Significant IDA21 replenishment required as need for concessional finance grows

13 December 2023

Rich country donors are under pressure to ensure that the upcoming 21st replenishment of the World Bank’s International Development Association (IDA21), which starts early next year and runs until December, sees a significant increase in funding. IDA provides concessional financing and grants for low-income countries, which are in desperate need of financing to deal with a series of compounding crises, in addition to suffering from a liquidity crunch that has pushed at least half of IDA’s members into debt distress or high risk of debt distress.

Given the critical need, many have called for a significant increase in IDA funding. In their World Bank and IMF Annual Meetings 2023 communiqué, the V20, a grouping of countries systematically vulnerable to climate change, stated they expect “an ambitious IDA21 replenishment”, and backed calls for contributions to be tripled by 2030 (see Dispatch Annuals 2023).

While civil society recognises the need for additional grant and concessional finance, it has nonetheless questioned the value of IDA’s Private Sector Window (see Observer Summer 2021), arguing that the $2.5 billion allocated to the window under IDA20 to subsidise private sector investments would be better spent on core IDA projects.

Meanwhile, IDA is seeking to avoid a ‘fiscal cliff’ in the remaining 18 months of IDA20, which runs to mid-2025, through a combination of cancelling and recommitting unused committed funding, new donor contributions to two crisis windows and new bond issuances (see Dispatch Annuals 2023). This shortfall was the result of the $93 billion IDA20 replenishment being front-loaded to help countries with the economic fallout from Russia’s invasion of Ukraine, which left IDA $7.8 billion dollars short for the last two years of its current three-year IDA20 funding cycle.