Donor nations have committed a record $100 billion over three years to replenish the World Bank’s fund for the poorest countries, offering crucial support amid overwhelming debts, climate crises, inflation, and conflict.
The World Bank made the announcement early on Friday in Seoul at a pledging conference for the International Development Association, which provides grants and very low-interest loans to 78 low-income countries.
The total exceeds the previous $93 billion IDA replenishment announced in December 2021. Countries will contribute about $24 billion directly to IDA, only marginally increased from the $23.5 billion pledged in 2021, but the fund will issue bonds and employ other financial leverage to stretch that to the targeted $100 billion in grants and loans through mid-2028.
The two-day pledging conference fell short of the $120 billion goal that African heads of state had called for, partly because the U.S. dollar’s strength .DXY – pushed up by Donald Trump’s U.S. presidential election victory – diminished the dollar value of significant increases in foreign currency contributions by several countries.
At a G20 leaders’ summit in Brazil last month, Norway increased its pledge by 50% from 2021 to 5.024 billion krone. That’s $455 million at current exchange rates, but at the start of 2024, it would have been worth $496 million.
South Korea boosted its pledge by 45% to 846 billion won, ($597 million), Britain by 40% to 1.8 billion pounds, and Spain by 37% to 400 million euros. Spain’s pledge was worth $423 million on Friday, $10 million less than the day it was announced in October.
U.S. President Joe Biden pledged a $4 billion U.S. contribution, up from $3.5 billion in the previous round.
The World Bank did not immediately reveal the amounts of other pledges, but said that 17 donor countries had committed to raising their contributions by more than 25%, with 10 offering increases of 40% or more.
World Bank President Ajay Banga said in a statement that IDA will be able to stretch the new pledges further because of work done to optimize the development lender’s balance sheet over the past two years, increasing its lending capacity by some $150 billion over 10 years.
The bank’s ability to leverage contributions will transform “modest contributions into life-changing investments,” Banga said in an open letter to shareholders and client countries.
About 35 countries have graduated from IDA to become donors, including China, South Korea, Chile, Jordan, and Turkey.
Banga said the resources will allow the bank to put job creation at the center of its work, even as it addresses climate change and other global crises.
“In this context, IDA is not just a financial instrument; it is a catalyst for job creation,” Banga said. “It provides countries with the resources to build infrastructure, improve education and health systems and foster private sector growth.”
(with inputs from Reuters)
