Hearing of the State, Foreign Operations, and Related Programs Subcommittee of the House Appropriations Committee - U.S. Treasury International Assistance Programs and U.S. Contributions to International Financial Institutions

Statement

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REP. BETTY MCCOLLUM (D-MN): Thank you, Madam Chair. Secretary Paulson, I'd like to thank you for joining us this afternoon. And first, I want you to know I support the administration's request for the IDA15 Replenishment.

My support is based on IDA's mission, its success, and because of its very impressive leadership with President Zoellick at the World Bank. President Zoellick is to be commended for picking up the pieces at the World Bank during the difficult time and leading the institution forward with a very successful IDA replenishment effort.

IDA, by definition, is a commitment to providing aid to meet development needs in the world's poorest countries and help their people. The countries eligible for IDA are based on per capita income of less than $1,065 meaning these investments are going to serve the needs of the poorest people of the world.

Because of the per capita income eligibility requirements, there are only 34 countries which are -- there are -- excuse me. Because of the per capita income eligibility requirements, there are 34 countries which are former IDA recipients, such as Botswana, Egypt, and Turkey, all which have graduated to middle class income status. This is clearly a mark of success.

I have a copy of a very interesting article, Madam Chair, I'd like to submit for the record, which is in the Journal of Economics Perspectives entitled, "Where Does the Money Go? Best and Worst Practices in Foreign Aid" by William Easterly. This article details the research and evaluates more than 30 bilateral and multilateral foreign assistance energies and ranks them based on criteria for best practices for aid organizations.

In this research, IDA ranks as number one among all other international organizations. By comparison, the U.S. ranks 16th, just beneath Italy. I believe IDA is a good investment by this subcommittee, and it deserves to have our full efforts.

Secretary Paulson, I do a have a question for you. I understand that the U.S. currently in the rears to IDA, and I'd like to know how much, and I'd also like to know, Secretary Paulson, is there a plan and a time line to eliminate our rears in IDA?

I have one other question. It kind of goes with something you touched on in your testimony, which is your technical expertise that the Treasury can offer. The work that you're doing makes a lot of sense. Strengthening the capacity of bureaucracies and institutions within developing countries to address financial issues, tax policies, financial services and enforcement is critical to long-term good governance.

I'd like to raise the possibility of expanding the scope of this work. I see the role of parliamentarians to be vital in participating in the development equation. And building their capacity to understand and evaluate budget policy, foreign assistance financing, and other financial issues is critical in establishing good governance for countries receiving aid.

I've heard from World Bank officials, for example, that the lack of parliamentary capacity with regards to finance issues can actually inhibit parliamentary consent as well as oversight of development interests. Can you envision extending your technical assistance at Treasury and training parliamentarians and parliamentary staff in developing countries? Thank you for being here.

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