Devex Invested: US Congress zooms in on development finance

While many of you know me as your trusted reporter on all things development finance, I also cover the U.S. Congress for Devex. Rarely do those beats converge in the way they have over the past week.

To wit:

• MCC. Legislation in Congress could expand the list of countries eligible for Millennium Challenge Corporation investment to the world’s 125 lowest-income nations, up from 81. The move would allow MCC to work in countries with more wealth, as long as they meet the governance and policy criteria. It may also help address the issue of nations bouncing between income classifications and provide new partners for an agency dealing with what one source called “a little bit of an identity crisis” as more countries graduate from low-income status.

• DFC. The U.S. National Defense Authorization Act for Fiscal Year 2023, which has passed the House and awaits consideration in the Senate, gives the U.S. International Development Finance Corporation’s Office of Inspector General law enforcement authority — i.e., subpoena power, which would allow it to more effectively gather information and investigate the agency.

Separately, dedicated Invested readers may recall my reporting on a push to score DFC’s equity investments differently for budget purposes. Language to that effect was stripped out of the CHIPS and Science Act that Congress passed last week. But even before that objections by some lawmakers had made changing the scoring unlikely and they discussed a $3 billion funding boost to help DFC make more equity investments instead — those efforts could live another day, a congressional staffer tells me.

• IDB Invest. The private sector arm of the Inter-American Development Bank is catching the eye of U.S. lawmakers. Andy Baukol, a Treasury official, reiterated during a Senate Foreign Relations Committee hearing that the U.S. government was ready to begin negotiations about an IDB Invest capital increase “in line with a broader reform agenda for the group.” I’ll be watching for what those reforms might be.

At the same hearing, Sen. Bob Menendez urged the Biden administration to “more robustly use the IDB,” commending bank President Mauricio Claver-Carone for having “marginalized the Chinese” by reducing Beijing’s influence over his institution. “I just hope we can get past the personalities and start thinking about what is in our interest,” added Menendez, the committee chair.

• IMF Special Drawing Rights. About $58 billion out of last year’s $650 billion SDR issuance has now been pledged by wealthy nations for rechanneling to lower-income countries, including through IMF funds, Baukol said last week. The U.S. itself has yet to move anything, though Baukol testified that the administration was requesting authorization to provide $21 billion to IMF trust funds.

That comes on the heels of a recent letter from Democrats pushing Treasury Secretary Janet Yellen to use U.S. influence at the International Monetary Fund to create another Special Drawing Rights allocation to help countries facing food price inflation and other problems. Such a decision is likely to face serious opposition from Republicans who worry that Russia, China, and Iran will see huge inflows.

Read: MCC eyes expansion of eligible countries to better tackle poverty

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ABCs of EBRD

That was the value of potential funding in the European Bank for Reconstruction and Development’s pipeline last year. My colleague Miguel Antonio Tamonan has an analysis of the geographic and sectoral priorities, as well as a breakdown of the biggest projects.

Read: Inside EBRD’s €10.8B pipeline in 2021 (Pro)

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A climate for spending

A new OECD analysis has found that climate finance was up only slightly in 2020 and, as expected, did not meet the $100 billion annual commitment that high-income nations promised to low- and middle-income countries, my colleague David Ainsworth reports.

In better news for climate finance watchers, The Rockefeller Foundation has announced plans to make climate change central to its programmatic, operational, and investment strategies — a notable pledge for an organization built with oil industry riches, my colleague Stephanie Beasley writes.

Read: OECD report reveals little progress on climate funding

Plus: Rockefeller Foundation to focus on climate, wrestles with oil legacy

Megadonors, megagoals

Indian venture philanthropy fund Dasra has announced plans to launch GivingPi, an invite-only network that aims to raise $1 billion for social causes annually by 2030. Members will be required to contribute at least $64,000 per year directly to NGOs, through their foundations, or through an intermediary such as a collaborative fund, all with the aim of accelerating progress on the Sustainable Development Goals.

Stephanie has the details on this exclusive group and its potential to ”open the door for the ultra-wealthy to give more as the gulf widens further with the country’s poorest.”

Read: Inside India’s invite-only club for megadonors (Pro)

What we’re reading

A food crisis in Europe “can be averted,” AfDB chief economist says. [Devex]

Mark Lowcock on how extreme poverty fell off U.K. aid’s radar. [Devex Pro]

China agrees to a landmark debt relief deal for Zambia. [Financial Times]

Ray Dalio: The growing threats of “deglobalization” and autocracy. [Devex]

Opinion: From attribution to contribution for “Team Europe” collaboration. [Devex Pro]

Shabtai Gold contributed to this edition of Invested.