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                                                       Calendar No. 969
110th Congress                                                   Report
                                 SENATE
 2d Session                                                     110-464

======================================================================



 
    INTERNATIONAL DEVELOPMENT ASSOCIATION REPLENISHMENT ACT OF 2008

                                _______
                                

               September 16, 2008.--Ordered to be printed

          Mr. Biden, from the Committee on Foreign Relations,
                        submitted the following

                                 REPORT

                         [To accompany S. 3168]

    The Committee on Foreign Relations, having had under 
consideration the bill (S. 3168), to authorize United States 
participation in the replenishment of resources of the 
International Development Association, 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....................................................4
  V. Evaluation of Regulatory Impact..................................6
 VI. Changes in Existing Law..........................................6

                               I. PURPOSE

    The purpose of S. 3168 is to authorize United States 
participation in the fifteenth replenishment of resources of 
the International Development Association (IDA) of the 
International Bank for Reconstruction and Development.

                          II. COMMITTEE ACTION

    S. 3168 was introduced by Senators Biden and Lugar on June 
19, 2008. On June 24, 2008, the committee ordered S. 3168 
reported favorably by voice vote.

                            III. DISCUSSION

    S. 3168, the ``International Development Association 
Replenishment Act of 2008'' authorizes U.S. participation in 
the fifteenth replenishment of the International Development 
Association. The U.S. three-year commitment, 2009-2011, amounts 
to $3.7 billion, representing 14.7% of the total $41.6 billion 
replenishment. Although this represents an increase from the 
previous replenishment, for the first time the United Kingdom 
(UK) has replaced the United States as the top donor to IDA. 
The UK's contribution for this replenishment is $4.3 billion or 
16.7% of the total. In the previous IDA replenishment, the 
Congress appropriated $2.85 billion out of a total 
replenishment of $33 billion.
    IDA was founded in 1960, 16 years after the creation of the 
World Bank, to address concern that the poorest countries could 
not afford to borrow at the near-market rate terms offered by 
the International Bank for Reconstruction and Development 
(IBRD).
    It was established as a revolving fund, providing 
concessional loans to the poorest countries subsidized by donor 
contributions and transfers from the IBRD. IDA is the largest 
provider of multilateral official development assistance to low 
income countries; between 1994 and 2005 it disbursed 
approximately $80 billion. Because IDA provides the poorest 
countries with grants and loans at subsidized rates, its 
resources must be periodically replenished. Donor nations have 
replenished IDA 14 times since its founding.
    On March 5, 2007, donor nations began to discuss a possible 
fifteenth replenishment of funds for IDA. This is the first 
replenishment since the G8 summit at the Gleneagles Resort in 
Scotland in 2005 where world leaders proposed the creation of 
the Multilateral Debt Relief Initiative (MDRI). The MDRI 
cancels the remaining debt of the world's poorest countries and 
pledges to double the amount of aid to Sub-Saharan Africa 
between 2004 and 2010, primarily in the form of grant-based 
assistance. In the negotiations, the U.S. emphasized the 
following reform areas: an expanded results measurement system 
to increase project effectiveness, improvements to World Bank 
engagement in fragile and post-conflict states, measures to 
enhance debt sustainability in debt relief recipients, and 
greater institutional transparency.


    Enhanced efforts to improve results.    IDA has established 
a results measurement system to monitor progress against key 
development indicators (such as primary school completion rates 
and HIV prevalence rates). The committee supports the World 
Bank's commitment to continue to improve the quality of data 
and the way it is measured, strengthening the link between 
expenditures and poverty reduction.

    Fragile and post-conflict states.    The committee notes 
that the World Bank has increased the scale of its assistance 
to fragile and post-conflict states such as Liberia. This is a 
positive development; the committee intends for this 
replenishment to increase the World Bank's capacity to help 
cash-strapped post-conflict states. Restoring essential 
services, initiating infrastructure reconstruction, and 
bringing about a ``peace dividend'' are critical areas that 
require sustained World Bank support.

    Debt sustainability and grants.   The World Bank will be 
able to provide grants to countries at risk of experiencing 
debt distress. The committee believes this represents an 
important step towards ending lend-and-forgive policies and 
will ensure that the poorest countries will be able to 
sustainably service their debt.

    Transparency.   Increased transparency is a high priority 
for the committee. It is important that the World Bank continue 
to implement transparency reforms in the latest replenishment, 
including disclosing Board minutes, strengthening public 
consultation procedures, and continuing independent audits of 
internal management controls. The committee continues to 
monitor progress at the World Bank on anti-corruption efforts 
in its projects and programs and asserts that ensuring that 
development funds are not stolen or misused will result in 
better project and program outcomes. The committee also 
continues to monitor progress at the World Bank on anti-
corruption and transparency promotion with client countries.


