Donor countries have pledged a record $100 billion for a three-year replenishment of the World Bank’s fund aimed at assisting the world’s poorest nations. This fund serves as a critical lifeline for nations grappling with severe challenges, including mounting debt, climate disasters, inflation, and conflict.
The announcement was made on Friday in Seoul during a pledging conference for the International Development Association (IDA), the World Bank’s arm dedicated to providing grants and low-interest loans to 78 low-income countries.
The new commitment surpasses the $93 billion IDA replenishment announced in December 2021. Approximately $24 billion will come directly from donor countries, only a slight increase from the $23.5 billion pledged in 2021. However, the fund plans to issue bonds and utilize financial leverage to expand the total to $100 billion in grants and loans by mid-2028.
Despite these efforts, the two-day conference fell short of the $120 billion target sought by African leaders, partly due to the U.S. dollar’s strength diminishing the value of foreign currency contributions.
Several countries significantly increased their pledges:
- Norway raised its contribution by 50% to 5.024 billion krone ($455 million at current exchange rates).
- South Korea increased its pledge by 45% to 846 billion won ($597 million).
- Britain boosted its contribution by 40% to 1.8 billion pounds.
- Spain raised its pledge by 37% to 400 million euros ($423 million).
The United States pledged $4 billion, up from $3.5 billion in the previous cycle. The World Bank also highlighted that 17 donor nations committed to increasing contributions by more than 25%, with 10 offering boosts of 40% or more.
World Bank President Ajay Banga emphasized that recent optimizations of the bank’s balance sheet have enhanced its lending capacity by $150 billion over a decade. This will enable the IDA to turn modest contributions into transformative investments in areas like infrastructure, education, healthcare, and private sector development.
“In this context, IDA is not just a financial instrument; it is a catalyst for job creation,” Banga stated. He underscored that the funds will empower countries to address global crises while fostering economic growth and resilience.
Since its inception, the IDA has helped 35 countries graduate to donor status, including China, South Korea, Chile, Jordan, and Turkey.