Trump Administration Budget Request Undermines the Effectiveness of U.S. Foreign Assistance

February 11, 2020 (WASHINGTON) This statement is delivered on behalf of the Modernizing Foreign Assistance Network (MFAN)

Yesterday, the White House released the President’s budget request for Fiscal Year 2021. The budget includes a reduction of 22 percent to the foreign affairs budget, a drastic cut which is unlikely to be approved by Congress but which will nonetheless lead to significant disruptions and inefficiencies in the planning, obligation, and implementation of foreign aid programs.

MFAN has spoken out in recent months about the ways that extreme cuts to foreign aid are detrimental to international development outcomes. Significant evidence shows that development assistance is most effective when funded at relatively stable levels and for multiple years. In contrast, sharp and unexpected funding reductions —and even the threat of such cuts — can harm effectiveness and undermine development gains. A 22 percent cut to the foreign affairs budget may not be unexpected, but it is certainly sharp.

This year’s budget request again recommends combining the Economic Support Fund, which is primarily intended to advance strategic objectives, and the Development Assistance account, which is largely intended to support long-term investments to spur economic growth, reduce the risk of fragility and forced migration, advance global health and food security, and prevent future crises from emerging. These two types of aid are fundamentally different and should remain separate.

The budget would also strike provisions included in prior appropriations bills, which are intended to limit the administration’s flexibility in reallocating foreign assistance dollars and to require consultation with Congress before the transfer or reprogramming of funds occur.

At the same time, the request would increase equity funding for the Development Finance Corporation (DFC) by 200 percent and would increase the DFC’s program account by 733 percent. While MFAN continues to believe in the promise of the DFC to leverage private investment to promote economic development in low-income countries, the coalition opposes such dramatic increases in funding for the DFC if they come at the expense of official development assistance. Rather, MFAN supports increasing the DFC’s equity authority by scoring equity investments in a manner that recognizes that many investments will actually bring a profit, not a loss, to American taxpayers.

“It is no surprise at this point that the Trump administration again opted for blunt and meaningless cuts,” said Conor Savoy, MFAN’s Executive Director. “Lawmakers on both sides of the aisle understand the seriousness of stable and carefully planned funding for American investments abroad, so they will likely ignore the President’s requests and craft a serious budget. In the meantime, American development implementers are spending scarce time and energy planning out a budget scenario that will not happen.”

“It is disappointing that the administration took the approach it did with the DFC,” said Savoy. “Redirecting funding from other programs is not the effective or efficient way to fund equity investments. Congress and the administration should work together on a logical mechanism to resolve this issue.”

MFAN urges the Trump administration to approach foreign aid funding with greater analytical rigor, recognizing that thoughtful, evidence-based planning and funding is the most effective use of taxpayer dollars. The coalition looks forward to working with Congress as the Fiscal Year 2021 appropriations process begins in earnest.

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