    S. 3168 lays out several Congressional priorities. First, 
the bill requires that the World Bank consider greenhouse gas 
emissions when undertaking environmental assessments of 
potential funded projects. Second, the bill authorizes the 
Secretary of the Treasury to engage in negotiations to 
establish a pilot anti-corruption trust fund. This is meant to 
assist poor countries in prosecuting fraud and corruption, as 
well as to determine whether such a fund would be relevant to 
other multilateral institutions. Third, it requires the 
Secretary to submit a report to Congress assessing the level, 
adequacy and effectiveness of the system used to address 
grievances with multilateral development banks.

Requirement to Consider Greenhouse Gas Emissions in Environmental 
        Impact Assessments

    Current law requires U.S. Executive Directors at the World 
Bank and all the regional development banks to abstain or vote 
against any proposed action with significant environmental 
effects if it has not received an appropriate environmental 
assessment that has been available to the Executive Director 
and the public for 120 days prior to a vote. Section 5 of S. 
3168 adds to that assessment an analysis of the greenhouse gas 
emissions associated with proposed actions, and with 
alternatives to the proposed actions, to be made available in 
both English and the official languages of the countries 
affected.
    The committee notes that the President of the World Bank 
has announced the goal of making greenhouse gas emissions a 
fundamental consideration in the design and selection of World 
Bank projects. President Bush has proposed a U.S. contribution 
of $2 billion to a Clean Technology Fund, to be housed at the 
World Bank, to provide assistance to developing nations for the 
purpose, among others, ``to reduce emissions growth in 
developing countries . . .'' The committee believes that U.S. 
development assistance, including lending through multilateral 
development banks, should promote the overall goal of lower 
global greenhouse gas emissions.
    Section 6 of S. 3168 requires a report by the Secretary of 
the Treasury on the greenhouse gas emissions of each 
environmentally significant project funded at each multilateral 
development bank, and the total emissions of all such projects. 
The report shall also include an assessment of alternative 
projects that could accomplish the same social and economic 
goals, as well as a description of the plans of the Secretary 
of the Treasury to encourage reductions of greenhouse gas 
emissions of multilateral development bank projects, and an 
evaluation of the methodology used for assessing the greenhouse 
gas emissions of those projects.

Anti-corruption Trust Pilot Program

    The bill authorizes the Secretary of the Treasury to engage 
in negotiations to establish a pilot anti-corruption trust 
fund. This is meant to assist poor countries in prosecuting 
fraud and corruption, as well as to determine whether such a 
fund would be relevant to other multilateral institutions. The 
fund is consistent with the committee's long-standing interest 
in fighting corruption, generally and supporting tools for 
developing countries to actively fight corruption, 
specifically.

Report on Process to Address Grievances with the Multilateral 
        Development Banks

    The bill requires the Secretary to submit a report to 
Congress assessing the level, adequacy and effectiveness of the 
systems used to address grievances with the multilateral 
development banks. The report should provide a comprehensive 
review of the grievance process outcomes, the participation of 
requesters in the process and the quality of action plans to 
implement corrective measures.

                           IV. 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, July 31, 2008.

Hon. Joseph R. Biden, Jr.,
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. 3168, the 
International Development Association Replenishment Act of 
2008.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Jennifer 
Reynolds.
          Sincerely,
                                           Peter R. Orszag.

                                ------                                


               Congressional Budget Office Cost Estimate

                                                      July 31, 2008

                                S. 3168


                 International Development Association 
                       Replenishment Act of 2008


  AS ORDERED REPORTED BY THE SENATE COMMITTEE ON FOREIGN RELATIONS ON 
                             JUNE 24, 2008.

Summary

    S. 3168 would authorize the appropriation of $3.7 billion 
to replenish the resources of the International Development 
Association (IDA) and to establish and evaluate an 
anticorruption program within the World Bank.
    CBO estimates that implementing this bill would cost $1 
billion in 2009 and $3.7 billion over the 2009-2013 period, 
assuming appropriation of the authorized amounts. Enacting the 
bill would not affect direct spending or revenues.
    S. 3168 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. 3168 is shown in the 
following table. The costs of this legislation fall within 
budget function 150 (international affairs).

