MFAN Finds Advances and Setbacks in Final Fiscal Year 2022 State, Foreign Operations, and Related Programs Legislation

March 22, 2022 (WASHINGTON) – This statement is delivered on behalf of the Modernizing Foreign Assistance Network (MFAN) by Co-Chairs Lester Munson, Larry Nowels, and Tessie San Martin.

 

MFAN is a reform coalition focused on the effectiveness, efficiency, and sustainability of U.S. foreign assistance and does not engage in advocacy efforts for either top line or individual development or humanitarian sector funding levels. However, we express our concern that the final bill lacks adequate resources to address these significant challenges and priorities.

The world continues to recover from the health and economic impacts of the COVID-19 pandemic and now faces grave new humanitarian challenges from Russia’s invasion of Ukraine that has already resulted in more than 3 million new refugees in Europe. Further, we must continue to devote attention to on-going humanitarian crises in Afghanistan, Yemen, and East Africa, as well as critical development priorities. We note that the significant decrease in funding of the State, Foreign Operations, and Related Programs section of the enacted legislation is below the President’s budget request and below the levels proposed in both the House and Senate versions of the bill.

Despite the substantially lower overall funding level of the bill, we are extremely pleased that the Appropriations Committee leadership recognized the important role of the USAID workforce in carrying out U.S. foreign aid policy and programs. It is through the agency’s Operations and Expenses (OE) account that staff and operations may be carried out effectively, and we applaud the funding of this account at the robust level of $1.636 billion.

Within the OE account, we also note the Committee’s endorsement of the Office of the Chief Diversity, Equity, Inclusion, and Accessibility Officer and accompanying funding of $9.5 million to support the work of the office. We support the Committee’s focus on USAID’s workforce with the required establishment of a Strategic Workforce Plan which should include workforce diversity initiatives.

As a strong advocate of locally led development, MFAN commends House and Senate Appropriators for their engagement with USAID to provide both new funding and staffing as well as increased flexibility as the agency prioritizes local actors and voices in development. We are pleased to see the Committee requiring reports and briefings on the efforts of agency personnel to ‘build lasting partnerships with local government officials and community leaders to implement programs.’ We are pleased to see the increase in funding for USAID’s Local Works program to $80 million.

MFAN has long opposed presidential initiatives and congressional directives that tie the hands of USAID missions and partners in setting local development priorities. We support greater flexibility to enable USAID to transfer funds to address changing local priorities and needs and commend the Committees for providing funding flexibility to the agency as it strives to address the many challenges facing Central American countries of El Salvador, Guatemala, and Honduras. MFAN is enthusiastic about this flexibility for the Centroamérica Local program and sees it as an important first step in granting increased flexibility for the agency across all of its programs.

Accountability of U.S. foreign assistance – through transparency, monitoring, evaluation, and learning – has been a long-standing reform pillar of MFAN. We applaud the Committees’ continued focus on improving the accountability of U.S. foreign assistance by requiring that agencies make public all reports produced for the Committee under this legislation and its requirements that implementing partners establish procedures to gain feedback from program beneficiaries of this assistance. These requirements strengthen both accountability and sustainability of U.S. investments.

Other important U.S. development agencies funded within this legislation face continued challenges in the final bill. MFAN remains concerned that Congress’ intent under the BUILD Act regarding the financing of important economic development projects through the Development Finance Corporation (DFC) continues to be restricted by how equity investments are scored by the White House (Office of Management and Budget – OMB) and the Congressional Budget Office. While we commend Congress for its continued efforts to address this significant roadblock to DFC investments, we note that had Congress and OMB agreed to score DFC equity investments similar to U.S. government credit programs rather than on a dollar-for-dollar grant basis, less direct funding for the DFC would have been necessary, freeing up additional resources in this bill to provide more robust funding for other critical development and humanitarian programs.

Next, as we expressed in our statements regarding the House and Senate versions of the FY22 SFOPS bill, we are also concerned about the Committees’ decision to rescind $515 million from the Millennium Challenge Corporation (MCC), as requested by the Biden Administration. While we understand that much of the proposed rescission was the result of MCC’s decision to cancel its compact with Sri Lanka, we again note that MCC maintains a unique model among US development agencies that is centered around development effectiveness. The decision to rescind this level of funding risks undermining the MCC model. We continue to encourage Congress to work with the Corporation to ensure its ability to fully fund its compacts with partner countries going forward without risking the MCC’s unique partnership relationship with these countries.

Finally, with new and protracted pressures on humanitarian responses, U.S. development investments to support partners in their transition from poverty, hunger, and countless other development challenges to the global economy will continue to require significant attention. MFAN regrets that Congress has not emphasized in the bill the need for USAID and Treasury to engage with partner countries on Domestic Resource Mobilization (DRM). We note that governments and their residents must lead in their development not just through their own priority setting but also through their own financial commitments. U.S. partnerships with these countries in their DRM efforts can most effectively be accomplished with a clear and comprehensive whole-of-government DRM strategy, and MFAN looks forward to engaging with Congress and the Administration in this important vision.

Once again, MFAN congratulates Chairman Leahy, Chair DeLauro, Ranking Members Shelby and Granger, as well as SFOPS Subcommittee Chairman Coons, Chairwoman Lee, and Ranking Members Graham and Rogers and their staff on their work to finalize this important piece of legislation. It is through this bipartisan congressional commitment that the U.S. may continue its engagement with our partners across the globe in humanitarian crises and their efforts to overcome development challenges.

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