World Bank raises record US$100 billion for aid to poorest nations
THE World Bank received pledges to deploy a record of US$100 billion via its unit focused on low-interest loans and grants to the poorest nations.
The total figure to fund its International Development Association (IDA), whose resources must be replenished every few years, builds on pledges from donor countries announced this week totalling US$24 billion, the bank said.
The figure is the culmination over the last year of president Ajay Banga’s drive to break the last funding round record, of US$93 billion built off US$23.5 in donations in 2021.
The effort had been challenged by stretched financing among most countries, which had been battered by the pandemic and buffering their countries from the global inflation spike, as well as a stronger US dollar.
Seventeen donor countries increased their pledges by 25 per cent, measured in their own currencies, over the previous round, the bank said. Ten increased by 40 per cent or more.
Based on IDA’s model and borrowing ability, donations get leveraged about three-and-a-half to four times.
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Pakistan, Bangladesh, Tanzania and Kenya were among the largest borrowers from IDA in the 2023 fiscal year, all receiving more than US$2 billion of the US$34 billion in total commitments.
Over the past decade, the association has deployed US$270 billion, with about two-thirds directed to Africa. That has helped extend health services to 900 million people, connect 117 million people to reliable electricity and gain access to clean water for 94 million people, according to the World Bank.
Banga, who took the helm in June 2023, has pledged to make the institution faster, more efficient, and mobilise capital from the private sector to magnify the impact of its development lending, including for climate change adaptation and the transition to clean energy.
The Biden administration last month announced a US$4 billion pledge from the US, the institution’s largest shareholder. That contribution will require an appropriation from Congress, something that’s unlikely to take place before the current session ends in two weeks.
In his first term, president-elect Donald Trump and his advisers generally favoured more unilateral lending rather than through multilateral development banks. However, under Trump the US did agree to contribute about US$3 billion to refilling the IDA fund in 2019. BLOOMBERG
