A participant stands next to the World Bank logo during the 2018 International Monetary Fund - World Bank Annual Meeting in Nusa Dua, Bali, Indonesia, on October 12, 2018. Reuters
In a significant move to support the world’s poorest countries, donor nations have pledged a record $100 billion for the World Bank's International Development Association (IDA) fund over the next three years. This replenishment comes as a vital lifeline to nations facing severe challenges, including mounting debt, climate change impacts, inflation, and ongoing conflicts. The announcement was made early on Friday at a pledging conference held in Seoul, underscoring the global commitment to tackling these pressing issues.
The $100 billion total exceeds the previous $93 billion replenishment, which was announced in December 2021. While countries will directly contribute around $24 billion to the IDA—slightly more than the $23.5 billion pledged in 2021—the real impact will come from the fund’s ability to leverage additional resources. The World Bank plans to issue bonds and employ other financial strategies to stretch the total contribution, aiming to provide up to $100 billion in grants and loans to the 78 low-income countries by mid-2028.
Despite this record-breaking pledge, the two-day conference did not reach the $120 billion goal set by African heads of state. The shortfall was partially due to the strength of the U.S. dollar, which reduced the value of contributions from some countries that pledged in foreign currencies.
At a G20 summit in Brazil last month, several countries made substantial increases to their pledges. Norway, for example, raised its contribution by 50% from 2021 to 5.024 billion krone (around $455 million). South Korea boosted its pledge by 45% to 846 billion won (roughly $597 million), while Britain increased its contribution by 40% to 1.8 billion pounds. Spain’s pledge also grew by 37% to 400 million euros (about $423 million). However, due to currency fluctuations, Spain's pledge was worth slightly less than initially expected.
The U.S. government, under President Joe Biden, pledged $4 billion, up from $3.5 billion in the previous round of funding. Although the World Bank did not immediately disclose the exact amounts pledged by other nations, it confirmed that 17 donor countries had committed to increasing their contributions by at least 25%, with 10 nations promising increases of 40% or more.
Ajay Banga, the President of the World Bank, expressed optimism about the potential impact of the new pledges. He highlighted the bank’s efforts over the past two years to improve its balance sheet, which has expanded its lending capacity by approximately $150 billion over the next decade. This enhanced capacity will allow the IDA to stretch the funds further, turning modest contributions into transformative investments that can improve the lives of millions in low-income countries.
Banga emphasized that the additional resources would help the IDA focus on job creation, infrastructure development, and climate action. He also noted that the IDA is not merely a financial tool but a key driver of economic growth. The funds will be used to improve education and health systems, stimulate private sector growth, and provide countries with the resources needed to address the challenges they face.
The World Bank has also seen a growing number of countries graduate from being aid recipients to becoming donors, including nations like China, South Korea, Chile, Jordan, and Turkey. These countries, now contributors, demonstrate a positive shift toward global collaboration in addressing poverty and inequality.
This historic replenishment represents a crucial step in strengthening global efforts to alleviate poverty and foster sustainable development worldwide.
