The “skinny budget” released by the Trump administration yesterday proposed significant cuts to foreign assistance programs, including funding for the World Bank and other multilateral development banks (MDBs). While the budget indicates there is some support for continued U.S. participation in the MDBs, the result of the cuts will undoubtedly diminish the ability of the U.S. to reform and leverage the institutions to advance its foreign policy agenda.
We still do not know exactly how much will be requested for the various Banks in which the U.S. participates, but unlike institutions like OPIC, the GCF, and others that were zeroed out in this budget, the administration has indicated the MDBs are still somewhat of a priority. This is good news for those who see the U.S. as playing a positive leadership role at the World Bank in particular—by advancing reforms that have transformed the development finance landscape into one that is more accountable, transparent, and responsive to communities and civil society than it once was. However, more work must be done to hold the banks accountable and ensure they are meeting the needs of the people they are ostensibly meant to serve, and this indicative budget raises serious questions about the U.S. role in such efforts going forward.
Money talks at these institutions—especially at the World Bank in an IDA replenishment year, and it is hard to believe that the U.S. would be able to maintain its influence at the World Bank with any substantial reduction in funding. Historically, the U.S. and other European donors have used the triennial replenishment of the Bank’s fund for the poorest countries to push through key reforms at the institutions, as well as to advance foreign policy goals on the global stage, assist allies, and influence how the World Bank works to end poverty and respond to crises around the world—from outbreaks of Ebola to the influx of refugees. If the proposed $650 million cut over three years to the MDBs means the IDA pledge made by the Obama administration just last December will not be fulfilled (rumor has it the U.S. contribution will be cut around 15%), we can expect to see a corresponding reduction in U.S. influence.
Many questions remain unanswered in this skinny budget, including which MDBs may be prioritized over others. We will continue to monitor details as they emerge.