US Foreign Aid and the MCA: Above and Beyond?

In a new CGD paper, Kaysie Brown, Bilal Siddiqi and Myra Sessions take a closer look at whether the MCA is cutting into existing US development aid funding. As CGD has pointed out before, the MCA was intended to be a supplemental aid program that would complement—and not replace—existing aid structures. But many commentators have expressed worries that the administration is failing to live up to President Bush’s promise, and that increases in MCA funding are diverting funding away from USAID. Presenting aid numbers with pre-MCA and post-MCA analysis for the first time, the data and the paper paint a mixed picture.The big takeaways in this paper are:1) While ODA has increased in recent years—thanks in large part to Iraq and Afghanistan—core development aid targeted specifically at poverty reduction and economic growth (the MCA’s mandate) has remained stagnant on a global level for the past several years.2) Interestingly, MCA eligible countries on average have received fewer reductions in appropriations than non MCA eligible countries, suggesting that the downturn in aid may be part of a more general trend.3) MCA eligible and compact countries have seen concentrated reductions in the Development Assistance (DA) account of US development aid, which could potentially be part of a broader strategy to move funds away from those sectoral areas where MCA compacts and proposals primarily concentrate.4) The difficulty in finding and collecting data on US foreign aid made this exercise very difficult. Greater transparency and accessibility of data on US foreign aid is necessary. The Director of Foreign Assistance should establish a centralized and comprehensive database, which would help spur more effective decision making and oversight by the U.S. government and key aid constituencies.One overriding question that this study raises is: what is the place of the MCA in the overall US development framework, especially in an era of declining core development assistance and ncreased attention on the overhaul of the US aid infrastructure? The budget process should be a strategic decisionmaking tool to assign priorities across the multitude of programs making up the entire foreign aid budget. The FY2008, so says Secretary Tobias, will be the first budget that shows the results of the Administration's foreign aid reform efforts -- but whether it brings the MCA into the strategy is still unclear.MCC has still not received its FY2007 appropriations. The Administration requested $3 billion which it clearly showed it could use. The House Appropriations Committee approved a $2 billion appropriation. The Senate Appropriations Committee mark-up settled at $1.877 billion. We are unlikely to see a final appropriation until after the elections.