Mnuchin defends US call to slash support for development banks

WASHINGTON, April 12, (AFP): US Treasury Secretary Steven Mnuchin on Wednesday defended budget proposals that would sharply cut or eliminate American support for multilateral aid agencies and programs.

The remarks in congressional testimony come a week before the World Bank and International Monetary Fund hold their Spring Meetings in Washington. The Treasury Department in October rejected a World Bank request for a capital increase, calling instead for greater efficiency.

The department’s budget request for the 2019 fiscal year, which begins in October, calls for cutting US contributions to a World Bank arm and other programs and organizations by nearly $400 million from 2017 levels.

The proposal, which has no bearing on budget ultimately approved by Congress, is nevertheless a strong signal of the current administration’s political priorities.

“Our budget envisions United States contribution levels that are more appropriate relative to those of our partner countries,” Mnuchin told a subcommittee of the House Committee on Appropriations. “We seek to balance priorities and direct government resources to programs that support the national interest and national security,” he added.

“Treasury also encourages international financial institutions to operate more efficiently and has been a driver of shareholder support for reforms.”

The budget proposal would reduce US support for the World Bank’s International Development Association, its fund for the world’s poorest, by eight percent to just over $1 billion.

It would also impose a 20 percent cut on the African Development Fund, while cutting in half US contributions to the Global Environment Facility, or GEF, and the Asian Development Fund.