2007 Spring Meetings

Briefing on the IDA15 Replenishment Process

April 13, 2007

This meeting was an opportunity for the Bank to provide an update on the process so far for the 15th International Development Association (IDA) replenishment process thus far and to discuss the next steps with stakeholders. The session was chaired by Carolyn Reynolds – Head of the World Bank Civil Society Team. The principal Bank speakers were Philippe Le Houérou, World Bank Vice President for Concessional Finance and Global Partnerships, and Akihiko Nishio, Manager of the Resource Mobilization Department.

Philippe Houérou began by explaining the function and role of the International Development Association (IDA). IDA is the arm of the Bank that lends to the poorest countries. It complements the World Bank’s other lending arm—the International Bank for Reconstruction and Development (IBRD)—which serves middle-income countries with market-based loans and advisory services. IDA is one of the largest sources of assistance for the world’s 82 poorest countries, 39 of which are in Africa. It is the single largest source of donor funds for basic social services in the poorest countries. IDA lends money on concessional terms. This means that IDA credits have no interest charge and repayments are stretched over 35 to 40 years, including a 10-year grace period. IDA is funded largely by contributions from the governments of the richer member countries. Additional funds come from IBRD's income and from borrowers' repayments of earlier IDA credits. Donors meet every three years to replenish IDA funds and review IDA’s policies. The IDA 15 replenishment process is currently underway and is expected to operational from July 2008 to June 2011.

AkihikoNishio then explained that discussions with donor governments on the replenishment of IDA15 started in March 2007. During the course of the discussions four meetings will be held. The discussions are undertaken by donor countries represented by IDA deputies, but also involve representatives of borrower countries. The key theme emerging in discussions is the comparative advantage of IDA in the light of the trends in harmonization and the increasing fragmentation of aid. Specific themes being discussed during this replenishment process are:

• The role of IDA in the global aid architecture, at the country, sectoral, regional and global levels, including its support for debt sustainability of recipient countries.
• The effectiveness of IDA’s assistance at the country level, including: further analysis on resource allocation and development outcomes; achieving and measuring results; and progress in harmonization and alignment.
• IDA’s role in fragile states, including its strategy and operational instruments, to both support the development of fragile states and continued debt relief.

Mr. Nishio informed the meeting’s participants that all papers discussed with the deputies will be available on the IDA website. As regards finance, Mr. Nishio noted that the Multilateral Debt Relief Initiative (MDRI) will lower the volume of IDA’s credit reflows available for new assistance commitments in the future.

Discussion

In the ensuing discussion, questions from civil society participants centered on whether Country Performance and Institutional Assessment (CPIA) will continue to determine IDA allocations to countries, or whether a more needs based allocation system will be employed; if pressing concerns like climate change, the achievement of the Millennium Development Goals, and recurrent costs would be eligible for IDA resources; and how CSOs will be engaged in the discussions on the IDA 15 replenishment.

On the issue concerning the CPIA, the Bank representatives acknowledged that allocation of aid based on the current CPIA has been complex and often difficult for CSOs to follow despite efforts undertaken to divulge their criteria and country scores.  In this regard, the CPIA has been simplified recently with a reduction of its indicators from 20 to 16, but there will be continuing efforts to simplify the CPIA further.

In response to the question on using IDA allocations to addressing pressing development needs at the country level, Bank representatives stated that IDA allocations are adapted to different circumstances in different countries.  Therefore, there is flexibility for governments to use IDA funds to address the prevailing concerns in a country. Eligibility rules on spending have been expanded to allow for greater scope to cover MDG related projects. Furthermore through budget support the Bank can also fund recurrent costs.

On the engagement of CSOs in the ongoing IDA15 replenishment the participants were informed that meetings will be organized - probably - in the Autumn with CSOs to discuss the forthcoming draft progress report on IDA replenishment, following the completion of the draft.  

At the close of the meeting, the Bank representatives on the panel emphasized the value of getting feedback from civil society and the private sector on IDA, and thanked the representatives for their comments.

(Prepared by Guggi Laryea, World Bank)

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