WASHINGTON, September 22, 2016 — The International Development Association (IDA), the arm of the World Bank Group that works in the world’s poorest countries, announced today its first-ever public credit ratings of Aaa/AAA (stable) issued by Moody’s and S&P.
The credit ratings will enable IDA to raise money in the capital markets to support its financing of a wide range of life-changing investments—from the provision of clean water and energy to the creation of opportunities for refugees and response to natural disasters and health crises—in the world's 77 poorest countries.
"This triple-A rating is a well-deserved recognition of the success of one of the most important partnerships within the World Bank Group, reflecting the strong equity and management of IDA, which puts us in an exceptional position to access capital markets,” said World Bank Group Managing Director and Chief Financial Officer, Joaquim Levy. "It is a landmark in private sector capital mobilization for development finance, leveraging the balance sheet and the significant achievements of IDA and opening new investment opportunities in the fixed income space."
By blending concessional contributions from donors with capital market debt, IDA will significantly increase the financial support it provides to clients—critical to achieving the universal goal of ending extreme poverty by 2030. The blended financing model will allow IDA to provide clients financial assistance through grants and zero- to low-interest loans appropriate for the poorest and most vulnerable countries.
“This is really good news for the poorest people. The rating increases our ability to deliver important programs and help our client countries to achieve their development goals," said World Bank Interim Managing Director and Chief Operating Officer, Kyle Peters. "This will enable us to expand our contributions to overcome challenges that most affect the poorest, ranging from climate change, to gender inequality, conflict, jobs and economic transformation, and governance."
The rating comes at a time when IDA is negotiating a replenishment package for the three-year period from July 2017 to June 2020 (known as IDA18). IDA replenishments include cash contributions from a coalition of more than 50 governments around the world. Earlier this year, IDA’s partners supported IDA’s proposal to pursue this capital market borrowing, based on its financial strength and performance track record.
“IDA’s triple-A credit rating is not only historic for IDA, it also pioneers a new model for financing sustainable development in the poorest countries,” said World Bank Vice President and Treasurer, Arunma Oteh. “This critical milestone positions IDA to access financing from the capital markets for the first time ever. Obtaining the highest credit rating possible is a testament to IDA’s exceptionally strong financial position, underpinned by the strength of support from its members, its governance structure, and critical role in achieving the ambitious global development agenda.”
IDA18 implementation will begin in mid-2017, with the expectation that IDA will be ready to access the capital markets during IDA18 implementation.
“Leveraging IDA’s balance sheet represents one of the most radical transformations in IDA’s 55-year history,” said World Bank Vice President for Development Finance, Axel van Trotsenburg, who oversees resource mobilization for IDA. “This innovation offers donors exceptional value for money, with every dollar they contribute translating into about $3 in finance directly from IDA. This is one of the most concrete and significant proposals to date on the Addis Ababa Action Agenda to scale up the financing needed to achieve the Sustainable Development Goals.”
The financing will support action across the development spectrum, with a special focus on climate change; gender; conflict, fragility and violence; jobs and economic transformation; and governance.
IDA’s results-driven approach yields significant results. With support from IDA, during fiscal years 2011-2015:
• Over 400 million people received essential health services
• 17 million pregnant women received prenatal care from a health care provider
• 50 million people received access to better water services
• Over 100,000 kilometers of roads were constructed, rehabilitated or upgraded
• 5 million teachers were recruited and/or trained
• 205 million children were immunized
IDA delivers strong results in other priority areas as well. For example, from 2011-2013, IDA supported the expansion of health, nutrition and sanitation services in Kenya’s Dadaab and Ethiopia’s Dollo Ado refugee camps. The project benefited 1.5 million people, over 290,000 children received Vitamin A supplements, and over 85,000 children were treated for severe acute malnutrition. IDA is currently providing $200 million in concessional financing to help the governments of Lebanon and Jordan respond to the Syrian refugee crisis.
In the area of climate change, with help from IDA, nearly 5 million people in rural Bangladesh now have solar electricity and nearly 50,000 households are being connected each month. In Vietnam, climate-smart agriculture is reducing greenhouse gas emissions by 30 to 35 percent. And the lives of more than half a million Mongolian herders have been transformed by affordable, portable solar home systems.