SEOUL, 05/12/2024 – Donor nations have pledged a historic $100 billion to the World Bank’s International Development Association (IDA), providing critical support for 78 low-income countries grappling with debt, climate crises, inflation, and conflict. The announcement was made on Friday at a two-day pledging conference in Seoul, South Korea.
The $100 billion commitment surpasses the previous $93 billion replenishment announced in 2021. Although direct contributions from countries increased slightly from $23.5 billion to $24 billion, the IDA plans to leverage these funds by issuing bonds and employing financial mechanisms to meet the target.
Pledges and Currency Challenges
The pledging conference fell short of the $120 billion goal set by African leaders, partly due to the U.S. dollar’s strength, which reduced the dollar value of several foreign currency contributions. Despite this, numerous countries made significant increases:
•Norway: Boosted its pledge by 50% to 5.024 billion krone ($455 million), although it would have been worth $496 million earlier this year.
•South Korea: Increased its contribution by 45% to 846 billion won ($597 million).
•Britain: Raised its pledge by 40% to 1.8 billion pounds.
•Spain: Committed 400 million euros, a 37% increase, worth $423 million at current exchange rates.
U.S. President Joe Biden announced a $4 billion U.S. contribution, up from $3.5 billion in the last funding round.
The World Bank noted that 17 donor nations committed to raising contributions by over 25%, with 10 countries offering increases of 40% or more.
Enhanced Lending Capacity
World Bank President Ajay Banga emphasized the transformative potential of the fund, highlighting recent measures to optimize the institution’s balance sheet. This has increased the World Bank’s lending capacity by $150 billion over the next decade, enabling IDA to maximize the impact of the pledges.
“IDA is not just a financial instrument; it is a catalyst for job creation and infrastructure development,” Banga said in a statement. “The resources will allow us to address global crises while prioritizing job creation, climate action, and private sector growth.”
A Catalyst for Change
Since its inception, IDA has supported low-income nations through grants and low-interest loans. Its impact is evident in the 35 countries, including China, South Korea, and Turkey, that have transitioned from IDA beneficiaries to donor nations.
The funds will enable IDA to focus on job creation, infrastructure, education, and health systems, ensuring sustainable growth in vulnerable economies.
“This replenishment represents life-changing investments for the world’s poorest,” Banga said.
The commitment signals a unified effort by global leaders to address pressing challenges and foster economic resilience in the most vulnerable regions.