By Erin Collinson , Jocilyn Estes and Julia Brownell
Against the odds, congressional appropriators struck a deal to fund development and diplomacy priorities in FY26. The topline figure, coming in at $50 billion, represents a 16 percent cut compared to FY25, but that’s before subtracting select emergency funding and rescissions. And unlike last year’s continuing resolution extending funding at prior levels, lawmakers put their own stamp on the new spending bill. A host of reporting requirements and mandated briefings will ensure that key actors on Capitol Hill remain engaged with a range of development and humanitarian policy issues in the months ahead.
That said, there are plenty of lingering questions about the extent to which the vision for future international assistance—as sketched out in the bill—comes to fruition, given both the Department of State’s lean staffing and the administration’s views on impoundment and its penchant for withholding funds. Nevertheless, appropriators are voicing a desire to see continued US leadership in the provision of foreign aid and in various multilateral fora. The deal is yet to pass the Senate, but here’s a rundown of how several major accounts fared and what might come next. (You can find the link to the bill text HERE and the joint explanatory statement HERE.)
Global health gets by
Despite years of bipartisan backing and the administration’s stated commitment, the president’s budget proposed a staggering 60 percent cut to funding for global health programs. In contrast, appropriators signaled support for strong US leadership in global health, providing $9.4 billion for the primary global health account, previously split between the Department of State and USAID. That’s $5.6 billion above the administration’s request. That figure is allocated largely to familiar funding priorities, including HIV/AIDS, maternal and child health, malaria, and even areas left out of the America First Global Health Strategy, such as nutrition, neglected tropical diseases, and family planning and reproductive health.
The compromise bill reaffirms Congress’s desire to keep the US engaged in major health multilaterals—save the World Health Organization—directing US contributions to the Global Fund, Gavi (the Vaccine Alliance), the World Bank-hosted Pandemic Fund, and the Coalition for Epidemic Preparedness Innovations.
Despite breaking with the administration on funding levels, the measure and accompanying report lean into several components of the America First Global Health Strategy. The bill directs a new strategy to expand market access for US biomedical firms and requires a PEPFAR transition strategy that shifts toward country-led programming without sacrificing results. Appropriators also included a mandate to support research and development for breakthrough technologies targeting HIV/AIDs, malaria, and other infectious diseases, which could be read (in part) as an endorsement of the kind of partnership demonstrated by the State Department’s purchase agreement supporting the rollout of the game-changing HIV prevention drug lenacapavir through the Global Fund.
State Department officials have outlined lofty goals for the US global health portfolio as they negotiate and sign a slew of bilateral memoranda of understanding charting global health cooperation with partner countries in the years ahead. Still, lawmakers have questions about precisely how an America First global health agenda might proceed, instituting new reporting requirements on multilateral health engagement, the bilateral global health agreements, and the Global Health Bureau’s plans to launch an innovation fund.
Humanitarian spending on the horizon?
For years, the United States has been the world’s leading provider of humanitarian aid—with structures and systems that, while deeply fragmented, have been capable of responding to urgent needs across a host of contexts. But the Trump administration’s stop-work order, award terminations, and dismantling of USAID threw an enormous wrench in the gears. Humanitarian relief efforts could surely benefit from constructive reforms, and with so many protracted crises around the world, the US would be wise to revisit its response toolkit. But what we’ve witnessed over the past year is simply much less US humanitarian aid. The State Department has touted its responses in the wake of Hurricane Melissa and Typhoon Tino, and, more recently, struck a deal with the United Nations Office for the Coordination of Humanitarian Affairs—suggesting a level of continued commitment to humanitarian support so long as it can shape the parameters. Still, it doesn’t negate the fact that humanitarian spending fell well behind pace in FY25. The most generous interpretation may be that intent ran headlong into limited capacity.
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Appropriators acquiesce to the administration’s desire for a central humanitarian account—combining the State Department’s Migration and Refugee Assistance with the International Disaster Assistance pot once managed by USAID—but would provide more than double the requested funds. The administration had hoped to channel more funding through the Emergency Refugee and Migration Assistance account, which the president can draw down at his discretion. With passage of the FY26 Agriculture spending bill last year, lawmakers also rejected the administration’s plans to defund a separate international food aid account that can be used to respond to humanitarian needs.
As the joint explanatory statement suggests, in requesting detailed administration plans for spending humanitarian funds, this will be a key area to watch.
The death of Development Assistance?
Provisions in the bill text and explanatory statement suggest a durable interest in continued investment in aid-supported work previously managed by USAID, with spending directives for advancing food security and agricultural development ($720 million), women’s economic empowerment ($150 million), and global education programs ($691.5 million).
In its FY26 budget, the White House sought to zero out traditional bilateral economic assistance accounts and replace them with a wildly flexible America First Opportunity Fund. Notably, the administration also rescinded billions of dollars in previously appropriated economic aid. Lawmakers seem eager for a more measured approach, rolling the two core accounts (Development Assistance and the Economic Support Fund) into a new National Security Investment Programs (NSIP) bucket meant to link traditional economic development priorities with strategic objectives. Appropriators would provide significantly more resources than the White House requested, and, of those resources, the bill specifies that at least 15 percent should be allocated to Africa, focusing on sub-Saharan Africa, and with just $575 million of the new account carved out for the administration’s America First Opportunity Fund. Democracy programs survive as a separate line item, but with a steep, roughly 40 percent haircut from FY24 and FY25 enacted levels before rescissions.
