Looking to 2025, World Bank soft loaning could shift course

Photo by: Anders Sandberg / CC BY-NC-SA

This past weekend, the annual spring meetings of the World Bank and the International Monetary Fund sounded a familiar, but loud call to donors: step up support for the world’s poorest nations.

Discussions are underway for the 17th replenishment period of the International Development Association, the World Bank’s lending arm for these countries. While there has been some progress reducing poverty worldwide, the World Bank contends that 1.2 billion people continue to live in destitution. According to the bank’s Development Committee, a “robust IDA-17 replenishment” is still needed to make significant gains in the fight against extreme poverty.

Strategic debate over the weekend focused on the future of IDA after the Center for Global Development and other prominent development organizations, including InterAction and Oxfam, urged the bank to consider restructuring IDA. CGD said that of the 81 countries currently receiving IDA soft loans, 36 are expected to breach the bank’s GNI per capita threshold by 2025. For fiscal 2012, that threshold stood at $1,175.

The World Bank comprises IDA and the International Bank for Reconstruction and Development. While IDA provides loans and grants for poverty-reduction programs in low-income countries, IBRD gives loans and advice to middle-income economies and poorer nations with good credit standing.

Click on the image to view a larger version of the infographic.

The first Devex infographic above identifies the 36 countries (not including small island countries) projected to graduate from IDA eligibility before the year 2030. If the projections are accurate, 42 percent of the 36 countries currently receiving soft loans will no longer be eligible by IDA-17.

Click on the image to view a larger version of the infographic.

The second Devex infographic identifies the 31 countries that would be eligible for IDA funding in 2025. Supporting the contention that IDA requires restructuring, 25 of the 31 countries are located in sub-Saharan Africa — a region which, despite pressing needs and development challenges, received only 16 percent of IDA funding in 2012.

Discussions over IDA-17 have also emphasized and prioritized support to fragile and conflict-affected states. Eighteen of the 31 countries are defined as fragile or post-conflict.

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About the author

  • Pete Troilo

    Former director of global advisory and analysis, Pete managed all Devex research and analysis operations worldwide and monitors key trends in the global development business. Prior to joining Devex, Pete was a political and security risk consultant with a focus on Southeast Asia. He has also advised the U.S. government on foreign policy and led projects for the Asian Development Bank and International Finance Corp. He still consults for Devex on a project basis.

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