In mid December the World Bank announced that it had secured a record $51.9 billion worth of contributions for its grants and concessional loans arm, the International Development Association (IDA, see Update 69). The final negotiating meeting was held in Moscow, Russia, and the Bank said 46 countries had agreed to contribute to IDA 17, a drop from 51 in IDA 16.
Britain regained the spot as top donor with a grant contribution of £2.81 billion ($4.6 billion) plus concessional loans of £500 million. The UK took the top spot from the US in 2007 at the 15th IDA replenishment but lost it in 2010 at IDA 16. The US’ $3.9 billion contribution was the second largest. Media reported Japan as the third largest donor, and that Germany’s €1.6 billion ($2.2 billion) made it the fourth largest. Bank president Jim Yong Kim said that emerging market countries had “played a very large role” in the replenishment. The full breakdown of contributions will be released in the final replenishment report due out in March.
The nominal figure includes non-grants and probably represents a decline in real terms (see article, Update 85). Media reported that up to $4 billion of the $51.9 billion would be delivered as low-interest loans from donors to the Bank. Using the final agreed discount rate of 2.65 per cent, the grant element of loans this size could range from $0.7 billion to $1.8 billion depending on the donors’ loan terms. Taking out the non-grant elements would leave a headline figure of at most $49.7 billion.
IDA negotiations are formally conducted in special drawing rights, not any national currency, but the Bank press release presented only the dollar figure. Using US dollar inflation rates to enable comparison, IDA 17’s overall $51.9 billion would overall be valued at $48.65 billion in 2010 dollars, and stripping out the non-grant portions using the most generous assumptions, the $49.7 billion would be valued at $46.5 billion in 2010 dollars. Those figures are respectively 1.3 per cent and 5.7 per cent less than the $49.3 billion agreed for IDA 16 in 2010. Assuming donors use the tightest possible loan terms would yield a total figure of $48.6 billion, valued at $45.5 billion in 2010 dollars, a 7.7 per cent decline.
The concessional donor loans proved to be one of the most controversial aspects of negotiations because the discount rate will be used to calculate the grant elements of the loans, and thus will affect IDA voting rights. Resistance to the loans idea came principally from Nordic countries. In addition to the UK’s loans, Japan, France and Italy indicated an intention to use the loan option.
One of the other contentious issues was over graduation, meaning when countries are no longer eligible for IDA loans and must take loans from the Bank’s less concessional lending window at the International Bank for Reconstruction and Development (IBRD). India, home to 400 million of the 1.2 billion people the World Bank considers to be below the extreme poverty line, passed the IDA graduation threshold, but according to the published draft of the IDA 17 framework, negotiators planned to approve transitional support. India would receive IDA funds, but at two-thirds of the 11 per cent of total IDA resources they would have received if they had not passed the graduation threshold. Angola, Armenia, Bosnia and Herzegovina, and Georgia all look to have fully graduated without transitional support.
The IDA results measurement system comprises all the indicators that the Bank will track, but the final language and indicators, like the donor contribution levels, will not be published until spring. In November comments on the draft report (see Bulletin Dec 2013), international NGO Oxfam asked for a stronger focus on inequality, more investment in education and for specific targets on the reduction of health service user fees and equity in access to health services. They also recommended “IDA deputies to commit to revise the CPIA [Country Policy and Institutional Assessment] during the IDA 18th replenishment and ask management to present proposals at the time of the midterm review of IDA 17” as several aspects of the CPIA are outdated (see Update 72, 69, 63).