By Aaron Ranck, Senior Fellow, and Tenley Smith, Program Associate

With trade wars, hot wars, and big beautiful bills dominating the headlines, you would be forgiven for not paying attention to President Trump’s budget request (PBR) for the international financial institutions. But it warrants some attention. The PBR is the beginning of the budgetary process, with the administration signaling its policy priorities to Congress which possesses the power of the purse and ultimately decides what to fund. Following the February 2025 executive order calling for a review of US participation in, and potential withdrawal from, various international organizations, many of us have been wondering what the administration has in mind for the international financial institutions (IFIs). Concerns grew after some of the administration’s early multilateral maneuvers including efforts to redistribute burden-sharing in NATO and U.S. withdrawal from the WHO.

But the administration sent its first clear signal that it remains committed to the IFIs in a speech by Treasury Secretary Scott Bessent  alongside the IMF/WB meetings in April. Secretary Bessent said he believes “mission creep has knocked these institutions off course,” however, he went on to say the administration is committed to taking on a stronger leadership role to reform and strengthen the institutions “in order to restore fairness to the international economic system.” House Financial Services Committee Chairman French Hill (R-Ark.) offered similar remarks during the Bretton Woods Committee’s Spring Summit, urging the institutions to get “back to basics” in order to focus on their core missions.

“Back to Basics”

The World Bank has responded to the U.S. and many of its other large shareholders’ concerns by embarking on a major push to expand access to electricity to accelerate development progress. This effort includes lifting the World Bank’s ban on nuclear energy—a move applauded by French Hill. While not yet final, President Banga has also asked the institution’s board to consider lifting its ban on upstream gas projects. The U.S. has also signaled that it wants the World Bank to graduate China from developing country status and reform its procurement policies to value based models.

The IMF, for its part, has shown a willingness to implement difficult reforms to address its serial borrower problem, and is committed to working harder on intractable issues around sovereign debt. Both U.S. Treasury and  Congress have signaled they want the IMF to be more aggressive on enforcement of accurate data provision from countries to the IMF. The U.S. has also been critical of the IMF’s Resilience and Sustainability Facility (RSF) as a form of mission creep.

Regional development banks are also paying attention. The FT reports the Asian Development Bank is considering lifting its ban on nuclear financing. The shift on energy policy comes after many years of pressure by Congressional Republicans and efforts by the Biden administration to build an international coalition of support for nuclear energy as a means of achieving both energy security and climate targets simultaneously.

Policy Priorities in the PBR?

The second signal of support for the IFIs came in its presidential budget request. Overall, this budget request shows an administration that understands the unique role the IFIs can provide in pooling resources to address global challenges, leverage effects, and maintaining the U.S.’s voice in the IFIs. Its funding requests prioritized multilateral institutions where US paid-in capital is tied to voting share and thus not renewing would relinquish US shareholding.

Notably, the budget request includes $1.07 billion in support of IDA’s 21st replenishment. The IDA commitment, while lower than president Biden’s pledge, is a higher number than many expected and could be bolstered by legislative language to exempt securities issued by IDA from regulation by the Securities and Exchange Commission, saving resources spent on compliance that could otherwise be spent on development.

It also includes a request for shifting temporary, multilateral financing at the IMF (from the NAB) to permanent, paid-in capital (quotas). It is worth underlining that the US Treasury sees this shift in resources at the IMF as an exchange of assets, not a net increase in its commitment to the IMF.  

See this BWC Backgrounder for an explanation of quota reform. 

Additionally, multilaterals that recently revamped their private sector windows (i.e. IDB Invest) saw funding maintained. A few multilaterals have been explicitly cut, including the African Development Fund, which is a bit of a head-scratcher. But we suspect the administration is looking for some signals from the incoming AfDB president that it will be aligned with a “Back to Basics” agenda before requesting funding. For climate-focused funds and UN off-shoots, inclusion in the budget request was always going to be an uphill battle and we are not surprised to not see those requested from this administration.

BWC will publish a full Presidential Budget Request Explainer soon with a full breakdown of what is included in the request. 

