[Senate Report 111-51]
[From the U.S. Government Publishing Office]
Calendar No. 113
111th Congress Report
SENATE
1st Session 111-51
======================================================================
AFRICAN DEVELOPMENT FUND
REPLENISHMENT ACT OF 2009
_______
July 16, 2009.--Ordered to be printed
Mr. Kerry, from the Committee on Foreign Relations,
submitted the following
REPORT
[To accompany S. 955]
The Committee on Foreign Relations, having had under
consideration the bill (S. 955), to authorize United States
participation in, and appropriations for the United States
contribution to, the African Development Fund and the
Multilateral Debt Relief Initiative, to require budgetary
disclosures by multilateral development banks, to encourage
multilateral development banks to endorse the principles of the
Extractive Industries Transparency Initiative, and for other
purposes, reports favorably thereon, and recommends that the
bill do pass.
CONTENTS
Page
I. Purpose..........................................................1
II. Committee Action.................................................1
III. Discussion.......................................................1
IV. Cost Estimate....................................................3
V. Evaluation of Regulatory Impact..................................6
VI. Changes in Existing Law..........................................6
I. PURPOSE
The purpose of S. 955 is to authorize United States
participation in, and appropriations for the United States
contribution to the eleventh replenishment of the resources of
the African Development Fund.
II. COMMITTEE ACTION
S. 955 was introduced by Senators Kerry and Lugar on May 1,
2009. It is cosponsored by Senator Kaufman. On May 5, 2009, the
committee ordered S. 955 reported favorably by voice vote.
III. DISCUSSION
S. 955, the ``African Development Fund Replenishment Act of
2009'' authorizes U.S. participation in the eleventh
replenishment of the resources of the African Development Fund.
The authorized 3-year appropriation, 2008-2010, of $486.2
million represents 8.9 percent of the total $8.9 billion
replenishment.
The African Development Fund (AfDF or ``Fund'') is a
concessional lending and grant making facility for low-income
African member countries of the African Development Bank. The
African Development Bank includes shareholders from 53 African
countries and 24 non-African countries. The AfDF was created in
1972 and began operations in 1974, there are currently 38 AfDF
borrower countries.
The AfDF is primarily financed by the non-African countries
with the U.S. ranked fourth in funding behind the UK, Germany
and France. Donors negotiate a replenishment agreement every 3
years. In December 2007, negotiations concluded for the
eleventh replenishment of AfDF resources (AfDF-VI) that will
provide financing of $8.9 billion during 2008 to 2011. It
provides grant financing and loans on highly concessional terms
to Africa's poorest countries. The AfDF financing supports
investments in infrastructure, health, education, agriculture,
water supply and sanitation. In addition, it provides technical
assistance to facilitate basic economic policy and
institutional reforms in support of sustainable economic growth
and development.
In the previous AfDF replenishment, the Congress
appropriated $407 million out of a total replenishment of $5.4
billion. In the latest negotiations, the U.S. emphasized the
following priorities: Managing for results, fragile states,
regional operations, and private sector-led growth.
Managing for Results. The U.S. pushed for a results-based
framework, with concrete indicators and objectives, to guide
Fund operations through 2010. The framework encourages the Fund
to focus on measurable results rather than merely funding
priorities. The committee agrees that the Fund should base its
funding on tangible results and supports this emphasis. The
committee continues to monitor progress at the African
Development Bank on anti-corruption efforts in its projects and
programs and believes that ensuring that development funds are
not stolen or misused will result in better project and program
outcomes.
Fragile States. The Fund has established a special facility
to provide targeted assistance to countries in transition from
conflict and economic failure to stability and growth. Such
assistance will support the elimination of arrears, provide
resources to secure a peaceful and stable environment, and
supplement capacity-building efforts. Countries that will
benefit include post-conflict states such as Liberia. This
committee believes this is an important sector where the Fund
can exercise a comparative advantage. As an eminent persons
group on the African Development Bank (chaired by former
Mozambican President Juaquim Chissano and former Canadian Prime
Minister Paul Martin) advised in its final report in fall 2007,
the ``AfDB has excess capacity and the AfDF has excess
demand.'' It is critical that fragile states who compose the
majority of AfDF borrowing countries have access to sufficient
capital in order to facilitate their reconstruction and
development. The committee recognizes the increased challenges
for fragile states, especially in achieving sufficient capacity
to govern and maintain accountability within government
institutions. Fund resources in such situations must be managed
with extraordinary oversight and the tools to build similar
capacity locally should be a part of any programs implemented.
