WASHINGTON, United States (AFP) — US Treasury Secretary Steven Mnuchin on Wednesday defended budget proposals that would sharply cut or eliminate American support for multilateral aid agencies and programmes.

The remarks in congressional testimony come a week before the World Bank and International Monetary Fund hold their Spring Meetings in Washington.

The Treasury Department in October rejected a World Bank request for a capital increase, calling instead for greater efficiency.

The department’s budget request for the 2019 fiscal year, which begins in October, calls for cutting US contributions to a World Bank arm and other programmes and organisations by nearly US$400 million from 2017 levels.

The proposal, which has no bearing on budget ultimately approved by Congress, is nevertheless a strong signal of the current administration’s political priorities.

“Our budget envisions United States contribution levels that are more appropriate relative to those of our partner countries,” Mnuchin told a subcommittee of the House Committee on Appropriations.

“We seek to balance priorities and direct government resources to programmes that support the national interest and national security,” he added.

“Treasury also encourages international financial institutions to operate more efficiently and has been a driver of shareholder support for reforms.”

The budget proposal would reduce US support for the World Bank’s International Development Association, its fund for the world’s poorest, by eight per cent to just over US$1 billion.

It would also impose a 20 per cent cut on the African Development Fund, while cutting in half US contributions to the Global Environment Facility, or GEF, and the Asian Development Fund.

The budget would also completely eliminate all support for two major agricultural and food security programmes.

Republican and Democrat lawmakers on the panel expressed concern over the apparent US retreat from the global arena, warning that reduced support for development could foment regional instability and create strategic opportunities for China.

But Mnuchin told the panel many of the funding objectives had either already been met or were addressed elsewhere in the federal budget.

“There are a lot of facilities that focus on environmental issues. This is just one of them,” Mnuchin said of the GEF, a grant-making fund established ahead of the 1992 Rio Summit.

“The reason why we’re comfortable cutting this facility or asking for a cut in half is because this facility has defined obligations. A significant amount of them have already been impacted.”