World Bank says IDA is 'on track' for a $95B replenishment

The World Bank is “on track” to hit a target of $95 billion for the replenishment of a key fund for low-income countries, a senior official told Devex, even as the funding round comes a year early. “We should be able to do at least $95 billion,” said Samuel Maimbo, director of development finance at the World Bank. The figure is a 15% increase from the International Development Association’s last funding round. IDA19 was finalized in December 2019, and reached a package worth $82 billion in what was dubbed an historic accomplishment. The financing was meant to last three years. But because of the immense stress the pandemic has placed on governments in low-income countries, the bank “front-loaded” much of its spending — meaning the fund will be depleted faster, and donor nations are now being asked to contribute to the latest round a year ahead of schedule. The final pledges are due in mid-December at a conference in Tokyo. African nations are hoping to squeeze up to $100 billion out of IDA this time around, though the final numbers remain to be seen. The money is expected to be committed over three years. The bank is using blended finance and other tools to stretch each dollar from donors about four times over. “We’ve moved from a time when donor contributions were 100% of the IDA envelope to a point today where donors are about 30%,” Maimbo said in an interview with Devex ahead of the final push to donors for the funding tool, which lends on a low-interest or grant basis. Even with the advancement of IDA capital, debt is soaring in many developing countries, creating a new set of burdens that will raise the cost of borrowing and impede the Sustainable Development Goals. For the bank, this makes the IDA funding even more critical. Maimbo says that IDA is careful not to earmark money in advance, but that the funds would help purchase vaccines and ensure the last-mile delivery of COVID-19 vaccines, in addition to a slew of more typical development needs. There are also plans for IDA funds to tackle ripple effects of the pandemic, such as the abysmal schooling situation in many low-income countries, where lockdowns and social distancing have meant many children haven’t set foot inside a school for well over a year. Without home computers and internet access, many have simply fallen behind. The World Bank estimates that trillions of dollars are being lost in human capital and future earnings as a result. Children’s reading levels are plummeting, bank president David Malpass said recently. The IDA money will be a key test of the World Bank’s commitment to aligning with the 2015 Paris treaty on climate. “IDA20 has adopted green as one of its core themes,” Maimbo said, with the bank set to focus on mitigation, but even more so on adaptation. Given the speed of climate change and rising concerns over displacement and forced migration, adaptation finance has increasingly come into focus at the bank. The other IDA shift will see more focus on conflict zones and fragile states, which are among the least attractive to private sector investors, given the risks. The bank has been seeking more ways to invest in these countries for several years. The report laying out the strategy and framework for IDA20 went public last weekend and is open for public comment until Nov. 26.