The World Bank is cautiously confident of exceeding its $100bn target for the 21st replenishment of the International Development Association, its arm which provides grants and loans for the poorest countries. But its real benchmark for success is $105bn — and in real terms, that would only be the same as it raised in the last replenishment.
Ajay Banga, president of the World Bank Group, has set a target of $100bn for IDA 21 to finance its next three year programme, after $93bn was raised for IDA 20, the period from 2022 to 2025. He used a high profile speech last month to call for support.
IDA is talking to donors during the Annual Meetings to secure pledges and hopes to receive more commitments this week.
Dirk Reinermann, director of IDA resource mobilisation, told GlobalMarkets he was optimistic the Bank could put together a package of $105bn for IDA 21, which begins next July. “It is a 12 month marathon, and this is really the final stretch,” Reinermann said.
Donor countries will hold a meeting next week ahead of the final pledging session in early December.
Reinermann said $105bn was the Bank’s benchmark for success because it would represent the same in real dollar terms as the $93bn package in IDA 20. “I’m confident that we will get there, but it’s tough this time around.”
Demand for assistance by IDA countries is rising, to meet urgent and growing needs in education, health, social protection, transport and energy access. “Now with climate change, the needs keep going up,” Reinermann said.
But at the same time, the major donors are facing a “perfect storm” from the Covid pandemic, their own fiscal crises and the recent spike in inflation.
On top of that, the appreciation of the dollar, the unit in which IDA pledges are made, against the currencies of many donor countries had made contributing more expensive.
However, Reinermann pointed to signals from major donors such as Japan, China and the UK that were looking to increase their official development aid budgets, which could lead to higher IDA commitments.
This week one or two donors may make public pledges, following last month’s announcement by Denmark of a 40% increase in its contribution. “We have a number of countries that are leaning forward, which is really making us very hopeful,” Reinermann said.
Clemence Landers, a senior policy fellow at the Center for Global Development, said poor countries were under heightened pressure from the impact of Russia’s invasion of Ukraine on global supply chains and food prices, which meant the stakes for a successful IDA could not be higher.
But she criticised the Bank and other multilateral funds such as the vaccine alliance Gavi, the World Health Organization, the Pandemic Fund and even the Bank’s own Livable Planet Fund (LPF) for appealing to donors simultaneously.
“Historically, in IDA replenishment years, the Bank does not do fundraising for other vehicles,” she said. “So it’s quite extraordinary to see the Bank simultaneously fundraising for IDA and launching a different fund.”
Reinermann acknowledged the coincidence of replenishment appeals was its own “perfect storm”, but said all the agencies involved worked in partnership with each other, rather than in silos. He added that the Bank had said the LPF would not fundraise from donors until IDA 21 had been wrapped up.