IDA: World Bank fundraising drive begins

16 April 2010

As discussions opened on donor contributions to the sixteenth replenishment of the International Development Association (IDA, the World Bank arm for low-income countries), civil society groups urged major reforms to the Bank’s structure and approach.

In early March, the first meeting took place for the IDA-16 replenishment – replenishments are three-yearly fundraising drives to top up IDA’s resources for future lending (see Update 69).

In opening presentations, representatives of selected IDA-recipient countries argued for stronger country ownership of aid and reduced complexity in the aid system. Recent events had also demonstrated the need for the World Bank to respond more quickly and effectively to financial crises, they said.

Concern that rich country donors plan to renew their support for IDA without addressing fundamental problems at the Bank

Beyond representatives’ contributions to meetings, there is no formal mechanism for systematic and sustained dialogue between donors and client countries or civil society within IDA. Officials from South Africa, the UK and Australia are considering how to remedy this, but any improvements will come only after this replenishment.

Over the two day meeting, it was agreed that aid effectiveness and results would form the overarching theme for IDA-16. Despite a similar emphasis in the last replenishment, a 2009 report by the Bank’s Independent Evaluation Group (IEG) found that there was only a “mixed record on … the results agenda”, and initiatives to strengthen monitoring and evaluation were “yet to demonstrate a clear impact on outcomes.”

Four special themes for IDA-16 were also selected: the Bank’s capacity to respond to crises, IDA’s role in responding to climate change, mainstreaming gender issues, and IDA support for fragile states.

Civil society organisations were concerned that rich country donors plan to renew their support for IDA without addressing fundamental problems with Bank governance (see Update 70), conditionality (see Update 69), and poor performance in key sectors such as health and education. A joint paper by over 20 European NGOs said, “Unless the World Bank implements the urgent reforms required to become a credible development bank, European governments should not replenish IDA beyond IDA-15 levels and instead seriously consider alternative, more effective channels of disbursing international development funds.”

Rose Wanjiru of Kenyan NGO Centre for Economic Governance and AIDS in Africa expressed particular concern about the Country Policy and Institutional Assessment (CPIA) that largely determines countries’ IDA allocations (see Update 69), saying, “CPIA is based on erroneous assumptions which have led to inappropriate policy and economic prescriptions by the World Bank. It should be overhauled, and criteria that recognise countries’ development trajectories and ownership adopted.”

Bank to lead in future crises?

Following the pilot since November 2009 of an IDA crisis response ‘window’, intended to provide rapid support to countries’ core spending when crises hit, the Bank was given a mandate to design a permanent mechanism. Various financing options will be considered, but funding is unlikely to be additional to general IDA resources. In February, the Bank published a paper setting out the case for such a window and how it might work in practice. However, some rich countries oppose the Bank leading on crisis response, preferring the IMF as the lead agency, even where crises do not generate problems with countries’ balance of payments (see Update 70).

Another Bank proposal, to establish a dedicated funding mechanism for climate change issues, was rejected out of hand (see Update 70). The way forward on gender – where an IEG report suggests the Bank’s performance has been deteriorating in some respects (see Update 69) – remains unclear.

The next replenishment meeting will be held in an IDA country in June, and will focus on countries’ needs and the special themes. A civil society consultation may be held simultaneously. IDA deputies will meet again at the time of the annual meetings in the autumn and at the end of the year, when countries will finalise their funding commitments.