2017 - Press Release, IDA18 Poised for July 1 Kick-Off

    By now, everyone has heard about the $75 billion IDA18 replenishment. With 50 percent more funding than IDA17, the historic package offers unprecedented potential for transformational development in the world's poorest countries.

     

    IDA18 Themes

    As part of the replenishment process, donors and borrowers agree to a set of special themes that warrant intensified and systematic focus by IDA. Themes are not a way to earmark IDA spending but provide a framework for ensuring our focus on critical areas and for evaluating our overall work. The overarching theme for IDA18 is “Toward 2030: Investing in Growth, Resilience and Opportunity.”

     

    Deputies agreed to carry forward the work of IDA17 and deepen the focus on the thematic areas of  Fragility, Conflict and ViolenceClimate Change, and  Gender Equality. IDA18 introduces two additional themes:  Jobs and Economic Transformation, with a strong emphasis on quality infrastructure, including energy, to promote private sector development to create jobs; and  Governance and Institution Building, which emphasizes domestic resource mobilization, public financial management, and public administration reform.

     

    The far-reaching innovations and policy commitments agreed under IDA18 pave a new way forward for development, in line with the ambitions of the 2030 agenda. Among the innovations are a new hybrid financial model, establishment of the IDA18 IFC-MIGA Private Sector Window, and the new approach engagement in countries affected by fragility and conflict. "Along with opportunity comes the need for change," says Axel van Trotsenburg, vice president of Development Finance who oversees the IDA replenishment. "IDA18 is really an agreement to action. We need to work together in a whole new way—to build a pipeline of projects, take IDA to the capital markets, and engage more deliberately across the World Bank Group to mobilize private finance in riskier markets."

     

    New hybrid financing model ups the ante

    For the first time,  IDA will raise funds on the capital markets, which will increase financing for IDA countries without the need for additional donor contributions. As a result, every dollar in partner contributions will generate about $3 in spending authority (up from $2 in IDA17)—offering partners exceptional value for money. At the same time, donor contributions remain central to funding IDA's concessional finance business model and provide the strong shareholder support that rating agencies view as critical to the triple-A rating.

     

    Private Sector Window set to open

    The private sector lies at the center of a sustainable development model and accounts for 90 percent of jobs in IDA countries. The  IDA18 IFC-MIGA Private Sector Window will contribute to the IDA18 priority of job creation and economic transformation by:

    • Mitigating risks to scale up IFC and MIGA engagements in IDA countries, with a focus on FCS markets
    • Building on World Bank Group efforts to broaden the reach of private sector solutions
    • Crowding in private investments and    creating markets
    • Scaling up the growth of a sustainable and responsible private sector

     

    IDA18 homes in on fragility, conflict and violenceIDA18 introduces an unprecedented financing package and differentiated approach to address the drivers of fragility, conflict and violence. Highlights include:

    • Doubling of core allocations to FCV countries to $14 billion and a new "Refugee Window" of $2 billion for IDA countries hosting refugees
    • A comprehensive set of policy commitments that aim to integrate World Bank Group strategies addressing FCV drivers and building institutional resilience; improve staffing, operational effectiveness and flexibility; and promote partnerships for a more effective response.
    • New "Risk Mitigation Regime" to mitigate risks of fragility, conflict and violence in Guinea, Nepal, Niger and Tajikistan

    IDA18 Financing Windows

    Core IDA financing, which is the unearmarked portion of IDA, increased from $39 billion in IDA17 to $52 billion in IDA18. The remainder of the funds is accessible to client countries through various "windows" many also new or significantly scaled up:

     

    IDA18 Financing Windows

    Core IDA financing, which is the unearmarked portion of IDA, increased from $39 billion in IDA17 to $52 billion in IDA18. The remainder of the funds is accessible to client countries through various "windows" many also new or significantly scaled up:

    • The Crisis Response Window will provide $3 billion to help IDA clients around the globe respond to severe unexpected natural, economic or health disasters. IDA's instruments for crisis preparedness and response are expanded further by the introduction of the Catastrophe Deferred Draw-Down Option (CAT-DDO) for IDA countries.
    • The new $2 billion Refugee Window will support countries that host significant refugee populations to meet the medium- and long-term development needs of both the refugees and their host communities.
    • The new IDA/IFC/MIGA Private Sector Window will provide $2.5 billion to expand private investment in the poorest and most fragile IDA countries. 
    • The $5 billion Regional Program supports regional growth and integration. Sub-Saharan Africa will be allocated 75% of this window.
    • The $6.2 billion Scale-up Facility provides additional financing on IBRD terms for clients seeking greater financing for high impact development projects beyond what their core financing can support.

     

     

    Photo: School girl, Tonga. Credit: Tom Perry / World Bank.