World Bank Looks Beyond Traditional Donors for IDA Replenishment

World Bank President Robert Zoellick fields questions at a press briefing marking the conclusion of the World Bank-International Monetary Fund Development Committee meeting on Oct. 9, 2010. Photo by: World Bank / CC BY-NC-ND World BankCC BY-NC-ND

Amid global economic woes, the World Bank is working to spread the burden of replenishing the coffers of the International Development Association, the bank’s arm for assisting the world’s poorest nations, World Bank President Robert Zoellick said Oct. 9.

“We are not just asking traditional donors to carry the load,” Zoellick said in a press conference at the sidelines of the annual meetings of the World Bank and International Monetary Fund in Washington, D.C. “[W]e are asking emerging donors to contribute to reflect their growing economic weight [and] we are looking to mobilize our own resources.”

The bank expects that some 75 percent of “a reasonable increase” of IDA resources could come from “internal reflows and new donors,” Zoellick said at the start of the meetings on Oct. 8.

“What this really means is that for the traditional donors - and I have been in your situation, and I know it is not easy - we need you to avoid cutbacks where you can make some modest increases, where your currency has worked to the benefit, because we have created a system where the rest is leaning forward, but we can’t let you fall back. This is all about the poorest, and particularly for the ministers in this room, we’ll need your help in your home countries,” Zoellick said.

He also urged former IDA recipients to expedite their payments, adding that the bank is making IDA recipients close to graduating out of the program to “pay a bit more.”

A robust IDA replenishment could help to immunize 200 million more children, extend health services to more than 30 million, provide access to improved water sources to 80 million, help construct 80,000 kilometers of roads, and train and recruit over 2 million more teachers, Zoellick said.

A lack of support for IDA, meanwhile, would “devastate” efforts to achieve the Millennium Development Goals, he remarked. 

IDA has committed more than USD3 billion since 1988 to support HIV/AIDS responses in 67 countries.

“IDA is one of the - maybe the only - concessional funding system that offers grants or no-interest loans to allow countries with a sense of ownership to be able to connect their own development efforts with donor efforts from other countries,” Zoellick said. “The donor efforts from other countries are often very well-intentioned, but they may be focused on one item or another item not really interconnected.”

The bank will seek donor contributions for IDA by the end of 2010, the World Bank president said. Meantime, a meeting of IDA deputies is slated for today (Oct. 11), he added. The meeting, he clarified, will not be a pledging session.

IDA funding is replenished every three years. This year, donors will decide on their contributions to IDA for 2011 to 2014.

Tax for development

IMF Managing Director Dominique Strauss-Kahn has balked at the idea of imposing taxes on the financial sector to help mobilize funding for development initiatives.

“I would not rely too much on this idea. If we really want to have money for development, there are many ways to find the resources, including increasing taxes if there is a political will to do it, but then it is easier to increase existing taxes than to rely on the potential levy which is not still in the place. The risk is that it takes so much time to have it that finally you will never get the money for the goal you are looking at,” the IMF chief said Oct. 9.

Sector priorities

The bank is looking at “ramping up” its investments in agriculture and food security to about USD6 billion to USD8 billion annually over the coming years, Zoellick said Oct. 8 at the plenary session of the meetings.

Meanwhile, gender and support for fragile states will be the focus of the replenished IDA, he said, noting that the two sectors will also be the topics of the bank’s World Development Report in 2012.

On climate change, Zoellick is optimistic that there is “strong possible progress” that can be made in the Cancun climate summit in the areas of forestation, technology, soil carbon and the fast-start climate finance.

Meantime, Obiageli Ezekwesili, the World Bank vice president for Africa, has called for renewed assistance to Sudan at the sidelines of the World Bank-IMF meetings. Ezekwesili highlighted the need for “urgent and sustained” support to broad-based economic development in Sudan, as well as to the implementation of agreements under the Comprehensive Peace Agreement, including the upcoming referenda in Southern Sudan and Abyei.

World Bank management

The World Bank has added a third seat for sub-Saharan Africa to its executive board. Renosi Mokate, a former deputy governor of the South African Reserve Bank, will assume the post on Nov. 1.

Zoellick has also highlighted the representation of developing economies in the bank’s staff and management.

“For the first time in the history of the World Bank, all three of our managing directors and our chief economist are some leaders in finance and development from the developing world. Over half of the officers that I have been able to appoint are women, and we have to continue to press this throughout the organization,” Zoellick said.

The bank is also collaborating with state or provincial governments to help improve public finance, procurement, transparency and accountability, which are all key to enhancing revenue management and achieving better results, the World Bank chief asserted.

In improving governance and anti-corruption efforts, the bank is focusing on the “preventive side,” Zoellick said, noting that the bank has completed more than 300 individual cases of corruption.

“We are doing not just sanctions but referrals for prosecutions, and now we have a cross-debarment system with our partners at the regional development banks - so if you steal from one of us, you are shut out from all of us,” he said. “We are going to have a meeting in December to try to build an anti-corruption network, which is critically important because this is a cross-border issue.”

Influence of developing nations in IMF and World Bank

Zoellick underscored the World Bank’s move to increase the voting power of developing and transition countries in the bank’s International Bank for Reconstruction and Development. Developing nations’ voting power at IBRD is now 47.2 percent, up by 4.6 percentage points.

IMF, meanwhile, is working to resolve outstanding issues in its quota and governance reforms. These issues cover the size of the quota increase and the quota shift, enhanced voice and representation of emerging markets and developing countries at IMF’s executive board, modalities for protecting the voting share of the poorest members, enhanced ministerial engagement and strategic oversight, and an “open, transparent, and merit-based process” for selecting the heads of IMF and other international financial institutions, according to the communique by the 22nd meeting of the International Monetary and Financial Committee of IMF’s board of governors.

The two institutions will tackle presidential selection and dual performance in their next meetings, scheduled for April 2011. The fund is currently overhauling the seats in its board of directors to allow emerging nations to have a bigger say at IMF.

Switzerland would insist on retaining its permanent seat on the IMF board, Federal Councillor Hans-Rudolf Merz said Oct. 8 in a press conference in Washington, D.C.

Countries that are the most underrepresented in the IMF board, based on the calculated quota, should be the  primary beneficiaries of the quota redistribution, according to Merz. The financial contributions of the member countries - for instance, contributions to the IMF fund for low-cost credit and technical assistance for developing countries - should be duly taken into account, he added.

About the author

  • Dsc05567

    Ma. Rizza Leonzon

    As a former staff writer, Rizza focused mainly on business coverage, including key donors such as the Asian Development Bank and AusAID.