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IDA Donors Reach Agreement On Increased Funding For Poorest Countries

Press Release No:2002/001/S


Contacts:  Caroline Anstey  (202) 473-1800

John Donaldson  (202) 473-1367

London, July 2, 2002 -  Donor countries have reached agreement on a three year plan to fund the World Bank’s International Development Association (IDA) program, which provides assistance to 79 countries where the vast majority of people live on less than $2 a day.  Approximately $23 billion in resources will be made available during the three years, of which about $13 billion will come from new contributions from 39 donor countries.  This represents an 18% increase over levels in the previous replenishment. 

Sven Sandstrom, who chaired the IDA negotiations, called the agreement “an important step forward in addressing the goals highlighted at the recent development conference in Monterrey.”  He said that IDA “performs a critical role in balancing the responsibilities of  poor countries for their own futures with support from donors and international institutions.

These replenishment discussions produced three notable innovations in IDA’s policies and processes.  In order to better track the results of IDA’s assistance and help ensure that IDA resources achieve the greatest possible impact on poverty reduction, the IDA donors urged World Bank management to establish a results-based measurement system to link IDA programs to a country’s development outcomes.  To increase IDA’s flexibility in addressing the special difficulties faced by the poorest and most vulnerable countries, donors recommended a significant expansion in the use of IDA grants.  Also, in order to increase the transparency of their deliberations, the replenishment discussions were opened up to representatives of borrowers and civil society, and background documents were regularly posted on the World Bank website.

Donors emphasized a number of clear objectives for IDA, including promotion of sound policies to secure the basis for economic growth and poverty reduction.  These policy priorities include: improving the quality and access to basic education by the poor, creating an enabling environment for gender equality, strengthening the fight against the spread of communicable diseases, including HIV/AIDS, fostering good governance, building a healthy investment climate as the basis for a competitive private sector and the promotion of free and fair trade, diversifying the sources of growth and exports, and mainstreaming environmental concerns in IDA operations.  IDA is a major development partner in Sub-Saharan Africa, where donors expect that half of IDA resources will be directed to support development programs across the continent, subject to performance.

In order to increase IDA’s flexibility in addressing the special difficulties faced by the poorest and most vulnerable countries, donors agreed on a significant expansion in the use of grants as a part its financial assistance focused on the poorest countries with per capita incomes of less than a dollar a day.  As developed over the course of their deliberations, this will result in a range of 18-21% of IDA’s overall resources being provided in the form of grants. They also took important steps to address the financial impact of grants, and provide resources to maintain IDA’s financial integrity into the future. 

Due in part to increased interest in the programs and policies of the World Bank, IDA’s donors drew substantially on the views and input of borrowers, civil society and the general public as they worked toward this agreement. Representatives from borrowing countries participated fully in discussions, and policy papers prepared for this replenishment were made publicly available in advance of meetings.  Donors sought and received direct public comment on the draft report of this agreement and took these comments into account in final drafting.  

IDA, which was created in 1960, is the world’s largest source of concessional financial assistance for the poorest countries, and invests in basic economic and human development projects.  The program seeks to promote sound policies that lay the foundation for growth and poverty reduction, ensure effectiveness and measurable results, and improve transparency and consultation with borrowers to improve operational effectiveness.  This agreement represents the thirteenth multi-year replenishment of IDA’s resources.

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