The United States budget, which was recently announced after protracted negotiations, contained significant cuts in spending on foreign assistance. It seems inevitable that these cuts will result in a sharp fall in Official Development Assistance (ODA) given by the United States to developing nations during 2012.
Such cuts in the foreign assistance budget are in contrast to the President’s budget request, published earlier in the year, which contained provisions for a modest increase in bilateral assistance coupled with a significant scaling up of multilateral aid. Budget4Change analysed spending in four areas of the State and Foreign Appropriations Bill (Whereas the full 302b allocation tables had not been published at the time of writing the data were drawn from the text of the final bill) which, between them, account for most of the United States reported ODA. These areas are: Bilateral Assistance, Multilateral Assistance, USAID Operational Expenditure and Export & Investment Assistance. The President’s request suggested a combined 11% increase in the funding of these parts of the budget, compared to FY2011. However, the eventual budget agreement delivers cuts to these four areas of some 19% overall, or almost $4.8billion.
The table above shows the scale of the cuts for each of the four budget categories together with the amounts put forward in the President’s request.
As can be seen, the budget for USAID’s operational expenditure has been cut back by around one-third. One immediate effect of the cuts is to halt new hiring at USAID and a stop to the expansion of overseas facilities.
Table 1: Cuts in US foreign assistance planned in FY2012 by budget category Budget Category FY2011 budget President's request FY2012 budget Proposed budget cut in FY2012 Bilateral assistance 21,200 22,500 17,700 3,500 Multilateral assistance 2,529 3,900 1,800 729 USAID operational expenditure 1,528 1,745 1,040 488 Export and investment assistance 333 350 266 67 TOTAL 25,590 28,495 20,806 4,784
Almost all the underlying bilateral assistance programs have had their budgets reduced with major cuts to the Global Health program (-14%), the Migration and Refugee Assistance program (-12%) and the Millennium Challenge Corporation (-19%).
However, the biggest single cut is to the bilateral Economic Support Funds (ESF). The aim of these funds is to “support U. S. foreign policy objectives by providing economic assistance to allies and countries in transition to democracy, supporting Middle East Pease negotiations, and financing economic stabilization programs” (economic stabilization programs). The amount of money budgeted for such funds was $6.4billion in 2010 and $7.2billion in 2011, but is set to fall to $4.1billion in 2012 representing a cut of over $3billion or 43%.
Similarly, funding for almost all multilateral bodies is set to fall in 2012, notably the Global Environment Facility (-53%), the Asian Development Fund & Asian Development Bank (-31% combined) and the African Development Fund (-27%).
Back to top