Regional Operations. The Fund will provide further
resources to projects that enhance regional integration and
cross-border infrastructure. In addition, the Fund will develop
a results measurement and development impact framework
specifically for regional projects. The committee believes that
development in Africa cannot be achieved on a country-by-
country basis. It is vital that regions develop integrated
strategies that will leverage comparative economic regional
advantages.
Private Sector-led Growth. The Fund will increase support
in this area by promoting macroeconomic, regulatory, and
financial sector reform, as well as by helping countries
develop stronger anti-corruption frameworks and improved
transparency. This includes helping countries implement the
Extractive Industries Transparency Initiative. Finally, the
Fund will also emphasize support to the agriculture sector, to
alleviate the impact of the global food crisis. This represents
an area of priority for the committee. The committee also
encourages the Fund to help developing countries link programs
and projects with private sector partners in order to reduce
poverty, promote growth, and foster job creation. At the same
time, it is important that recipient countries manage private
sector growth in a transparent and consistent manner,
conforming to global norms and standards, especially with
regard to extractive industries, international environmental
standards, and internationally recognized workers rights.
S. 955 also includes two additional congressional
priorities. One, the bill directs the Secretary of the Treasury
to ensure that each multilateral development bank discloses to
member countries the operating budget of the bank, including
expenses for staff, consultants, travel, and facilities. This
level of transparency is important for shareholders, including
the United States, to understand how the multilateral
development banks are utilizing their operational funds so that
they can advocate for efficient use of those funds.
Second, the bill requires the Secretary of the Treasury to
direct the United States Executive Director of each
multilateral development bank to use the voice and vote of the
United States to ensure that the bank endorses the principles
of the Extractive Industry Transparency Initiative (EITI) and
integrates such principles into any project funded by the bank
that is related to an extractive industry. The World Bank has
already endorsed EITI and now integrates the EITI principles in
its extractive industry projects. The other multilateral
development banks are at varying stages of endorsement and
implementation.
V. COST ESTIMATE
In accordance with Rule XXVI, paragraph 11(a) of the
Standing Rules of the Senate, the committee provides this
estimate of
the costs of this legislation prepared by the Congressional
Budget Office.
United States Congress,
Congressional Budget Office,
Washington, DC, June 11, 2009.
Hon. John F. Kerry.,
Chairman, Committee on Foreign Relations,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 955, the African
Development Fund Replenishment Act of 2009.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is John Chin.
Sincerely,
Douglas W. Elmendorf.
------
Congressional Budget Office Cost Estimate
June 11, 2009.
S. 955
African Development Fund Replenishment Act of 2009
AS ORDERED REPORTED BY THE SENATE COMMITTEE ON
FOREIGN RELATIONS ON MAY 5, 2009
SUMMARY
S. 955 would authorize the appropriation of $468 million
for the United States' share of the eleventh general
replenishment of the resources of the African Development Fund
(AfDF-11). That replenishment covers the three-year period
ending in December 2010.
The bill also would authorize the appropriation of up to
$26 million to meet potential shortfalls in the U.S. commitment
to compensate the African Development Fund (AfDF) for debts
cancelled under the Multilateral Debt Relief Initiative (MDRI)
over the 2006-2054 period. CBO expects that provision would
have no significant budgetary impact.
CBO estimates that implementing S. 955 would cost $318
million over the 2010-2014 period, assuming appropriation of
that amount. (The Congress has already appropriated $150
million for fund replenishment in 2009.) Enacting the bill
would not affect direct spending or revenues.
S. 955 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would not affect the budgets of state, local, or tribal
governments.
ESTIMATED COST TO THE FEDERAL GOVERNMENT
The estimated budgetary impact of S. 955 is shown in the
following table. The costs of this legislation fall within
budget function 150 (international affairs).
Changes in Spending Due to S. 955*
By Fiscal Year, in Millions of Dollars
----------------------------------------------------------------------------------------------------------------
2010 2011 2012 2013 2014 2010-2014
----------------------------------------------------------------------------------------------------------------
Estimated Authorization Level........................... 159 159 0 0 0 318
Estimated Outlays....................................... 95 159 64 0 0 318
----------------------------------------------------------------------------------------------------------------
* The Congress appropriated $150 million for a contribution to the African Development Fund (AfDF) for fiscal
year 2009, enacted in the Omnibus Appropriations Act, 2009 (Public Law 111-8) on March 11, 2009. CBO assumes
there would be no additional funding for the AfDF for this year.
BASIS OF ESTIMATE
For this estimate, CBO assumes that S. 955 will be enacted
before the end of fiscal year 2009, that the estimated amounts
necessary to fully fund the U.S. share of the current
replenishment will be appropriated each fiscal year, and that
outlays will follow the historical spending patterns for U.S.
contributions to the fund.
