World Bank Accountability Act - H.R.3326

Summary

H.R. 3326 would withhold a portion of future appropriations for the World Bank’s International Development Association (IDA) until the Secretary of the Treasury reports that the World Bank has undertaken reforms to fight corruption, strengthen management accountability, and undermine violent extremism.

Specifically, the bill would:

• Require the World Bank to implement staff evaluation standards that prioritize anti-poverty results and capable project management over the volume of lending produced;
• Withhold funds from the Bank until Treasury reports progress in overall management and management of the Bank’s trust funds;
• Require the importance of economic freedom to be emphasized in appropriate Bank policies, directives, and country strategies;
• Insist on greater efforts by the Bank to fight corruption in its projects by withholding appropriations until the Bank raises the quality and quantity of its forensic audits, which identify systemic corruption in projects;
• Require greater scrutiny of “development policy lending,” which involves direct lending to governments (not project funding), in order to prevent corruption; and
• Require the Bank to strengthen efforts to undermine violent extremism through its projects and would withhold a portion of appropriations if the Bank approved assistance to a state sponsor of terrorism.
• Call on the U.S. Executive Director at the Bank to oppose assistance to IDA countries that knowingly fail to enforce UN Security Council sanctions against North Korea.

Background

The World Bank’s International Development Association (IDA) is the Bank’s concessional lending window for the world’s poorest countries. IDA’s resource levels are authorized every three years and funded through annual appropriations. Seventy-seven countries are currently eligible for IDA assistance based on a per capital income of less than $1,215.

In conducting oversight of the World Bank, the House Committee on Financial Services found that the Bank has at times fallen short in its anti-poverty missions for reasons including: institutional incentives that prioritize generating high loan volume; lending to corrupt regimes; and insufficient attention paid to free enterprise in IDA countries.

President Barack Obama pledged $3.871 bill for the 18th IDA replenishment (encompassing FY 2018-2020). Under the Trump Administration’s FY 2018 Budget, the replenishment was cut by 15%[4]. This bill would enact the Trump Administration’s proposed reduction, in addition to withholding up to 30% of future IDA appropriations unless the Bank implements reforms to address shortcoming and strengthens its effort to undermine violent extremism.

Amendments

1. Rep. Norman (R-SC) – This amendment modifies a Treasury reporting requirement to ensure that the World Bank is promoting reduction of government barriers to entrepreneurship as an important component of poverty reduction.
2. Rep. Connolly (D-VA) – This amendment requires a report on steps taken by the World Bank to ensure G-5 visa holders (foreign bank domestic workers) employed by World Bank diplomats and staff are informed of the protections afforded to them pursuant to the William Wilberforce Trafficking Victims Protection Reauthorization Act.
3. Rep. Andy Barr (R-KY) – This amendment makes U.S. opposition to IDA assistance for a foreign government mandatory if the government knowingly fails to enforce UN Security Council sanctions against North Korea. The amendment includes Presidential waiver authority.

Cost

The Congressional Budget Office (CBO) estimates that implementing the bill would cost about $3.3 billion over the 2018-2022 period, assuming appropriation of the specified amounts. Enacting H.R. 3326 would not affect direct spending or revenues; therefore, pay-as-you-go procedures do not apply. CBO estimates that enacting H.R. 3326 would not increase net direct spending or on-budget deficits in any of the four consecutive 10-year periods beginning in 2028.

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Democratic Whip Steny Hoyer:

While this bill authorizes $3.29 billion for the U.S. contribution to the World Bank’s International Development Association (IDA) for FY 2018 – FY 2020, it withholds up to 30% of the funding unless certain requirements are met.  While most of the requirements are reasonable, withholding funds that benefit the poorest countries in the world is not the appropriate way of pushing the Bank to reform its operations. 
 
When H.R. 3326 was being considered in Committee, Ranking Member Waters urged support for the bill with the understanding that Chairman Hensarling and his staff would continue to work on components that Democrats opposed.  Despite that agreement, House Republicans decided to move the bill to the Floor without changes.  In another attempt to improve the bill, Rep. Moore (WI) offered an amendment that would have allowed the Secretary of the Treasury to voice U.S. concerns at the bank, instead of enforcing overreaching and vague policy reforms through cuts to funding that will hurt some of the poorest people in the world, but her amendment was not made in order.
 
On several occasions Democrats attempted to work with Republicans to improve this legislation that impacts the most vulnerable in the world, but Republicans decided to move forward on their own.  

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