A breathtaking moment of international solidarity to support the most vulnerable people
We are in a crisis, a crisis that touches every nook and cranny of life. Health, life, livelihoods and the future are at stake. The impacts of the COVID-19 crisis are remarkably pronounced in the world’s poorest and most vulnerable countries.
It is at times like this that we urgently and desperately need demonstrations of solidarity and community support. Last week, we witnessed such a moment of global solidarity when negotiations were launched for the 20th Replenishment of the International Development Association (IDA), the World Bank’s fund for the poorest countries. We have seen representatives from developed and developing countries join forces with a focused and determined gaze on the end goal: a green, inclusive and resilient recovery for all.
Pressures from the COVID-19 crisis prompted IDA to step up its funding commitments last year and launch a advance replenishment to meet the needs of countries. We welcome the decision of IDA donor and borrower country representatives to bring the replenishment negotiations forward by one year and look forward to the many crucial discussions to come, which will culminate with a pledging session. in December.
IDA mobilized to respond to an unprecedented global crisis
IDA has a strong track record: the institution has never shied away from the daunting challenges facing member countries. Indeed, in the face of the COVID-19 pandemic, IDA has redoubled its efforts with a significant increase in funding 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 aimed at saving lives, protecting the poor and vulnerable, creating jobs, saving businesses and build a more resilient and sustainable recovery.
In Cambodia, for example, IDA has used years of investments in health to disburse funds quickly, allowing the government to procure essential supplies for emergency response early on. In Afghanistan, IDA helps educate women about the risks of COVID-19 and keep their communities safe. And in the Sahel—Where climate change exacerbates the impacts of COVID-19 — IDA sets up follow-up initiatives, strengthens existing early warning systems, and provides targeted responses to support agro-pastoral sectors.
IDA’s funding model has been the cornerstone of this response
bonds in international capital markets for the first time in its history. This step has resulted in a remarkable increase with every dollar in new contributions from partners generating more than $ 3 in support to the poorest and most vulnerable countries, backed by capital market financing and loan repayments.The first innovation came in 2018, when IDA extended funding to member countries by 50% by obtaining an AAA credit rating and issuing
Another important achievement of the IDA18 cycle was the increase in funding dedicated to the most vulnerable. This included more than doubling funding to countries facing fragility or conflict. IDA also supported arrears clearance, providing $ 1.1 billion in financing and complementing the Heavily Indebted Poor Countries (HIPC) Initiative, which facilitated a notable re-engagement with Somalia and Sudan, and gave them the opportunity to emerge from conflict and build their resilience.
In addition, the Deferred Disaster Drawdown Option (CAT-DDO) has been introduced in development policy operations to help countries build their capacity to plan and manage crises before a 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 mobilize private resources and open up investment opportunities in some of the most difficult markets. These experiences have enabled IDA to provide fast and flexible financing in times of urgent need.
All of this makes IDA a powerful platform to operationalize 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 achieve their development goals. As the world’s leading provider of multilateral financial assistance to the poorest countries, IDA is key to supporting the estimated 480 million people living in extreme poverty in member countries, a number expected to increase from 55 to 63 million this year.
Today, as these communities face the unprecedented challenge of the global pandemic and its ripple effects, IDA’s ability to reach those in need has never been greater or appreciated. The 20th Replenishment Process offers a real opportunity to help countries reposition themselves on the path to a better future. IDA’s focus on efficiency and results, and its ability to work with key partners, make it a powerful platform to operationalize this much-needed international solidarity.