Fourteenth Replenishment of IDA Resources Finalized
Largest Funding Increase in Two Decades, But More Resources Needed
Final Report: Working Together to Achieve the Millennium Development Goals
The Board of Governors of the International Development Association (IDA) approved the fourteenth replenishment of IDA’s resources on April 18, 2005. Under IDA14, approximately SDR 22 billion ($33 billion) will be made available to the world’s 80 poorest countries during the next three years. Of this amount, about SDR 12 billion ($18 billion) will come from new contributions from 40 donor countries. This represents an approximately 25 percent increase in overall resources over the previous replenishment, and is the largest expansion of IDA resources in two decades.
Former World Bank President James D. Wolfensohn hailed the IDA14 agreement, saying, “IDA is the lifeline for many of the world’s poorest people and this increase in IDA resources represents a major step forward in the international community’s efforts to fight poverty and achieve the Millennium Development Goals. We are pleased that the donors have come together to ensure that the poorest countries of the world will continue to have substantial new resources for improving the lives of their people. This IDA14 replenishment marks an important milestone as the first measurable deliverable of 2005, a year of intense focus on scaling up both the volume and the quality of aid we provide in the fight against global poverty.”
The new resources will underpin important innovations in IDA’s policies for poverty reduction, which include the following:
Donors supported a renewed focus on stronger, broad-based economic growth as essential to enable poor countries to reach the ambitious goals of progress and human welfare embodied in the Millennium Development Goals. They pointed to a large and growing need for investment in access by poor communities to clean water, better communications and reliable power, and viewed IDA, which has a large and expanding infrastructure program, as a key instrument in meeting these requirements. They also stressed that stronger growth required action by IDA to foster a better climate in poor countries for private investment, and they urged a redoubling of innovative efforts by IDA to support entrepreneurship and vibrant domestic private sector growth.
IDA's financial support to poor countries will now take systematic account of vulnerability to debt. The countries facing the toughest debt problems – most of them in Sub-Saharan Africa – will get all of their support in the form of grants, while less debt-burdened countries will receive IDA's highly concessional long-term loans (interest-free credits with a maturity period of 40 years and a grace period of 10 years), or in a few cases a mixture of grants and credits. It is expected that, as a result, around 30 percent of total IDA support in the coming three years will be on grant terms. At the same time, donors agreed on measures to help offset the financial impact of grants on IDA's ability to support poor countries in the future.
In another innovative step, the new agreement puts development results at the center of IDA's program. Systematic indicators, based on the Millennium Development Goals and on countries' own statistical systems, will monitor development progress and link outcomes to IDA country programs and projects, enabling better assessment of how both countries and IDA are doing, and quicker and more flexible responses to changes on the ground.
To get better results on the ground, donors also stressed that development needs stronger partnerships among aid providers and recipient countries, and better coordination of international development assistance – and they urged IDA to be a leading force for change. They asked IDA, as the leading provider of aid to poor countries, to reach out more systematically to development partners, including bilateral aid agencies and other international institutions, in order to "harmonize" development approaches and programs and thereby increase the efficiency and impact of aid in support of developing countries' own efforts. The importance of stronger collaboration is emphasized in the title of the IDA Deputies' report, “Working Together to Achieve the Millennium Development Goals.”
A key aspect of IDA’s financial support to poor countries is the strong and transparent link to country performance on economic policies, governance and poverty reduction efforts. Donors supported a decision by the World Bank's Board to make IDA's performance assessments of countries – its country ratings – publicly available. This will further enhance IDA's own transparency and accountability, and also help foster greater dialogue and openness on critical development, policy and financing decisions by developing countries and by international development assistance agencies.
Geoff Lamb, the Bank’s Vice President for Concessional Finance and Global Partnerships and Senior Counsellor for IDA, who chaired the IDA negotiations, said, “This replenishment is crucial in both timing and volume to contribute towards adequate financing for the poorest countries to achieve the Millennium Development Goals – goals for our common future. We are pleased overall by the increases in the quality and volume of assistance IDA will be able to deliver over the next three years, though everyone recognizes that the international community will still need to step up to the levels of development assistance required for the poor countries to grow their way out of poverty.”
Note on the replenishment process:
To further enhance the openness of IDA’s work and the quality of the replenishment plan, donors were joined by representatives from IDA borrower countries, who provided borrower country perspectives on the issues under discussion, and observers from multilateral development banks. Donors and borrower representatives also held a consultation with civil society representatives from borrower countries throughout South and East Asia, to gain additional insights from borrower countries. In addition, papers discussed at the meetings were made publicly available throughout the replenishment process, and the public was invited to comment on the IDA14 report as it was being drafted. View comments (pdf). The papers and Chairman’s summaries of the IDA14 meetings, are listed below.
Fouth Meeting. The fourth meeting of the IDA14 Replenishment negotiations was held in Athens, Greece, on December 13-14, 2004. See Chairperson Summary (pdf) and meeting papers:
- Debt Sustainability and Financing Terms in IDA14: Further Considerations on Issues and Options, November 2004
- Supporting Small and Vulnerable States, December 2004
- Financing Framework for IDA14: Pending Issues, November 2004
- Measuring Results: Improving National Statistics in IDA Countries
- Strengthening the Private Sector in IDA Countries: World Bank Collaboration, November 2004
- Strengthening the Private Sector in IDA Countries: Status of World Bank Collaboration with External Partners, November 2004
- Aid Delivery in Conflict-Affected IDA Countries: The Role of the World Bank, November 2004
- Indicators on Aid Harmonization and Alignment, November 2004
Thrid Meeting. The third meeting of the IDA14 Replenishment negotiations was held in Washington, D.C., USA on October 4-6, 2004. See Chairman's Summary (pdf) and meeting papers (pdf):
- Country Policy and Institutional Assessments: An External Panel Review - Panel Recommendations and Management, June 2004
- IDA Results Measurement System: Recommendations for IDA14, June 2004
- Recent Changes in Possible Outcomes for IDA14 Baselines, June 2004
- Debt Sustainability and Financing Terms in IDA14, June 2004
- Financing Requirements from IDA for Poor Countries during IDA14 - June 2004
- IDA13 Results-Measurement System: Spring 2004 Update, May 2004
- Modalities of IDA13 Grant Financing, Technical Note - March 2004
- Modalities of IDA13 Grant Financing, Technical Note - May 2004
First Meeting. The first meeting of the IDA14 Replenishment negotiations was held in Paris, France on February 18-20, 2004. See Chairman's Summary (pdf) and meeting papers (pdf):
- IDA's Performance-Based Allocation System: Update on Outstanding Issues, February 2004
- Proposed Timeline for the IDA14 Process, February 2004
- IDA14 Replenishment Priorities: Proposed Special Themes February 2004
- Initial Draft Part 1 of the Deputies' Report for IDA14, February 2004
- Further Options for IDA13 Grant Financing, January 2004
Background Papers for First Meeting:
- Debt Relief for the Poorest: An OED Review of the HIPC Initiative
- Toward Country-Led Development: A Multi-partner Evaluation of the Comprehensive Development Framework - Synthesis Report
- Toward Country-Led Development: A Multi-partner Evaluation of the Comprehensive Development Framework - Six Country Case Studies
- 2002 Annual Review of Development Effectiveness (by OED)