Budget Bonanza: What You Need to Know on Foreign Aid, Food Aid, and the IMF

April 16, 2013

Statutory deadlines and sequester disarray aside, we at last have President Obama's FY2014 budget request. It's not the grand vision that most budget requests are—instead, it's being touted (or derided) as a budget of compromise, particularly on the domestic front. Unlike a normal budget process, we already have the House and Senate budget resolutions, so this is broadly more about a longer-term fiscal agreement than about influencing specific FY14 funding numbers.

The president's request was $48.2 billion for the International Affairs base budget (the Overseas Contingency Operations, more commonly known as OCO, request brings it up to $52 billion). This is nearly the same as the levels enacted in FY13 and a four percent cut from FY12. The House set base spending for IA at only $38.7 billion; the Senate at $45.6 billion. So we'll need quite a lot of compromise between the House and Senate before we see an appropriations bill signed into law—and all before the new fiscal year starts on October 1st.

My colleagues take a look at what will matter from the president's request moving forward:

Sarah Jane Staats gives us an overview and says the international affairs budget was carved by the smart scalpel she’s been looking for, rather than the sequestration ax. The emphasis on selectivity, evidence-based decisions, and multilateralism is putting the 2010 Presidential Policy Directive on Global Development in action. She also takes a look at what’s missing.

Kim Elliott tells us the food aid reform proposal is a step in the right direction, if not the wholesale reform she and others at CGD have supported. Forty-five percent of the emergency food aid budget will be available as cash, which will mean increased flexibility to best address hunger and malnutrition in particular circumstances. She brings us through the kind of decisions that will need to be made on how to deliver this flexible food assistance, as well as what the reform could mean for upcoming trade negotiations (hint: it’s good).

Scott Morris is relieved the IMF quota request makes it in. He writes that he's hopeful Congress will be convinced that the IMF does matter for US jobs and national security. And, if you’re an aspiring budget nerd like me, you’ll appreciate his explanation of the history of the CBO scoring issue.

A few other things of interest:

  • More support for trade and investment in developing countries. OPIC, which self-finances and has returned billions to the US Treasury over the past three decades, would get up to 33 percent more in administrative expenses—this would support $5.7 billion in new financing. USTDA would get $15 million more in funding. But apparently we haven’t gotten over the Commerce Department merger plan. Can we please leave the development-related agencies out of it?
  • Global Climate Change Initiative.* The request is for $837 million--disappointing for an administration that has said climate change action is a priority. As my colleagues at Climate Advisers tell me, the $909 million for GCCI touted as a six percent increase over the FY12 numbers appears to include all of the funding requested for the Global Environment Facility (GEF), rather than the usual half--remove that, and you get $837 million. Not surprisingly, there’s silence on how the US will help fund the Green Climate Fund but I do welcome the emphasis on the multilaterals.
  • Social Impact Bonds, or, in USG speak, “Pay for Success.” Let’s hope the Pay for Success model, which would receive increased funding under this request, can be scaled up in the future to include development projects. Like SIBS, funding for DIBs projects would initially be provided by private investors, who are then paid back (with a return) by donor governments like the US if evidence shows that the programs achieve pre-agreed to outcomes. Check out our efforts on DIBs here. Working Group report coming soon…inclusion in the budget request next year?

See more from our friends over at USGLC breaking all the numbers down.

We'll be watching the budget hearings closely and crossing our fingers for something resembling regular order on the FY14 appropriations cycle.

*This paragraph has been corrected from the original post, which cited incorrect funding numbers.


CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.