Joint statement on World Bank’s IDA20 replenishment

6 October 2021 | Letters

The 20th replenishment of the World Bank’s International Development Association (IDA20), if properly designed and implemented, can be a vital source of development financing for countries which are struggling to cope with the debt, inequality and climate crises exacerbated by the ongoing global pandemic. Although the amount of the replenishment – an estimated US$94 billion for the period July 2022 and June 2025 – is not enough to address the scale of the health, social and economic devastation, it can serve as an essential lifeline for millions of people, preventing a further deepening and expansion of poverty.

However, for the IDA20 replenishment to make an effective and meaningful contribution to recovery and resilience efforts, the focus of resources must be on supporting public finance and strengthening public services. The numerous failures of efforts to leverage private finance to meet the Sustainable Development Goals sets a cautionary precedent against using IDA as an instrument for deepening market creation at the expense of the public sector, especially in the Covid-19 context.  In particular, the role of the IDA Private Sector Window (PSW) in accelerating the commodification of public services, especially in the health sector, is a cause for alarm. It is crucial that IDA refrains from investing in private healthcare and education, whether through the IDA-PSW or other IDA-related financing instruments.

Rather than viewing IDA as a ‘technical tool’ for fixing the impacts of the crisis, it is important to remember that countries not only need to recover from the impacts of the pandemic; they also need support in altering their economic systems. Above and beyond this, global trade structures and the power dynamics which have led to dire consequences for the Global South, including continued dependence on extractive economic activities, deindustrialisation, global vaccine inequity, unjust indebtedness and disproportionate impact of climate change need radical reform. IDA finance should not reinforce these dynamics. Instead of further embedding inequality and cementing the position of IDA countries at the periphery of the global economic order, the IDA20 replenishment must focus on generating socioeconomic transformations, which will lead to long-term structural and sustainable development models.

To achieve this, the special and cross-cutting themes under IDA20 need to address the pandemic as a multi-dimensional catastrophe which has been heightened and prolonged due to past and current political choices derived from the long-standing subordinate position of IDA countries in the global economy and international financial architecture. The issues of global unemployment, provision of public goods such as health and education, support for domestic investment through inclusive business models, debt cancellation and climate change adaptation and mitigation therefore need to be addressed in a way which empowers citizens while  guaranteeing the sovereign rights of states.

Prioritising development finance through IDA20 as a way to strengthen public goods, strengthen the provision of public services and promote equitable, ecologically sustainable and inclusive domestic businesses is a step in the right direction. In light of previous shortcomings, IDA20 must be used to support the long-promised and locally-led economic transformations that result in a break from the current economic order. It should enable IDA countries to meet their international human rights obligations and to engage in the global economy on an equal footing with high-income countries.