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PRESS RELEASE September 27, 1987

World Bank’s IDA-8 Advance Contribution Scheme Takes Effect

The World Bank announced today that the advance contribution scheme for the Eighth Replenishment of the International Development Association (IDA-8) became effective on September 24, 1987 when Japan gave notice of its agreement to participate. With this development, IDA-8 is now operational.

The advance contribution scheme is triggered when notices of participation are given by donors representing 20 percent of the basic resources of the replenishment. IDA-8 was negotiated for the three-year period ending June 30, 1990. The basic IDA-8 agreement is for $11.5 billion from 32 countries with an additional $0.9 billion pledged in supplementary contributions.

The scheme is designed to avoid costly delays in project implementation by ensuring that projects in the pipeline can continue to be prepared, negotiated, and signed during the implementation lag between the beginning of a replenishment period and when the replenishment becomes effective. During this interim period, one-third of the resources covered by the notices given can be used by IDA.

IDA provides concessional, long-term assistance to the poorest nations from contributions made by its richer member countries. The IDA-8 replenishment becomes effective when a majority of donors, including at least 12 industrialized Part I countries representing 80 percent of replenishment resources, notify IDA of their commitment to participate. An implementation lag results because of the time required for donors to secure necessary legislative and other approvals that may be required for the commitment of budgetary funds to the replenishment.

Japan's notice covers 18.70 percent ($2.15 billion) of the IDA-8 replenishment. Prior notices received amounted to 9.31 percent: from Canada (5.00 percent or $575 million); Sweden (2.62 percent or $301 million); Denmark (1.30 percent or $150 million); and three other countries (totaling 0.39 percent or $45 million). Canada's share includes a special contribution of $28.75 million equivalent equal to 0.25 percent of the basic replenishment. Japan has agreed to make a supplementary contribution to IDA-8 of $450 million equivalent and another $450 million equivalent has been pledged by five other donor members and by Switzerland, a non-member.