Record funding for world’s poorest countries from WB Group

Almost US$ 42 Billion for next three years

Berlin – Donor countries last week pledged a record US$ 25.1 billion for the World Bank to help overcome poverty in the world’s poorest countries. In total, the IDA15 replenishment will provide US$ 41.6 billion, an increase of US$ 9.5 billion over the previous replenishment (IDA14) which provided US$ 32.1 billion.

“This is the largest expansion in donor funding in IDA’s history,” World Bank Group President Robert B. Zoellick said of the 15th replenishment of the International Development Association (IDA15). “The donor community has demonstrated its full commitment to helping countries overcome poverty and achieve sustainable growth, especially in Africa.”
The record donor pledges for IDA15 represent a 42 percent increase from the previous replenishment. This is complemented by US$ 16.5 billion in internal financing from the World Bank Group and prior donor pledges for financing debt forgiveness.

Zoellick praised and thanked donors for this unprecedented show of support. “These funds will ensure IDA can continue to serve the 2.5 billion people living in the poorest countries on five continents,” he said.
“This generous replenishment is both a strong recognition of the importance of multilateral aid and a vote of confidence in IDA as an effective platform for global development aid.”

IDA15 will support low-income countries by increasing its activities in combating climate change, facilitating regional integration and cooperation, boosting infrastructure investment and providing greater support to post-conflict countries, notably in Africa.

A total of 45 countries made pledges to IDA’s 15th replenishment, the highest number of donors in IDA’s history. Six countries – China, Cyprus, Egypt, Estonia, Latvia and Lithuania, joined the list of donors. Some of the countries, such as Egypt and China, were once IDA borrowers. “We have been working hard to bring in more donors to IDA,” said Zoellick.“Broadening the base will help us raise more funds and build a solid foundation for IDA moving forward.”

The funding pledges came after two days of meetings of donor and borrowing country representatives hosted by the German Government in Berlin. German Minister for Economic Cooperation and Development, H.E. Heidemarie Wieczorek- Zeul welcomed the positive outcome of the replenishment, describing the World Bank Group as ““one of the institutions that is key to achieving the Millennium Development Goals, “ and “a role model, a frame of reference for many other multilateral and bilateral donors.”

Donors strongly endorsed IDA’s development effectiveness and recognised its critical importance in helping developing nations reach the Millennium Development Goals, including the internationally agreed target to halve poverty by the year 2015.

“We very much welcome this substantial replenishment of IDA as well as its clear regional focus on Sub-Saharan Africa,” said H. E. John Kufuor, President of Ghana and Chairman of the Assembly of the African Union .

“As we approach the target year of 2015 it is extremely important for African countries to know they can count on the international donor community and on a strong IDA to help us achieve the Millennium Development Goals and improve the livelihoods of African people. We see this replenishment as a bold step forward in the implementation of the scaling up agenda and look forward to the same level of commitment in the overall support of our partners to our development effort.”

Mr. Zoellick noted that this replenishment round was especially challenging as repayments during IDA15, including compensation for debt forgiveness, remain broadly the same as in IDA14. This meant that the bulk of any increase in the overall IDA envelope would be borne by donors, requiring a proportionally larger effort on their part.

IDA is one of the largest sources of assistance for the world’s poorest countries, 39 of which are in Africa. Nearly all of IDA’s loans (known as credits) have no interest charge and repayments are stretched over 35 to 40 years, including a 10-year grace period. IDA also provides outright grants to countries at risk of debt distress. IDA provides knowledge and financial services to client countries in support of their priorities and needs.

IDA-financed operations address primary education, basic health services, clean water and sanitation, environmental safeguards, business climate improvements, infrastructure, and policy and institutional reforms. These projects pave the way toward economic growth, job creation, higher incomes and better living conditions for the poor.

Since its inception, IDA credits and grants have totaled US $182 billion, averaging US $10 billion a year in recent years and directing the largest share, about 50 percent, to Africa. In fiscal year 2007 (which ended June 30, 2007), IDA commitments reached a record level of US $11.9 billion. Nineteen percent of those commitments were provided on grant terms. New commitments in 2007 comprised 189 operations. In September of 2007 the World Bank Group pledged to provide US $3.5 billion in net income transfers to IDA15. The US $3.5 billion is expected to be contributed equally by IFC and the International Bank for Reconstruction and Development (IBRD), both affiliates of the World Bank Group.