[Senate Report 110-464]
[From the U.S. Government Publishing Office]
Calendar No. 969
110th Congress Report
SENATE
2d Session 110-464
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INTERNATIONAL DEVELOPMENT ASSOCIATION REPLENISHMENT ACT OF 2008
_______
September 16, 2008.--Ordered to be printed
Mr. Biden, from the Committee on Foreign Relations,
submitted the following
REPORT
[To accompany S. 3168]
The Committee on Foreign Relations, having had under
consideration the bill (S. 3168), to authorize United States
participation in the replenishment of resources of the
International Development Association, and for other purposes,
reports favorably thereon and recommends that the bill do pass.
CONTENTS
Page
I. Purpose..........................................................1
II. Committee Action.................................................1
III. Discussion.......................................................1
IV. Cost Estimate....................................................4
V. Evaluation of Regulatory Impact..................................6
VI. Changes in Existing Law..........................................6
I. PURPOSE
The purpose of S. 3168 is to authorize United States
participation in the fifteenth replenishment of resources of
the International Development Association (IDA) of the
International Bank for Reconstruction and Development.
II. COMMITTEE ACTION
S. 3168 was introduced by Senators Biden and Lugar on June
19, 2008. On June 24, 2008, the committee ordered S. 3168
reported favorably by voice vote.
III. DISCUSSION
S. 3168, the ``International Development Association
Replenishment Act of 2008'' authorizes U.S. participation in
the fifteenth replenishment of the International Development
Association. The U.S. three-year commitment, 2009-2011, amounts
to $3.7 billion, representing 14.7% of the total $41.6 billion
replenishment. Although this represents an increase from the
previous replenishment, for the first time the United Kingdom
(UK) has replaced the United States as the top donor to IDA.
The UK's contribution for this replenishment is $4.3 billion or
16.7% of the total. In the previous IDA replenishment, the
Congress appropriated $2.85 billion out of a total
replenishment of $33 billion.
IDA was founded in 1960, 16 years after the creation of the
World Bank, to address concern that the poorest countries could
not afford to borrow at the near-market rate terms offered by
the International Bank for Reconstruction and Development
(IBRD).
It was established as a revolving fund, providing
concessional loans to the poorest countries subsidized by donor
contributions and transfers from the IBRD. IDA is the largest
provider of multilateral official development assistance to low
income countries; between 1994 and 2005 it disbursed
approximately $80 billion. Because IDA provides the poorest
countries with grants and loans at subsidized rates, its
resources must be periodically replenished. Donor nations have
replenished IDA 14 times since its founding.
On March 5, 2007, donor nations began to discuss a possible
fifteenth replenishment of funds for IDA. This is the first
replenishment since the G8 summit at the Gleneagles Resort in
Scotland in 2005 where world leaders proposed the creation of
the Multilateral Debt Relief Initiative (MDRI). The MDRI
cancels the remaining debt of the world's poorest countries and
pledges to double the amount of aid to Sub-Saharan Africa
between 2004 and 2010, primarily in the form of grant-based
assistance. In the negotiations, the U.S. emphasized the
following reform areas: an expanded results measurement system
to increase project effectiveness, improvements to World Bank
engagement in fragile and post-conflict states, measures to
enhance debt sustainability in debt relief recipients, and
greater institutional transparency.
Enhanced efforts to improve results. IDA has established
a results measurement system to monitor progress against key
development indicators (such as primary school completion rates
and HIV prevalence rates). The committee supports the World
Bank's commitment to continue to improve the quality of data
and the way it is measured, strengthening the link between
expenditures and poverty reduction.
Fragile and post-conflict states. The committee notes
that the World Bank has increased the scale of its assistance
to fragile and post-conflict states such as Liberia. This is a
positive development; the committee intends for this
replenishment to increase the World Bank's capacity to help
cash-strapped post-conflict states. Restoring essential
services, initiating infrastructure reconstruction, and
bringing about a ``peace dividend'' are critical areas that
require sustained World Bank support.
Debt sustainability and grants. The World Bank will be
able to provide grants to countries at risk of experiencing
debt distress. The committee believes this represents an
important step towards ending lend-and-forgive policies and
will ensure that the poorest countries will be able to
sustainably service their debt.
Transparency. Increased transparency is a high priority
for the committee. It is important that the World Bank continue
to implement transparency reforms in the latest replenishment,
including disclosing Board minutes, strengthening public
consultation procedures, and continuing independent audits of
internal management controls. The committee continues to
monitor progress at the World Bank on anti-corruption efforts
in its projects and programs and asserts that ensuring that
development funds are not stolen or misused will result in
better project and program outcomes. The committee also
continues to monitor progress at the World Bank on anti-
corruption and transparency promotion with client countries.
