 700 former USAID staff, about 6 percent of the pre-merger workforce of over 10,000, transitioned to State. In global health alone, reports suggest State has only created roughly 50 positions to replace a USAID workforce of 783. The shuttering of USAID also sharply cut the government’s ability to issue new awards. Global health obligations fell steeply in 2025, then rebounded in September 2026—after State rushed to obligate expiring funds before the end of the fiscal year. This doesn’t mean capacity has been restored; given the number of large awards to few recipients, it’s more likely evidence of how strained the system remains, and it leaves real doubts about whether State can efficiently manage the programs it has funded.
Other parts of the US development assistance machinery did survive the last two years, but they are not sized to replace USAID tomorrow. For example, the Millennium Challenge Corporation (MCC) survived the 2025 foreign assistance review as an independent agency, leaving it one of the few remaining bilateral channels built to finance the large infrastructure and policy reforms that partner governments prioritize. But more than half its programs were slated for cancellation, and it was never scaled to be the primary conduit for US foreign assistance.
By contrast, the World Bank and regional multilateral development banks (collectively known as the MDBs) have robust country teams, pipelines, and procurement systems running today. Every dollar a shareholder puts into an MDB is leveraged several times over through market borrowing. And the United States is the largest shareholder at the World Bank and the largest nonregional shareholder of the regional MDBs, enabling US officials to wield substantial influence.
Put US money into multilateral institutions that finance the poorest countries
US resources should back the institutions most focused on the poorest countries, stretch the US taxpayer dollar the furthest, and have a demonstrated track record of impact.
Start with the World Bank’s subsidized loan arm, IDA. The International Development Association is the largest source of grants and cheap loans for low-income countries, and it becomes more and more important as other money retreats. Yet the US commitment keeps shrinking. The Biden administration announced $4 billion in the last pledging round (IDA21); President Trump cut that to $3.2 billion, and the FY27 budget requests only $866 million, implying a $3 billion total commitment—a 25 percent reduction from the Biden administration’s original pledge. Meeting the original $4 billion pledge would require Congress appropriating around $3 billion across FY27–28. And signaling an ambitious US position for the upcoming replenishment being negotiated next year would be the single most substantial way for the US to retake a development leadership role.
Make IDA even more pro-poor in return for more funding. As a CGD policy paper showed this summer, IDA has drifted. Most IDA-eligible countries now exceed the income threshold, and in FY25, only 56 percent of subsidies went to the poorest (IDA-only) countries that need them most. The United States should signal that it is serious about IDA implementing a rules-based graduation policy that moves creditworthy lower-middle-income borrowers onto the World Bank’s nonsubsidized arm, the International Bank for Reconstruction and Development (IBRD).
Fund regional development banks’ concessional windows too. For the first time in its history, the United States made no pledge to the African Development Fund’s replenishment last December, despite having significant influence over the reform agenda during the negotiations, and despite the magnitude of needs in the 37 sub-Saharan countries that receive African Development Fund support. This can still be rectified.
The administration should also be encouraged to pledge to this year’s International Fund for Agricultural Development replenishment, which has historically received very strong bipartisan support. It is a relatively small account where a robust multiyear commitment could send a powerful signal, especially at a time when global food insecurity is on the rise.
Don’t let the IMF become a net drain on the poorest; shore up its subsidized loan program. The IMF’s Poverty Reduction and Growth Trust (PRGT) gives zero- or low-interest loans to low-income countries. It now faces a turning point: as COVID-era loans come due, the IMF is collecting increasingly large debt repayments from these countries, and by 2030 it will be receiving more back in debt service than it gives in new disbursements. That is happening just as other lenders pull back too: China’s net transfers to PRGT-eligible countries turned negative in 2022, and other bilateral creditors followed in 2024, as old loans come due and new ones dry up. Congress should encourage the administration to lead a push to keep IMF support to low-income countries net-positive. That means backing more PRGT subsidy resources, including from the IMF’s own income and reserves (and innovative solutions like gold sales!) or direct appropriations. This would provide important financial breathing room for some of the poorest countries most squeezed by high interest rates and the economic fallout from the war in Iran.
Pass technical fixes in Congress that allow the World Bank and IMF to do more at little to no budgetary cost:
- Lift IBRD’s artificial lending cap. An arcane rule could soon prevent IBRD from lending more in the near to medium term. Congress has the power to fix it. IBRD’s Articles of Agreement cap the amount it can lend to its subscribed capital plus reserves, and it is bumping up against that limit (as of 2025, it was at 79 percent of the limit). This cap is not based on an assessment of risk—credit rating agencies assess IBRD has around $100 billion in untapped lending ability before it risks its AAA rating—but a policy limit set more than 80 years ago. World Bank governors approved removing it in July 2023, but the amendment needs US acceptance, which requires congressional authorization. Removing the limit costs taxpayers nothing and would allow IBRD to expand its lending. The US could link abolishing the limit to a requirement that the new capital made available be channeled to lower-middle-income countries, including those graduating out of IDA.
- Pass the increase in the IMF quota. Congress can also unstick IMF lending. In 2023, IMF members agreed to increase all their IMF quotas by 50 percent. An IMF quota increase has no budget cost (though this remains a matter of debate with CBO and OMB), because the US Treasury treats quota payments as an interest-bearing reserve asset rather than as spending. But Congress still has to authorize and appropriate for it. It would allow more IMF resources to come from permanent quota funds rather than temporary borrowing arrangements, which makes them more reliable for countries with few other sources of crisis finance. (It’s like moving money from an overdraft line into your own savings: the total available stays similar, but it’s more dependable.) It also preserves the US vote share. Both the Biden and Trump administrations have asked Congress to authorize it, most recently in the FY27 budget. This should be an easy bipartisan win for the new session.
Next steps
Some of this can start before January. The current Congress must still finish FY27 appropriations before the continuing resolution expires on December 11, though with few days remaining in the legislative calendar, significant action is unlikely. But there could be real momentum around this agenda in the 120th Congress’s first year.
Rebuilding US bilateral development architecture is a project for the next decade. Leading through the multilaterals is something the next Congress can do in its first year, with bipartisan support, leverage, and impact, signaling that the US is ready to recommit to its role as leader in development assistance and lifesaving aid.