What We’re Watching for Next

The 180-day review of U.S. participation in all international organizations is scheduled to conclude in early August. While we are encouraged by the signals from Secretary Bessent’s speech and IFI requests included in the PBR, the outcome of the EO review will provide clarity on the U.S.’s participation in the IFIs. We’ll also be watching the appropriations process closely as it unfolds over the summer and fall.As always, we can expect Congress to leverage its power of the purse to assert its own priorities during the budget process.

We also anticipate the possibility that some of the president’s budget requests may not be fully funded due to budgetary constraints in Congress. On quota reform for the IMF, we foresee two primary sticking points. First, there is a significant difference between the Congressional Budget Office (CBO) and the Office of Budget and Management (OMB) over how to “score” the budgetary effects of US commitments to the IMF. OMB and Treasury see the IMF commitment as an exchange of assets with no budgetary impact, but CBO uses a fair value risk weighting which comes with a budgetary cost. This is not a new challenge, Congress and the administration found a way to work out their differences in 2015 and 2020 IMF reform packages, so they are likely to find a pathway again. Second, because the quota package raises the amount of US paid-in capital at the IMF, the threshold of SDR allocations that the U.S. Treasury can agree to without Congressional approval will rise from approximately $650 billion to $1 trillion. House Financial Services Committee Chairman French Hill (R-Ark.) has expressed concern about this dynamic andintroduced legislation which will likely serve as a basis for negotiations between the U.S. Treasury and Congress.

Other Legislation We Are Following  

IFI Improvements Proposed

Building off legislation first introduced in 2024, Ranking Member Waters (D-Ca.) and Rep. Beatty (D-Ohio) of the House Financial Services Committee introduced a sweeping bill in May to propose various reforms to the IMF, World Bank, and other multilateral development banks. It includes language to exempt IDA from securities regulation, though standalone legislation to that end passed unanimously out of the House Financial Services Committee in March. Now that there is bipartisan support for securities exemption for IDA, we hope to see a measure to enact the change pass the House in this Congress.

A Coin Toss: Congress to Stabilize Stablecoins?

Earlier this year, BWC published a paper with guidance for effective stablecoin regulation, so we’ve been paying close attention to the stablecoin legislation making its way through congress. There are two bills currently making their way through opposite chambers: The GENIUS Act (from the Senate) and The STABLE Act (from the House).

The differences in STABLE and GENIUS revolve around the balance of federal versus state regulatory authority. The STABLE Act takes a federal-first approach, preempting conflicting state laws and requiring state regulatory frameworks to “meet or exceed” federal standards. It also mandates that FinCEN develop specialized Bank Secrecy Act (BSA) regulations specifically for stablecoin issuers, centralizing anti-money laundering oversight at the federal level.

The GENIUS Act is a state-led model, providing state regulatory autonomy and requiring only that state regimes remain “substantially similar” to federal requirements through annual recertification. Rather than creating new FinCEN mandates, it integrates BSA compliance into existing regulatory frameworks. GENIUS also restricts state oversight to issuers below $10 billion in market capitalization, while STABLE imposes no such threshold.

There is a potential companion bill in the House (the CLARITY Act) that is a broader crypto market structure bill that outlines a clear division of regulatory oversight between the SEC and CFTC, with a focus on defining digital commodities and establishing a market structure for their trading.

So, how do these bills get reconciled? The passage of the GENIUS Act in the Senate on 17 June means the ball is now in the House’s court. It will need to decide what, if anything, from the GENIUS Act it wants to take on board and whether it wants to advance the CLARITY Act alongside the STABLE Act simultaneously. If the House passes a different bill than what’s in the GENIUS Act (which is likely), then the two chambers will work out their differences in a conference committee. There is a broad bipartisan consensus around the benefits of creating a clear regulatory framework for stablecoins, which makes it very possible that the differences between GENIUS and STABLE are surmountable.

Congress has a lot on its agenda this summer and it will only become more crowded as the end of the fiscal year approaches on September 30 and the budget debate heats up. We will check back in with you after the summer break, stay cool out there!