Safeguarding US shareholding at the IFIs
US engagement with and support for international financial institutions have remained a bright spot in the broader story of recent US development spending. The Trump administration has continued to make commitments and contributions to a number of international financial institutions (IFIs), and the back-to-basics agenda advocated by Treasury officials enjoys some bipartisan buy-in and has received support from other major shareholders (along with some think tank experts). The new spending bill would deliver the first payment toward the administration’s revised pledge to the replenishment of the World Bank’s International Development Association, IDA21, and the first payment for a level pledge at the last Asian Development Fund replenishment; it likewise includes the necessary authorizations for both contributions. With credit to the House Financial Services Committee, the measure also carries a sought-after, money-saving fix that exempts IDA from certain US Securities and Exchange Commission registration requirements. The concessional lending arms of the World Bank and the Asian Development Bank remain vital sources of affordable finance for a number of the world’s poorest countries, where continued US leadership and financial support matter.
In addition, under the bill, the European Bank for Reconstruction and Development (EBRD) would receive the first payment of a long-awaited capital increase, with $87.5 million teed up after authorization cleared in the continuing resolution. The bill also greenlights US participation in the IDB Invest capital increase—and while stopping short of an explicit appropriation, it provides $75 million in flexible Treasury funding that could enable the administration to make a first payment. Appropriators deflected on IMF quota reform and provided no resources for the African Development Fund, adding to US arrears at the institution. Still, the measure would keep the taps open for both the Global Environment Facility and the International Fund for Agricultural Development even without formal asks from the administration.
Big hopes and a stable budget for DFC
Both the White House and lawmakers have endorsed a bigger, bolder US International Development Finance Corporation (DFC). But will resources match ambition? Appropriators would level fund the agency, with language in the explanatory statement encouraging DFC to operationalize the changes in its recent reauthorization bill. After a sluggish FY25 in which, according to recent data, DFC made just over $3 billion in new commitments, DFC enters the new year with plenty of headroom to expand and the ability to invest almost anywhere in the world (with some guardrails). The president’s budget request sought to capitalize a proposed revolving fund that would enable DFC to make better use of its direct equity authority by providing a workaround to longstanding budget scoring constraints. While appropriators didn’t deliver the $3 billion bump requested by the administration, the joint explanatory statement notes that DFC can make transfers to the new DFC Equity Investment Account, subject to congressional notification procedures.
With reauthorization complete and new funding on the horizon, the big question ahead is whether the agency can deliver on its mandate to pursue strategic deals while still generating meaningful development impact. Appropriators also hope DFC’s transparency practices improve further—reminding the agency of its statutory authority to report its transactions to the central foreign aid dashboard, foreignassistance.gov. The agency has been working with the team at the State Department that manages the site, but has struggled with how to present loans, guarantees, and insurance commitments alongside more traditional grant-based aid.
MCC rides again
The Millennium Challenge Corporation (MCC) had a tumultuous last year. It narrowly avoided the fate that befell USAID thanks to a bipartisan cadre of champions, but the agency weathered a slew of program terminations and significant workforce reductions. The new bill would provide $830 million for MCC, roughly 11 percent lower than in recent years, but nowhere near the 75 percent cut envisioned in the president’s budget request.
However, the measure would resume the unfortunate recent trend of subjecting the agency to rescissions of unspent funds. As we’ve highlighted previously, MCC’s multi-year country agreements require the agency to bank substantial sums that it spends down over time. In the wake of recent program terminations, the minibus would claw back more than $661 million—though, again, less than the administration initially sought.
And overall, things may be looking up for the little agency. In the joint explanatory statement, appropriators direct MCC’s CEO (notably, still waiting on a nominee) to notify relevant committees before terminating assistance, specifying a raft of information that must be provided in advance. Meanwhile, key administration officials appear increasingly keen to deploy MCC’s model. With greater budget certainty, a refreshed scorecard, and newly selected partners, the prospects for MCC’s data-driven, good-governance-oriented approach appear promising.
But how do we know any of this spending will achieve its objectives?
If you’ve made it this far, you’re a real one—as the kids say—so we’ll acknowledge that we’ve been struggling more than usual when it comes to talking about two of our favorite topics: evidence and evaluation. On the one hand, amid scarce resources, it seems more important than ever to ensure that US assistance delivers value for money—that is, that programs achieve their intended impact in as cost-effective a manner as possible. On the other hand, we’re acutely aware (as noted above) that in the wake of USAID’s shuttering and other federal workforce reductions, bandwidth is limited. Prior to its dismantling, USAID had taken steps to improve its use and generation of evidence, including establishing an office with precisely that remit. The State Department has historically lagged behind in this area, but in 2023 began endeavoring to make evidence more accessible and actionable—with the goal of informing better decision-making. Despite increased invocation of the importance of outcomes and results, over the last year, we’ve seen no signs (at least shared publicly) that commissioning evaluations of aid-supported programming (to understand what programming actually achieved) or facilitating greater use of rigorous evidence (to design interventions to work well from the start) is a priority for the State Department. It’s encouraging that Capitol Hill still identifies the significance of rigorous evaluation in advancing aid effectiveness (see Section 7011)—and maybe the required strategy will provide an opportunity for the State Department to set new goals that will help it move from more basic but still critical data management (and transparency), to integrating evidence into decision-making and even generating quality evidence through rigorous evaluation.
The House recently approved the new spending bill, and it's expected to pass in the upper chamber when senators return to Washington for the final week of January. Congress has signaled that it still sees foreign assistance as a strategic tool for the United States, but the big unknown is whether an administration that has spent the past year rescinding and slow-walking aid dollars will be able and willing—now that it has taken the reins—to deliver on lawmakers’ intent. The spending bill is by no means a reset for US international engagement, but it does represent an opportunity to rebuild capacity and reshape an admittedly imperfect system. We’ll be eager to see how the new measure shapes US international assistance in the year (err, 8 months) ahead.
Read the original post on the Center for Global Development’s website.
