Sometimes your best still isn’t good enough. The World Bank’s International Development Association secured a record $93 billion replenishment Wednesday — but fell short of the $100 billion African leaders said was needed to deal with the fallout from COVID-19.
This is a preview of Newswire
Sign up to this newsletter for an inside look at the biggest stories in global development, in your inbox daily.
On Wednesday international donors agreed to pay in $23.5 billion to IDA, the World Bank’s highly prized fund for low-income countries, Shabtai Gold reports. The bank will take those contributions — and its AAA credit rating — to financial markets, and leverage a $93 billion resource pool it can draw from over the next three years.
$93 billion marks a record replenishment for the fund — which would seem all the more impressive given that IDA moved up its fundraising round an entire year after accelerating its lending to help low-income countries deal with the fallout from COVID-19.
But falling $7 billion short of what its clients requested — and $2 billion short of what the World Bank seemed very confident it would be able to bring in just a month ago — does not send a great signal about donor countries’ willingness to meet an unprecedented moment.
Just as IDA was searching for every available dollar Wednesday, the International Monetary Fund reported that in 2020, global debt saw its largest one-year increase since World War II — reaching $226 trillion. Of the lower-income countries for which IDA represents a critical source of financial support, 60% “are either already in debt distress or fast approaching it,” said Carmen Reinhardt, the World Bank’s chief economist.
Read: IMF warns of soaring debt amid divide between rich and poor nations
One big reason why IDA fell short of its more aspirational targets is a significant cut to the U.K. government’s contribution. For years, the U.K. has been IDA’s largest donor, but the 20th replenishment saw the government cut its contribution by 55% — an estimated $1.8 billion.
Several other countries — including Japan, the United States, and France — increased their pledges, but the steep falloff in U.K. funding proved difficult to overcome.
Read: Donors fail to hit expectation for IDA20 despite record $93B haul
Staff shortage
U.K. aid cuts are also hitting the country’s NGO sector. David Ainsworth reports that Christian Aid saw income fall 13% to £86.4 million ($114.8 million) in the financial year ending March 2021, while losing nearly 100 staffers.
Devex Pro: Christian Aid sees 13% fall in income and 10% cut to staff
New era
What does Angela Merkel’s departure and Germany’s new cabinet mean for the country’s global development engagement?
Andrew Green reports for Devex that the appointment of former environment minister Svenja Schulze to lead Germany’s Ministry of Economic Cooperation and Development — known as BMZ — could spell big things for the country’s role in climate diplomacy.
“There is reason to be optimistic that they will manage to bridge the climate and development agendas and mainstream climate into the development policy of the German government,” says Germanwatch’s Lutz Weischer.
Schulze is known as a climate progressive who previously pushed for greater ambition on phasing out coal. There is hope that she will have a big enough platform — and checkbook — to help embed climate-vulnerable countries’ concerns throughout German policymaking.
Devex Pro: What to know about Germany's new development minister
+ We provided Devex Pro subscribers with exclusive details on Germany’s plan to cut support for 25 countries and streamline its funding priorities. Not yet a Pro subscriber? Sign up now and start your 15-day free trial.
Talking points
Leaders from the African Union and European Union are due to gather at a summit in Brussels in February, and my colleague Vince Chadwick got an early look at what they will be talking about.
Vince obtained a draft joint statement for the sixth summit of leaders from the two continents that was prepared by European Council President Charles Michel and shared with EU member states earlier this month.
Three years after announcing a new “alliance” with Africa, the EU will use February’s summit to launch … a newer alliance.
“It will be embodied by tangible projects, designed together, which foster human, economic and scientific exchanges between our two continents, and fulfil the needs expressed by our populations,” the draft text reads.
Devex Pro: Draft documents reveal EU’s plan for summit with AU
ICYMI: COVID-19 vaccine gap looms over EU-AU summit
System change
“We believe the money we provide belongs to them anyway, and we work and communicate with them as full allies and partners — not as contractors or ‘grantees.’” — Chernor Bah, co-founder and co-CEO of Purposeful.
A self-described “poster child for development aid” writes it is time for global development organizations to confront the assumptions and inertia that perpetuate harmful practices.
Opinion: Here's how to stop global aid from being so condescending
In other news
U.S. Secretary of State Antony Blinken abruptly ended his trip around Southeast Asia, his first to the region in his current role, after a journalist traveling with his delegation tested positive for COVID-19. [New York Times]
A group of U.K.-based aid organizations have made a funding appeal to help 8 million people struggling in Afghanistan as winter fast approaches. [The Guardian]
Brazilian economy minister Paulo Guedes has terminated IMF's mission in the country, citing the financial institution's consistently mistaken economic forecasts for Brazil. [Reuters]
Sign up to Newswire for an inside look at the biggest stories in global development.
About the author
Michael Igoe@AlterIgoe
Michael Igoe is a Senior Reporter with Devex, based in Washington, D.C. He covers U.S. foreign aid, global health, climate change, and development finance. Prior to joining Devex, Michael researched water management and climate change adaptation in post-Soviet Central Asia, where he also wrote for EurasiaNet. Michael earned his bachelor's degree from Bowdoin College, where he majored in Russian, and his master’s degree from the University of Montana, where he studied international conservation and development.