S. 3168 lays out several Congressional priorities. First,
the bill requires that the World Bank consider greenhouse gas
emissions when undertaking environmental assessments of
potential funded projects. Second, the bill authorizes the
Secretary of the Treasury to engage in negotiations to
establish a pilot anti-corruption trust fund. This is meant to
assist poor countries in prosecuting fraud and corruption, as
well as to determine whether such a fund would be relevant to
other multilateral institutions. Third, it requires the
Secretary to submit a report to Congress assessing the level,
adequacy and effectiveness of the system used to address
grievances with multilateral development banks.
Requirement to Consider Greenhouse Gas Emissions in Environmental
Impact Assessments
Current law requires U.S. Executive Directors at the World
Bank and all the regional development banks to abstain or vote
against any proposed action with significant environmental
effects if it has not received an appropriate environmental
assessment that has been available to the Executive Director
and the public for 120 days prior to a vote. Section 5 of S.
3168 adds to that assessment an analysis of the greenhouse gas
emissions associated with proposed actions, and with
alternatives to the proposed actions, to be made available in
both English and the official languages of the countries
affected.
The committee notes that the President of the World Bank
has announced the goal of making greenhouse gas emissions a
fundamental consideration in the design and selection of World
Bank projects. President Bush has proposed a U.S. contribution
of $2 billion to a Clean Technology Fund, to be housed at the
World Bank, to provide assistance to developing nations for the
purpose, among others, ``to reduce emissions growth in
developing countries . . .'' The committee believes that U.S.
development assistance, including lending through multilateral
development banks, should promote the overall goal of lower
global greenhouse gas emissions.
Section 6 of S. 3168 requires a report by the Secretary of
the Treasury on the greenhouse gas emissions of each
environmentally significant project funded at each multilateral
development bank, and the total emissions of all such projects.
The report shall also include an assessment of alternative
projects that could accomplish the same social and economic
goals, as well as a description of the plans of the Secretary
of the Treasury to encourage reductions of greenhouse gas
emissions of multilateral development bank projects, and an
evaluation of the methodology used for assessing the greenhouse
gas emissions of those projects.
Anti-corruption Trust Pilot Program
The bill authorizes the Secretary of the Treasury to engage
in negotiations to establish a pilot anti-corruption trust
fund. This is meant to assist poor countries in prosecuting
fraud and corruption, as well as to determine whether such a
fund would be relevant to other multilateral institutions. The
fund is consistent with the committee's long-standing interest
in fighting corruption, generally and supporting tools for
developing countries to actively fight corruption,
specifically.
Report on Process to Address Grievances with the Multilateral
Development Banks
The bill requires the Secretary to submit a report to
Congress assessing the level, adequacy and effectiveness of the
systems used to address grievances with the multilateral
development banks. The report should provide a comprehensive
review of the grievance process outcomes, the participation of
requesters in the process and the quality of action plans to
implement corrective measures.
IV. COST ESTIMATE
In accordance with Rule XXVI, paragraph 11(a) of the
Standing Rules of the Senate, the committee provides this
estimate of the costs of this legislation prepared by the
Congressional Budget Office.
United States Congress,
Congressional Budget Office,
Washington, DC, July 31, 2008.
Hon. Joseph R. Biden, Jr.,
Chairman, Committee on Foreign Relations,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 3168, the
International Development Association Replenishment Act of
2008.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Jennifer
Reynolds.
Sincerely,
Peter R. Orszag.
------
Congressional Budget Office Cost Estimate
July 31, 2008
S. 3168
International Development Association
Replenishment Act of 2008
AS ORDERED REPORTED BY THE SENATE COMMITTEE ON FOREIGN RELATIONS ON
JUNE 24, 2008.
Summary
S. 3168 would authorize the appropriation of $3.7 billion
to replenish the resources of the International Development
Association (IDA) and to establish and evaluate an
anticorruption program within the World Bank.
CBO estimates that implementing this bill would cost $1
billion in 2009 and $3.7 billion over the 2009-2013 period,
assuming appropriation of the authorized amounts. Enacting the
bill would not affect direct spending or revenues.
S. 3168 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would not affect the budgets of state, local, or tribal
governments.
Estimated Cost to the Federal Government
The estimated budgetary impact of S. 3168 is shown in the
following table. The costs of this legislation fall within
budget function 150 (international affairs).
Basis of Estimate
The bill would authorize the appropriation of $3.7 billion
to replenish the resources of the IDA, a member of the World
Bank Group, which lends money to some of the world's poorest
countries.
The President has requested appropriations of $3.7 billion
to implement an agreement with the International Development
Association. International agreements to replenish the
resources of multilateral development banks typically cover a
number of years. According to Administration documents, the
replenishment agreements for the International Development
Association cover the 2009-2011 period. CBO assumes, for this
estimate, that the replenishment amounts would be provided in
equal installments over that period.
