$1.9 Trillion and No Money for the Multilateral Development Banks?

The Biden administration and the Congress rightly went big in the recently passed American Rescue Plan at a time of tremendous need. The package was appropriately focused on the domestic side, but it did not neglect the rest of the world. It provided $10.8 billion for health and humanitarian assistance, the United Nations, the US Agency for International Development, and the State Department. Yet not one penny went to the multilateral development banks (MDBs)—the World Bank and the regional development banks. These are the United States’ most powerful tools for fighting global poverty, particularly during times of crisis. We know that the pandemic has driven a surge in the number of global extreme poor—those earning $1.90 per day—whose numbers are projected by the World Bank to increase by 140-160 million by the end of this year. MDB financing and technical support is playing a central role in helping developing countries deal with the economic and social impact of the current crisis, while also directly supporting the supply and distribution of vaccines as well as related medical supplies. 

One might reasonably ask then why $1 billion or $2 billion could not have been included for fighting the poverty, food insecurity, and health crises driven by the pandemic. That would have amounted 0.05 to 0.1 percent of the total package. And it would have been multiplied many times over in additional poverty reduction dollars, because that it was the MDB model does. US aid dollars to MDBs are multiplied because they are combined with those of other country shareholders, because MDB capital is leveraged to expand lending capacity, and because MDB net income adds to that capital which also adds to lending capacity.