World Bank President Ajay Banga has called on member countries to make the next replenishment of the International Development Association (IDA) the largest ever, citing the increasing demands pushing the concessional resource to its limits. The current 20th IDA funding round, totaling $93 billion, faces challenges due to slow recovery from COVID-19 and negative spillovers from the war in Ukraine, prompting the need for a substantial increase in funding.
Key Points:
- Increasing Demands Strain IDA:
- Ajay Banga emphasized that the IDA, aimed at supporting the world’s poorest countries, is facing strain from escalating demands for development assistance.
- The ongoing 20th IDA funding round, set at $93 billion, is deemed insufficient to address the growing challenges and demands for concessional resources.
- Call for Record Replenishment:
- Banga urged World Bank shareholders, donor countries, and philanthropies to contribute significantly to the next replenishment of IDA, surpassing the current $93 billion.
- Creative financial engineering, according to Banga, will not compensate for the increasing need for funding to deliver better development outcomes in low-income countries.
- Current Funding Challenges:
- The 20th IDA funding round is scheduled to be completed by June 30, 2025, but the World Bank President highlighted the urgency of addressing the depletion of concessional resources.
- Negative spillovers from the Russia-Ukraine conflict and a slow rebound from the COVID-19 pandemic have further strained the available funds.
- Ambitious Climate Finance Plans:
- Banga’s call for increased concessional resources follows the World Bank’s ambitious plans to expand climate finance, announced at the COP28 conference in Dubai.
- New targets aim to increase the climate-related portion of total annual financing from 35% to 45%, with an immediate increase of about $9 billion.
- Concerns About Funding Diversions:
- Some developing countries have voiced concerns that the World Bank’s expanded mission to address climate change and global crises may divert attention and funding away from the core development mission.
Conclusion: World Bank President Ajay Banga’s appeal for the largest-ever replenishment of the IDA underscores the pressing need to address growing demands for development assistance in the face of global challenges. The call for increased concessional resources comes as the IDA faces strain from the lingering effects of the COVID-19 pandemic and the repercussions of geopolitical events. Balancing the need for expanded missions, such as climate finance, with the core development mission remains a challenge, and the response from member countries will play a crucial role in determining the future impact of the IDA.
