IDA20: A moment of stunning international solidarity to support the most vulnerable people

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Pressures of the COVID-19 crisis prompted IDA to accelerate financing commitments last year and launch an early replenishment. This made for a moment of much-needed international solidarity in support of the poorest countries’ needs.
Pressures of the COVID-19 crisis prompted IDA to accelerate financing commitments last year and launch an early replenishment. This made for a moment of much-needed international solidarity in support of the poorest countries’ needs. Photo: World Bank

We are in a crisis—a crisis that is touching all corners and crevices of life. Health, lives, livelihoods, and futures are on the line. The impacts of the COVID-19 crisis are remarkably pronounced in the world’s poorest and most vulnerable countries. 

It is in times like this that we urgently and desperately need demonstrations of solidarity and community support. Last week, we bore witness to such a moment of global solidarity during the launch of negotiations of the 20th replenishment of the International Development Association (IDA)—the World Bank’s fund for the poorest countries. We saw representatives of developed and developing countries join forces with a focused, determined eye to the end goal: a green, inclusive, and resilient recovery for all.

Pressures of the COVID-19 crisis prompted IDA to accelerate financing commitments last year, and launch an early replenishment to support country needs. We welcome the decision by IDA donor and borrower country representatives to advance replenishment negotiations by one year and look forward to the many critical discussions ahead, culminating in a pledging session this December. The stakes are high, and we must all keep this global spirit of solidarity alive in the months and years to come. 

IDA has stepped up to respond to an unprecedented global crisis

IDA has a strong track record: the institution has never shied away from daunting challenges facing member countries. In fact, in the face of the COVID-19 pandemic, IDA redoubled efforts with a significant upsurge in financing to support the response. Over a 15-month period ending in June 2021, IDA is providing up to $55 billion in concessional credits and grants focused on saving lives, protecting the poor and vulnerable, creating jobs, saving businesses, and building a more resilient and sustainable recovery.

In Cambodia, for example, IDA built upon years of investments in health to quickly disburse funding, allowing the government to procure critical emergency response supplies early on. In Afghanistan, IDA is helping to educate women on COVID-19 risks and keep their communities safe. And in the Sahel—where climate change is compounding the impacts of COVID-19—IDA is setting up monitoring initiatives, strengthening existing early warning systems, and providing targeted responses to support the agro-pastoral sectors. 

Throughout its history, IDA has helped lay the foundation to bolster large-scale recoveries that are now proving to be instrumental in the COVID-19 response. 

IDA’s financing model was a cornerstone of this response

IDA has recently implemented several innovations that spurred a paradigm shift in concessional development finance.  The first innovation was in 2018, when IDA expanded financing to member countries by 50% through obtaining a AAA credit rating and issuing bonds in the international capital markets for the first time in its history. That milestone enabled a remarkable scale-up with every $1 in new partner contributions generating more than $3 in support for the poorest and most vulnerable countries—supported by capital market finance and loan reflows.

Another significant achievement of the IDA18 cycle was increased financing dedicated to the most vulnerable. This included more than doubling of financing to countries facing fragility or conflict. IDA also supported arrears clearance, dedicating $1.1 billion in funding and complementing the Heavily Indebted Poor Countries (HIPC) initiative, which facilitated notable reengagement with Somalia and Sudan, and gave them the opportunity to transition out of conflict and build resilience.

Furthermore, the Catastrophe Deferred Drawdown Option (CAT-DDO) was introduced in Development Policy Operations to help countries strengthen their ability to plan for and manage crises before disaster strikes. The Crisis Response Window was expanded, giving IDA the ability to quickly channel funding when and where it was needed most, including in response to the COVID-19 pandemic. Finally, IDA established the Private Sector Window to mobilize private resources and open investment opportunities in some of the most challenging markets. These experiences have effectively positioned IDA to provide fast and flexible financing when it is urgently needed.

All this makes IDA a powerful platform for operationalizing a common global goal through IDA20

IDA was created 60 years ago to serve the most vulnerable people with grants and zero or low-interest loans to support economic growth and meet their development goals. As the world’s largest multilateral provider of financial assistance to the poorest countries, IDA is critical to supporting the approximately 480 million people living in extreme poverty in member countries—a number expected to increase by 55-63 million this year.

Now, as these communities face the unparalleled challenge of the global pandemic and its ripple effects, IDA’s ability to reach those in need has never been more important—or appreciated. The 20th replenishment process presents a very real opportunity to help countries re-position themselves on the path to a better future. IDA’s laser focus on efficiency and results, and capacity to work with key partners, make it a powerful platform for operationalizing this much-needed international solidarity.

For the latest on IDA, visit ida.worldbank.org or follow us @WBG_IDA and #IDAWorks

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