JAKARTA (TheInsiderStories) - A coalition of more than 60 donor and borrower governments agreed today to ratchet up the fight against extreme poverty US$75 billion commitment for the International Development Association (IDA), the World Bank’s fund for the poorest countries.
“This is a pivotal step in the movement to end extreme poverty. The commitments made by our partners, combined with IDA’s innovations to crowd in the private sector and raise funds from capital markets, will transform the development trajectory of the world’s poorest countries. We are grateful for our partners’ trust in IDA’s ability to deliver results,” World Bank Group President Jim Yong Kim said in a press statement.
He continued, the funding will enable IDA to dramatically scale up development interventions to tackle conflict, fragility and violence, forced displacement, climate change, and gender inequality and promote governance and institution building.
The funding will also boost jobs and economic transformation – areas of special focus over the next three years. These efforts are underpinned by an overarching commitment to invest in growth, resilience and opportunity.
“IDA’s focus on issues like climate change, gender equality, and preventing conflict and violence will also contribute to greater stability and progress around the world,” said World Bank Group Interim Managing Director and Co-Chair of the IDA18 negotiations, Kyle Peters.
Financing during the IDA18 replenishment period, which runs from July 1, 2017 to June 30, 2020, is expected to support essential health and nutrition services for up to 400 million people, access to improved water sources for up to 45 million people, financial services for 4 to 6 million people, safe childbirth for up to 11 million women through provision of skilled health personnel, training for 9-10 million teachers to benefit 300+ million children, immunizations for 130 to 180 million children, better governance in 30 countries through improved statistical capacity and additional 5 GW of renewable energy generation capacity.
To finance this groundbreaking package, IDA is proposing the most radical transformation in its 56-year history. For the first time, IDA is seeking to leverage its equity by blending donor contributions with internal resources as well as funds raised through debt markets. By blending concessional contributions from donors with its own resources and capital market debt, IDA will significantly increase the financial support it provides to clients.
“The innovative financing package offers exceptional value for money, with every $1 in partner contributions generating about $3 in spending authority. It is one of the most concrete and significant proposals to date on the Addis Ababa Action Agenda – critical to achieving the 2030 Sustainable Development Goals,”said World Bank Vice President for Development Finance, Axel van Trotsenburg.
The additional financing will enable IDA to double the resources to address fragility, conflict and violence (more than $14 billion), as well as the root causes of these risks before they escalate. The funds will also provide additional financing for refugees and their host communities ($2 billion). Increased financing will help strengthen IDA’s support for crisis preparedness and response, pandemic preparedness, disaster risk management, small states and regional integration.
Efforts to stimulate private sector development in the most difficult environments, which is at the core of job creation and economic transformation, will receive a major push in the form of a new $2.5 billion Private Sector Window (PSW). The PSW, being introduced together with the International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA), will help mobilize private capital and scale up private sector development in the poorest countries, particularly in fragile situations.
The funds will also help strengthen government institutions, mobilize resources needed to deliver services, and promote accountability.
A total of 47 countries pledged resources to IDA; additional countries are expected to pledge in the near-term. The World Bank Group is continuing the tradition of contributing its own resources to IDA. A total of 75 low-income countries are eligible to benefit from the IDA18 financing package.