The International Development Association (IDA) is the arm of the World Bank that provides grants and below-market loans to the world’s 74 poorest countries. IDA operates on a cash-in, cash-out basis and relies on grants from donor countries for about 30 percent of its funding, raising most funds through capital markets. Contributions from donors are critical for IDA to continue operations and maintain its credibility in capital markets to leverage new resources and convert market borrowing to grants. Every three years, donors meet to replenish IDA’s funds and review its policies. The last IDA replenishment, IDA19, began on July 1, 2020, to fund IDA through June 30, 2023. However, due to the COVID-19 pandemic, IDA front-loaded its third-year funds to address the crisis and cannot maintain current lending levels to member countries without supplemental funding from shareholders. To address this dilemma, IDA announced it would accelerate the next replenishment by one year. The IDA20 replenishment began in April 2021, when IDA Deputies met to discuss the status of IDA19 commitments and special themes and cross-cutting issues for IDA20.
At the next meeting of IDA Deputies on June 23-24, 2021, IDA will present the financing framework and policy commitments for IDA20. The June meetings are a key moment for donors to advocate for policy reforms and seek greater ambition from the Bank. As one of the three largest IDA shareholders, these meetings will be a pivotal moment for the United States to push IDA to raise the ambition of its commitments. Further, due to domestic budget constraints, the United Kingdom will step back as IDA’s largest donor, creating an entry point for the U.S. to assume a more prominent leadership role during IDA20 negotiations.
In April, IDA announced the overarching theme of IDA20 is “Building Back Better from the Crisis: Towards a Green, Resilient and Inclusive Future,'' and the special themes are climate change, fragility, conflict, and violence (FCV), jobs and economic transformation, and human capital. Focusing on expanding recovery efforts, the four cross-cutting issues are crisis preparedness, debt sustainability and transparency, governance and institutions, and technology. Together, these guiding themes shape IDA’s policy priorities for the twentieth replenishment and signal IDA’s desire to help low-income countries respond to the COVID-19 pandemic and support a green and equitable recovery. The pandemic’s social and economic impacts have reversed decades of development progress in IDA member countries. Therefore, it is crucial that IDA sets ambitious targets during IDA20 negotiations to help its member countries regain lost ground, prevent further back-sliding, and address the other looming crisis — climate change.
During the IDA-20 replenishment negotiations, BIC encourages the U.S. to advocate for the following policies:
- Disability should remain a key priority: Disability was a cross-cutting issue in IDA19 and a priority for the U.S. Under IDA20, World Bank management announced that human capital would become a special theme, encompassing health, education, social safety nets, and disability. We are concerned that the elimination of disability as a specific cross-cutting issue and its inclusion under the broader human capital theme will deprioritize disability issues. As a strong advocate for disability rights, we encourage the U.S. to use its position as one of the largest donors to build support among shareholders and push management to consider disability within each theme ambitiously. IDA deputies should systematically consider disability rights during IDA20 negotiations to support the needs and rights of persons with disabilities and provide them full access to project benefits.
- Nature-based solutions should feature prominently in the IDA20 policy commitments on climate: Under the Biden administration, the U.S. renewed its commitment to climate action. In April, the administration released the U.S. International Climate Finance Plan, directing the U.S. Department of Treasury and the U.S. Executive Directors in multilateral development banks (MDBs) to push the MDBs to set and apply ambitious climate finance targets and policies, in partnership with other shareholders. We encourage the U.S. to prioritize nature-based solutions in its climate policies and advocate measures that integrate forests and forest peoples, who serve as effective ecosystem stewards, into the IDA20 policy commitments. Historically, nature-based solutions have received little dedicated climate financing, despite the significant value forests and natural ecosystems have in contributing to human well-being and climate stabilization — for example, by absorbing and storing carbon above and below ground and by regulating rainfall. The IDA20 climate change special theme is an important opportunity for the U.S., other donors, and IDA to prioritize nature-based solutions and recognize the benefits these policies and projects have both in reducing GHG emissions and increasing resilience to climate impacts.
- Preventing Sexual Exploitation and Abuse (SEA), especially of children, should be prioritized within the human capital and FCV themes: There is an inherent risk of SEA in all types of projects funded by IDA and the World Bank, particularly infrastructure, education and fast-tracked COVID-19 response projects. Further, the global economic downturn caused by COVID-19, which is still at its height in many developing countries, has led to significant negative impacts for women and children, especially those out of school, including an increase in SEA. This risk is particularly acute in FCV contexts, and thus SEA should be specifically addressed in this theme. IDA policy commitments around SEA should also require measures to address the unique risks of child SEA that arise from IDA projects. Preventing child SEA and protecting children enables them to complete their education and represents a significant investment in human capital. IDA deputies should encourage the Bank to prioritize preventing SEA in IDA20 as part of a resilient and inclusive recovery from the COVID pandemic.
An accelerated IDA20 replenishment is unprecedented and reflects the level of need and depth of the crises the world is facing. As a historical champion for reform and progress at the World Bank and IDA, the U.S. should use its unique leadership position to advocate for more ambitious, inclusive, and green policy commitments from IDA during IDA20.