Peterson Institute for International Economics | Thu, Nov 5, 2020
by Edwin M. Truman
A special series outlining policy priorities and solutions heading into 2021 by the Peterson Institute for International Economics
Background: US foreign affairs programs underpin US soft (nonmilitary) power, which is in decline as these programs have been underfunded. In FY2020, the United States spent $57 billion on international programs, activities, and institutions. Spending on the major international financial institutions (IFIs) was $1.4 billion. They include the International Monetary Fund (IMF), the World Bank Group, and the other multilateral development banks (MDBs). These institutions are crucial magnifiers of US policies toward the problems and priorities of the global economy and financial system. Through them the United States leverages financing from other countries to address US priorities and mobilize international public opinion to support those policies. Unfortunately, new IMF financial commitments during the first eight months of the global coronavirus pandemic lag behind its commitments during the first eight months of the 2008-10 global financial crisis (see figure).