AfDF-11
S. 955 would authorize the appropriation of $468 million
for contributions to AfDF-11. The 11th replenishment was agreed
to in December 2007, committing the United States and other
donors to contribute a total of $8.9 billion to the fund.
Based on information from the Department of the Treasury,
CBO expects that the U.S. commitment to AfDF-11 would be funded
with appropriations over fiscal years 2009 through 2011. The
Omnibus Appropriations Act, 2009 (Public Law 111-8) provided
$150 million for the first installment. CBO further expects
that the remaining authorized amounts of $318 million would be
provided in two installments of $159 million in 2010 and 2011.
MDRI
S. 955 also would authorize the appropriation of up to $26
million to meet potential shortfalls in the U.S. commitment to
compensate the AfDF for debts cancelled under the MDRI, which
was agreed to in September 2006 and covers the 2006-2054
period.
The Treasury Department has indicated that it expects to
fully fund the United States' MDRI commitment of $26 million
for AfDF-11 by accelerating the encashment (payment) schedule
for U.S. replenishment payments to AfDF-11. Under the
department's plan, those payments would be completed in four
years--by 2012--rather than the 10 years that would otherwise
be allotted. Based on a formula negotiated with the fund, those
early payments would earn credits towards the U.S. MDRI
commitment because of the additional interest that the fund
would earn. Based on information provided by the Treasury
Department on this early encashment income, CBO expects that
additional appropriations to meet the U.S. MDRI commitment
would not be required for either AfDF-11 (2009-2011) or AfDF-12
(2012-2014). As a result, CBO estimates that authorizing such
appropriations would not significantly affect discretionary
spending over the 2010-2014 period.
INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT
S. 955 contains no intergovernmental or private-sector
mandates as defined in UMRA and would not affect the budgets of
state, local, or tribal governments.
Estimate prepared by:
Federal Costs: John Chin
Impact on State, Local, and Tribal Governments: Marin
Randall
Impact on the Private Sector: Burke Doherty
Estimate approved by:
Theresa Gullo, Deputy Assistant Director for Budget
Analysis.
V. EVALUATION OF REGULATORY IMPACT
Pursuant to Rule XXVI, paragraph 11(b) of the Standing
Rules of the Senate, the committee has determined that there is
no regulatory impact as a result of this legislation.
VI. CHANGES IN EXISTING LAW
In compliance with Rule XXVI, paragraph 12 of the Standing
Rules of the Senate, changes in existing law made by the bill,
as reported, are shown as follows (existing law proposed to be
omitted is enclosed in black brackets, new matter is printed in
italic, existing law in which no change is proposed is shown in
roman).
African Development Fund
Sec. 201. This title may be cited as the ``African
Development Fund Act''.
Sec. 202. The President is hereby authorized to accept
participation for the United States in the African Development
Fund (hereinafter referred to as the ``Fund'') provided for by
the agreement establishing the Fund (hereinafter referred to as
the ``agreement'') deposited in the archives of the United
Nations.
* * * * * * *
SEC. 219. ELEVENTH REPLENISHMENT.
(a) In General.--The United States Governor of the Fund is
authorized to contribute on behalf of the United States
$468,165,000 to the eleventh replenishment of the resources of
the Fund, subject to obtaining the necessary appropriations.
(b) Authorization for Appropriations.--In order to pay for
the United States contribution provided for in subsection (a),
there are authorized to be appropriated, without fiscal year
limitiation, $468,165,000 for payment by the Secretary of the
Treasury.
SEC. 220. MULTILATERAL DEBT RELIEF INITIATIVE.
(a) In General.--The Secretary of the Treasury is
authorized to contribute, on behalf of the United States, not
more than $26,000,000 to the African Development Fund for the
purpose of funding debt relief under the Multilateral Debt
Relief Initiative, subject to obtaining the necessary
appropriations and without prejudice to any funding
arrangements in existence on the date of the enactment of this
section.
(b) Authorization of Appropriations.--In order to pay for
the United States contribution provided for in subsection (a),
there are authorized to be appropriated, without fiscal year
limitation, not more than $26,000,000 for payment by the
Secretary of the Treasury.
(c) Multilateral Debt Relief Initiative Defined.--In this
section, the term ``Multilateral Debt Relief Initiative'' means
the proposal set out in the G8 Finance Ministers' Joint
Communique entitled ``Conclusions on Development'', London,
June 11, 2005, and reaffirmed by G8 Heads of State at the
Gleneagles Summit on July 8, 2005.