17 November 2005
New legislation includes provisions targeting reforms at the multilateral development banks (MDBs)
On November 14, 2005, President Bush signed into law H.R. 3057, Fiscal Year 2006 Foreign Operations Appropriation Bill, which contains language aimed at reforming the MDBs. The resolution is adapted from Senator Dick Lugar’s (R-Indiana) Development Bank Authorization and Reform Act, which unanimously passed out of the Senate Foreign Relations Committee in July 2005.
The legislation establishes a formal position for the US Executive Directors (EDs) to the different international financial institutions (IFIs) and includes key provisions for reforms around issues of transparency, accountability and anti-corruption. Among other things, the legislation requires that US approval for funding of extractive industries projects be given only to governments with mechanisms for revenue transparency, including independent audits of project expenditures and revenues and the dissemination of these audits, as well as the disclosure of Host Government Agreements (HGAs) and other project bidding documents. The legislation also requires the US EDs to release statements explaining the positions of the US relating to MDB operational policies and Category A projects- “any proposal which would result or be likely to result in a significant effect on the environment.”
Furthermore, the legislation makes the recommendation that all MDBs require draft country strategies to be disclosed at least 45 days prior to Board consideration. Additionally, the legislation calls for the US EDs to promote public listing of debarred firms and cross-debarment, reformed staff incentives, strengthened whistleblower protections, project-level grievance mechanisms for affected communities, budget transparency for countries receiving adjustment loans.
While the US Treasury must actively promote these reforms at the MDBs, it has no legal recourse to hold the MDBs to these recommendations.
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