Debt Relief Update

According to a recent GAO (Government Accountability Office) study, the United States has not fully funded its share of multilateral debt relief -- i.e., that offered through four international financial institutions (IFIs): The International Monetary Fund (IMF), the World Bank’s International Development Association (IDA), the Asian Development Bank, and the Inter-American Development Bank. Collectively, these four IFIs are projected to provide $58 billion in total debt relief to 41 countries.

The U.S. contribution does not fully fund its multilateral debt relief commitments because it is in arrears on its IDA replenishment, and the World Bank requires that a country’s IDA commitment be fully met before it uses any funds for debt relief. The reason that the U.S. is in arrears on its IDA replenishment is that we have been delaying payments pending certain transparency reforms required under U.S. law. To fully fund the U.S. debt relief commitment, (1) the Treasury needs to certify to Congress that the reforms have been made, and (2) Congress will need to appropriate a further $49 million.

This imbroglio points up once again how our foreign assistance system so frequently gets crosswise with itself. Clearly, the intent of Congress was to fully fund our debt relief commitments. But other legislative provisions – not unreasonable ones, in and of themselves -- make it impossible to do so. Fragmented legislative and administrative responsibilities make it difficult to implement consistent, mutually reinforcing policies, giving the impression that no one is in overall charge – yet another argument in favor of a foreign assistance reform package that would simplify and align responsibilities and authorities.