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Shift in US aid policy could reduce global prosperity

Friday, March 24, 2017

Subject

US development policy.

Significance

On March 16, the US administration presented its budget request for the 2018 fiscal year starting October 1, 2017 (FY18). The ‘America First’ budget reflects a bargaining position that will be examined and moderated by Congress later in the appropriation cycle but may signal a major policy shift, as recommended funding cuts and proposed elimination of agencies mark a break from the bipartisan approach of previous decades.

Impacts

  • Eliminating US funding for bilateral and multilateral climate change programmes may jeopardise implementation of the Paris agreement.
  • Reduced US assistance to low-income countries that Washington deems ‘non-strategic’ might reverse development gains.
  • The removal of development agencies' support for exports and foreign investments would limit business opportunities for US firms.
  • Using development assistance for short-term foreign policy and reducing untied aid would weaken international cooperation on development.
  • US opposition to reforms of international financial institutions would also reduce the momentum behind global cooperation.
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