Congress to Vote on FY2009 Appropriations

Feb 26th, 2009 1:41 PM UTC
By Larry Nowels

Five months into the new fiscal year, Congress is set to vote on nine remaining appropriation bills for FY2009, including funds for global poverty reduction, health, and assistance to Africa and elsewhere in the developing world. Levels agreed upon by House and Senate negotiators offer some welcome news as well as a few areas of concern. ONE’s own Larry Nowels takes an expert look at the numbers behind the FY2009 appropriation bills and what they mean for ONE’s issues:

The best outcome overall is that in the face of the financial crisis and recent approval of a nearly $800 billion economic stimulus package, Congress did not cut the total amount allocated for foreign policy and development programs from levels set in mid-2008. Reducing the commitment to the world’s poor would have been a troubling outcome and a signal of challenges ahead in the next budget debate for FY2010 that begins next month.

In total, the appropriation includes about $18 billion for programs that most directly impact the lives of poor people around the world, an increase of 4%. The largest component — $6.85 billion – supports global HIV/AIDS, TB, and malaria, 7.5% higher than last year. Other global health programs also fare well. Child survival and maternal health receive $497 million (+10%) and family planning/reproductive health grows to $545 million (+18%). The appropriation further allocates $50 million for the U.N. Population Fund, an organization that had been determined ineligible for U.S. support for the past eight years due to its programs in China.

Spending for other bilateral development programs is set at $1.8 billion, a 10% increase, with special attention focused on global food security and agriculture. Amounts for clean water, basic education, biodiversity, and microcredit remain at levels provided in FY2008.

The biggest loser in the appropriations outcome is the Millennium Challenge Corporation (MCC), receiving $875 million or 43% less than last year. Although this figure is a welcome result compared with the Senate’s earlier recommendation of $254 million, it will seriously limit the MCC’s ability to enter into new compacts with African and other nations this year. The $875 million appropriation permits two new compacts, but at a much lower amount of $350 million each compared with those signed in recent years with Tanzania, Ghana, Mozambique, and others.

Another disappointment is the $1.115 billion provided to the World Bank’s International Development Association (IDA). IDA is one of the largest sources of development assistance in Africa and in 2009 launches a new three-year spending agreement with a commitment from the U.S. for $1.235 billion each year. The $120 million appropriation shortfall will add to the already sizable arrears accumulated by the United States in recent years and may jeopardize IDA’s ability to fully support the Multilateral Debt Relief Initiative.

With the FY2009 budget debate winding down, President Obama releases his blueprint for FY2010 spending on February 26. While the blueprint will include few details – those will come in another month – the size of the request for overall foreign policy appropriations will be an important marker to understand whether there will be sufficient space for global poverty reduction programs. With the President pledging to double foreign aid over the next several years and achieve the Millennium Development Goals, the expectations are high. Equally high, however, are the challenges facing the world economy.

-Larry Nowels

TAGS: Development Assistance, ONE, Policy News