Basis of Estimate

    The bill would authorize the appropriation of $3.7 billion 
to replenish the resources of the IDA, a member of the World 
Bank Group, which lends money to some of the world's poorest 
countries.
    The President has requested appropriations of $3.7 billion 
to implement an agreement with the International Development 
Association. International agreements to replenish the 
resources of multilateral development banks typically cover a 
number of years. According to Administration documents, the 
replenishment agreements for the International Development 
Association cover the 2009-2011 period. CBO assumes, for this 
estimate, that the replenishment amounts would be provided in 
equal installments over that period.
    In addition, section 4 of the bill would authorize the 
appropriation of $2 million to establish an Anticorruption 
Trust Pilot Program at the World Bank to assist poor countries 
in prosecuting fraud related to financing from the World Bank. 
For the purposes of this estimate, CBO assumes that those funds 
would be provided in 2010. In total, CBO estimates that 
implementing this bill would cost $1 billion in 2009 and $3.7 
billion over the 2009-2013 period, assuming appropriation of 
the authorized amounts.

                                  Changes in Spending Subject to Appropriation
                                     By Fiscal Year, in Millions of Dollars
----------------------------------------------------------------------------------------------------------------
                                                       2009      2010      2011      2012      2013    2009-2013
----------------------------------------------------------------------------------------------------------------
International Development Association
    Estimated Authorization Level..................    1,235     1,235     1,235         0         0      3,705
    Estimated Outlays..............................    1,041     1,235     1,235       194         0      3,705
----------------------------------------------------------------------------------------------------------------
World Bank Anticorruption Trust
    Estimated Authorization Level..................        0         2         0         0         0          2
    Estimated Outlays..............................        0         0         1         1         0          2
================================================================================================================
  Total Changes
      Estimated Authorization Level................    1,235     1,237     1,235         0         0      3,707
      Estimated Outlays............................    1,041     1,235     1,236       195         0      3,707
----------------------------------------------------------------------------------------------------------------

Intergovernmental and Private-Sector Impact

    S. 3168 contains no intergovernmental or private-sector 
mandates as defined in UMRA andwould not affect the budgets of 
state, local, or tribal governments.

Estimate Prepared by:

    Federal Costs: Jennifer Reynolds
    Impact on State, Local, and Tribal Governments: Neil Hood
    Impact on the Private Sector: Jacob Kuipers

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).

The International Development Association Act

           *       *       *       *       *       *       *



SEC. 24. FIFTEENTH REPLENISHMENT.

    (a) The United States Governor of the International 
Development Association is authorized to contribute on behalf 
of the United States $3,705,000,000 to the fifteenth 
replenishment of the resources of the Association, subject to 
obtaining the necessary appropriations.
    (b) In order to pay for the United States contribution 
provided for in subsection (a), there are authorized to be 
appropriated $3,705,000,000 for payments by the Secretary of 
the Treasury.

           *       *       *       *       *       *       *


International Financial Institutions Act

           *       *       *       *       *       *       *



                      TITLE XIII--THE ENVIRONMENT


SEC. 1307. ASSESSMENT OF ENVIRONMENTAL IMPACT OF PROPOSED MULTILATERAL 
                    DEVELOPMENT BANK ACTIONS.

    (a) Assessment Required Before Favorable Vote on 
Proposal.--The Secretary of the Treasury shall instruct the 
United States Executive Director of each multilateral 
development bank not to vote in favor of any proposal 
(including but not limited to any loan, credit, grant, 
guarantee) which would result or be likely to result in 
significant impact on the environment, unless the Secretary, 
after consultation with the Secretary of State and the 
Administrators of the United States Agency for International 
Development and the Environmental Protection Agency, determines 
that for at least 120 days before the date of the vote--
          [(1) an assessment analyzing the environmental 
        impacts of the proposed action, including associated 
        and cumulative impacts, and of alternatives to the 
        proposed action, has been completed by the borrower or 
        the bank and has been made available to the board of 
        directors of the bank; and
          [(2) such assessment or a comprehensive summary of 
        the assessment (with proprietary information redacted) 
        has been made available to affected groups, and local 
        nongovernmental organizations and notice of its 
        availability in the country and at the bank has been 
        posted on the bank's website.]
          (1) an assessment analyzing the environmental 
        impacts, including associated and cumulative impacts 
        and net greenhouse gas emissions, of the proposed 
        action and of alternatives to the proposed action, has 
        been made available to the board of directors of the 
        bank; and
          (2)(A) such assessment or a comprehensive summary of 
        the assessment (with propriety information redacted) 
        has been made available to affected groups and local 
        nongovernmental organizations in English and in the 
        official languages of the countries of the affected 
        groups; and
          (B) notice of the availability of the assessment or 
        comprehensive summary at the bank and in the countries 
        of the affected groups has been posted on the Internet 
        website of the bank.