World Bank eyes early IDA replenishment as it boosts spending in COVID-19 response

The World Bank is allocating funding through the International Development Association faster than expected and has already had discussions with donors to begin the replenishment process ahead of schedule.

In response to the COVID-19 crisis, the World Bank has “front-loaded” its spending of IDA funds to support the world’s lowest-income countries, which were intended to last through 2022, World Bank President David Malpass told a small group of journalists Thursday. The World Bank’s commitments were up 65% in 2020 compared with the year before, he said.

IDA19, the replenishment that is currently funding operations, was approved in 2019 and meant to last through 2022 when there would be another replenishment. But in response to the pandemic, the World Bank has increased spending and is depleting those resources more rapidly than was planned. Bank donors have met and are considering getting the next replenishment, IDA20, done this year, Malpass said.

The United States has typically been a significant contributor of IDA funds, and Malpass said he looks forward to working with President Joe Biden’s administration and with Congress on the effort but doesn't want to “anticipate” what the U.S. might do. Last fall, two Democratic lawmakers asked the U.S. Government Accountability Office to review IDA’s financial viability, particularly its practice of using funds to raise money in capital markets.

Malpass said that bringing forward the IDA replenishment “will make more concessional resources available for the poorer countries.”

Response efforts

In October, the bank announced that it would provide $12 billion in financing for COVID-19 vaccines, and last week the board approved three deals related to that effort, with more expected soon. By the end of March, the World Bank expects to have committed $3 billion in grants or loans to help countries purchase vaccines, Malpass said.

One of the greatest challenges that countries, the World Bank, and others are facing is that existing vaccine contracts are often not public or are unclear, creating confusion about what is available and what has already been contracted, Malpass said. “One of the points we’ve encouraged is for more transparency in the contracting from the manufacturers to the various organizations that are buying and supplying the vaccines themselves,” he said.

Other key challenges in providing vaccines are indemnification and liability shields, Malpass said. In Lebanon, the legislature passed a special law to remove the need for a liability shield, which paved the way for the vaccination program to begin, he added.

Lebanon is one of the first countries to receive funding for vaccines from the World Bank, and in the agreement approving the funds, language was included about specific standards to ensure equitable distribution, Malpass said. The contract requires a fair registration process for participants across the country, with monitoring to ensure that the standards are followed, he said. Future programs to be approved by the bank will have similar standards in the loan or grant agreements.

Malpass once again called on the private sector to participate in debt relief efforts for the lowest-income countries, calling their lack of engagement a key challenge in implementing the common framework on debt from the G-20 group of nations. The World Bank is working with the International Monetary Fund on the implementation of the common framework, and one issue in the discussions is a connection between debt relief and tackling climate challenges.

“The climate agenda is going to be an added expense for some of the countries in terms of adaptation, in terms of mitigation. And so we look for a connection between debt relief and increased ambition on the climate agenda,” Malpass said.