The US Treasury’s Development Bank Bunker

The Treasury Department’s International Affairs arm submitted its 2014 budget request to Congress with a $2.1 billion total for standard development bank appropriation, over half in arrears. The $65 billion IMF quota expansion agreement dating from 2010 which does not involve dedicated money was included and will also be the subject of separate legislation. The accompanying statement ties the measure to maintaining US leadership and veto position there as well as jobs and exports in growing emerging markets. It notes the organization’s “solid” balance sheet with liquid and gold reserves above the $140 billion credit outstanding mainly in Europe, and the lack of default throughout its 70-year history. Letter-writing campaigns by interest and lobby groups have conveyed a similar message and reiterate that almost all other G-20 members have stumped up under the pledging and governance formula which will marginally shift financial and oversight responsibility to developing economies. The biggest piece asked is $1.3 billion for the World Bank’s poor-country IDA window, which had a $15 billion portfolio in 2012 for 150 projects half in Sub-Sahara Africa. The Treasury Secretary asserts that the arm leverages congressional contributions a dozen times and aids security objectives by tackling extremism’s “root causes.” $185 million is demanded for the parent institution to meet previous capital increases with the observation that it supports “core values” like private sector competition, transparency, and universal education and health access. The regional development banks would get $100-200 million each if approved, with the largest chunk to go to the AfDB’s concessional facility which focuses on post-conflict rebuilding and regional infrastructure networks. They focus on agriculture and environment operations which would receive additional commitments through global food production and alternative energy programs outlined in the proposal. Multilateral debt relief is pegged for $175 million and bilateral technical assistance $25 million, including for harmonization of East Africa’s government bond markets.

For MENA a small grant capacity would be established under the auspices of the Deauville partnership for policy innovations such as Tunisia’s recent launch of a one-stop investment authority. Through the State Department the Obama administration offered the country a guarantee to enable sovereign bond issuance, and Jordan is next in line to tap such backing after Morocco managed an offering on its own. Egypt finalized a new sukuk framework to appeal to Gulf and Asian buyers but continues to rely on individual placement chiefly to Qatar, which just announced another $3 billion order after the previous $5 billion. Libya may also come forward as cross-border commercial and diplomatic ties slowly heal after their respective strongman ousters. Corporate external debt has been absent from the area despite the record Q1 $100 billion pace worldwide, one-quarter from debut and half from high-yield names. Asia has dominated activity, but GCC state-linked borrowers have risen above the parapet including from besieged Bahrain and Dubai.