The latest capitalization round for the World Bank’s fund for the lowest-income nations secured a $93 billion replenishment package — a record haul — but the number is shy of expectations.
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Forty-eight donor countries pledged $23.5 billion for the three-year cycle of IDA20, the 20th replenishment of the bank’s International Development Association. The bank will leverage those funds using capital markets and other tools at a ratio of nearly 1 to 4 to hit the higher figure.
Bank officials had expressed confidence they would reach $95 billion. And earlier this year, African leaders pressed for a $100 billion target, citing the fallout from the COVID-19 pandemic in increasing needs and setting back growth.
Still, the leveraged figure comes in $10 billion higher than IDA19. The previous capitalization round was used up in two years, instead of the usual three, because nations were forced to spend faster to address the effects of the pandemic.
IDA funds are available to 74 low-income countries. “In these countries, the ongoing pandemic is worsening poverty, undermining growth, and jeopardizing the prospects of a resilient and inclusive development,” the bank said in a statement, adding that one-third are facing a “looming food crisis.”
“IDA is one of the most effective instruments we have in terms of fighting poverty,” David McNair, the executive director for global policy at the ONE Campaign, told Devex, adding that the donor response was “really disappointing.”
He noted that while some countries stepped up contributions, including major donors such as the United States and France, the United Kingdom’s contribution dropped by 55%. This translates to a $1.8 billion cut for the U.K., according to estimates.
The World Bank has rejected accusations that it has not been aggressive enough in leveraging donor funds. However, with the IDA20 figure falling short, more calls for greater utilization of the balance sheet are to be expected.
“The overall IDA replenishment size does not have to be limited by overall flat donor contributions,” Clemence Landers, a policy fellow at the Center for Global Development, told Devex, adding that the bank could use "IDA’s hybrid financing model’s surge potential" if country demand for concessional capital grows.