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Tuesday, March 12, 2013

Multilateral Development Banks: How the United States Makes and Implements Policy

Rebecca M. Nelson
Analyst in International Trade and Finance

Martin A. Weiss
Specialist in International Trade and Finance

This report analyzes how the United States makes policy towards the multilateral development banks (MDBs) and identifies ways by which Congress can shape U.S. policy and influence the activities of the banks themselves.

The executive branch and Congress share responsibility for U.S. policy towards the MDBs and each has primary control over a different part of the policy process. The Administration is responsible for negotiating with other countries and for managing day-to-day U.S. participation in the MDBs. Congress has ultimate authority over the level of U.S. financial commitments and the criteria that govern U.S. participation in these institutions. Congress has authorized the President to direct U.S. participation in the MDBs, and the President has delegated that authority to the Secretary of the Treasury. Other agencies also have reasons for being concerned about U.S. policy and the MDBs. The Administration created a new process, starting in 2009, to help coordinate interagency views on MDB issues.

Authorizing legislation is managed by the House Financial Services Committee and Senate Foreign Relations Committee. The House and Senate Appropriations Subcommittees on State, Foreign Operations, and Related Programs handle the appropriations. Since 1981, MDB legislation has become law through the regular legislative process only once. Usually it is enacted as a rider to other legislation.

Congress exercises its influence over MDB policy through its control over authorizations and appropriations and through oversight. The authorizing committees have included in MDB authorizing legislation many directives which affect the goal and direction of U.S. policy. Congress has also used its control over the funding process—its “power of the purse”—to set priorities and encourage the Administration and MDBs to consider changes in their policies or procedures. Congress has used hearings and required reports to get information about U.S. policy and the MDBs onto the public record and to draw the Treasury Department’s attention to issues of pressing concern. Since the Administration knows it must come to Congress for future authorizations and MDB funding, the views expressed by Congress through hearings have often had an impact on the focus and direction of U.S. policy regarding particular concerns.

For more information the MDBs, see:

  • CRS Report R41170, Multilateral Development Banks: Overview and Issues for Congress, by Rebecca M. Nelson; 
  • CRS Report R41672, Multilateral Development Banks: General Capital Increases, by Martin A. Weiss; and 
  • CRS Report RS20792, Multilateral Development Banks: U.S. Contributions FY2000-FY2013, by Rebecca M. Nelson.

Date of Report: March 7, 2013
Number of Pages: 15
Order Number: R41537
Price: $29.95

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