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Multilateral Development Banks: Issues for the 108th Congress 1 (March 29, 2003)

handle is hein.tera/crser0030 and id is 1 raw text is: IB96008 MOST RECENT DEVELOPMENTS In March 2003, the President submitted to Congress his proposals for the amounts the U.S. Government should spend during fiscal 2004. Congress is currently considering budget resolutions that will determine the amounts which can be spent in fiscal 2004. For the multilateral development banks (MDBs), President Bush requested appropriations totaling $1,555 million. Meanwhile, the authorizing committees are considering what approach they should take for securing pending authorization requests for MDB programs which were carried over from the 107th Congress. BACKGROUND AND ANALYSIS Introduction For 50 years, the MDBs have been major forums for economic cooperation and key vehicles through which the United States and other countries have channeled development aid. The cost of U.S. participation in them has been controversial. The Banks have also come under substantial criticism - from many different perspectives - for presumed weaknesses or errors in their policies and operations. In recent years, there has been much discussion in public and official circles about possible changes in the architecture of the international financial system, particularly the relationship between the MDBs and the International Monetary Fund (IMF). For information on specific issues, see: CRS Report RL31136, World Bank. IDA Loans or IDA Grants?; CRS Report RL31418, World Bank: Funding IDA's Assistance Program; Russia and the International Financial Institutions: From Special Case to a Normal Country, in the Joint Economic Committee's publication (S.Prt. 107-50) Russia's Uncertain Economic Future (available from author); and CRS Report RS21329, African Debt to the United States and Multilateral Agencies. U.S. Participation in the Multilateral Banks The MDBs are autonomous international agencies that finance development programs in poor countries using money borrowed in world capital markets or contributed by developed country governments. Run by their own managements and staffs of international civil servants, they are supervised by boards of executive directors and boards of governors selected by member country governments. Voting shares are weighted on the basis of countries' contributions. The IMF is a monetary institution, not a development bank. Still, in recent decades it has lent mainly to developing countries and its policies often affect economic conditions in borrower countries. The United States belongs to the World Bank and four regional banks: the African Development Bank (AFDB), Asian Development Bank (ADB), European Bank for Reconstruction and Development (EBRD), and Inter-American Development Bank (IDB). It also belongs to two other institutions, the North American Development Bank (NADB) and the International Fund for Agricultural Development (IFAD). In 1999, they lent or invested over $50 billion - 82% on market-based terms and the rest on concessional terms (low interest rates, long repayment periods) to the poorest countries. The World Bank provided 58% of the total and 77%of the concessional funds. CRS-1 03 -29-03

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