In addition, section 4 of the bill would authorize the
appropriation of $2 million to establish an Anticorruption
Trust Pilot Program at the World Bank to assist poor countries
in prosecuting fraud related to financing from the World Bank.
For the purposes of this estimate, CBO assumes that those funds
would be provided in 2010. In total, CBO estimates that
implementing this bill would cost $1 billion in 2009 and $3.7
billion over the 2009-2013 period, assuming appropriation of
the authorized amounts.
Changes in Spending Subject to Appropriation
By Fiscal Year, in Millions of Dollars
----------------------------------------------------------------------------------------------------------------
2009 2010 2011 2012 2013 2009-2013
----------------------------------------------------------------------------------------------------------------
International Development Association
Estimated Authorization Level.................. 1,235 1,235 1,235 0 0 3,705
Estimated Outlays.............................. 1,041 1,235 1,235 194 0 3,705
----------------------------------------------------------------------------------------------------------------
World Bank Anticorruption Trust
Estimated Authorization Level.................. 0 2 0 0 0 2
Estimated Outlays.............................. 0 0 1 1 0 2
================================================================================================================
Total Changes
Estimated Authorization Level................ 1,235 1,237 1,235 0 0 3,707
Estimated Outlays............................ 1,041 1,235 1,236 195 0 3,707
----------------------------------------------------------------------------------------------------------------
Intergovernmental and Private-Sector Impact
S. 3168 contains no intergovernmental or private-sector
mandates as defined in UMRA andwould not affect the budgets of
state, local, or tribal governments.
Estimate Prepared by:
Federal Costs: Jennifer Reynolds
Impact on State, Local, and Tribal Governments: Neil Hood
Impact on the Private Sector: Jacob Kuipers
Estimate Approved by:
Theresa Gullo, Deputy Assistant Director for Budget
Analysis
V. EVALUATION OF REGULATORY IMPACT
Pursuant to Rule XXVI, paragraph 11(b) of the Standing
Rules of the Senate, the committee has determined that there is
no regulatory impact as a result of this legislation.
VI. CHANGES IN EXISTING LAW
In compliance with Rule XXVI, paragraph 12 of the Standing
Rules of the Senate, changes in existing law made by the bill,
as reported, are shown as follows (existing law proposed to be
omitted is enclosed in black brackets, new matter is printed in
italic, existing law in which no change is proposed is shown in
roman).
The International Development Association Act
* * * * * * *
SEC. 24. FIFTEENTH REPLENISHMENT.
(a) The United States Governor of the International
Development Association is authorized to contribute on behalf
of the United States $3,705,000,000 to the fifteenth
replenishment of the resources of the Association, subject to
obtaining the necessary appropriations.
(b) In order to pay for the United States contribution
provided for in subsection (a), there are authorized to be
appropriated $3,705,000,000 for payments by the Secretary of
the Treasury.
* * * * * * *
International Financial Institutions Act
* * * * * * *
TITLE XIII--THE ENVIRONMENT
SEC. 1307. ASSESSMENT OF ENVIRONMENTAL IMPACT OF PROPOSED MULTILATERAL
DEVELOPMENT BANK ACTIONS.
(a) Assessment Required Before Favorable Vote on
Proposal.--The Secretary of the Treasury shall instruct the
United States Executive Director of each multilateral
development bank not to vote in favor of any proposal
(including but not limited to any loan, credit, grant,
guarantee) which would result or be likely to result in
significant impact on the environment, unless the Secretary,
after consultation with the Secretary of State and the
Administrators of the United States Agency for International
Development and the Environmental Protection Agency, determines
that for at least 120 days before the date of the vote--
[(1) an assessment analyzing the environmental
impacts of the proposed action, including associated
and cumulative impacts, and of alternatives to the
proposed action, has been completed by the borrower or
the bank and has been made available to the board of
directors of the bank; and
[(2) such assessment or a comprehensive summary of
the assessment (with proprietary information redacted)
has been made available to affected groups, and local
nongovernmental organizations and notice of its
availability in the country and at the bank has been
posted on the bank's website.]
(1) an assessment analyzing the environmental
impacts, including associated and cumulative impacts
and net greenhouse gas emissions, of the proposed
action and of alternatives to the proposed action, has
been made available to the board of directors of the
bank; and
(2)(A) such assessment or a comprehensive summary of
the assessment (with propriety information redacted)
has been made available to affected groups and local
nongovernmental organizations in English and in the
official languages of the countries of the affected
groups; and
(B) notice of the availability of the assessment or
comprehensive summary at the bank and in the countries
of the affected groups has been posted on the Internet
website of the bank.