Quick Explainer: IDA’s Historic $24 Billion Replenishment

The recent International Development Association (IDA) replenishment reached a record-breaking USD 24 billion. Leveraging would enable the IDA envelope to attain USD 100 billion in concessional financing. While this is a remarkable milestone, it falls way short of the ambition we need to meet global challenges.

A record-setting replenishment, but a target missed: What Africa’s leaders called for

This replenishment is the largest in IDA’s history, yet it falls below key targets set during international discussions. In April 2024, during the Africa Heads of State Summit on IDA hosted by President William Ruto in Nairobi, African presidents called for a replenishment target of USD 120 billion. Additionally, expectations were set at USD 105 billion during the International Monetary Fund-World Bank Annual Meetings. Unfortunately, the USD 24 billion replenishment misses both marks. These gaps highlight the urgent need for greater commitment and ambition in mobilizing resources for development.

Early pledges: Who stepped up?

Several countries demonstrated leadership through early and increased pledges:

• South Korea increased its contribution by 45 percent, setting an example of bold action as the host of the pledging conference.
• Denmark led the pack as the first country to publicly declare its pledge in September.
• Other notable contributors include Spain, the United States, the United Kingdom, Brazil, and Norway, which made the largest increase of 50 percent.

These efforts are commendable, but they must be scaled to meet the realities of today’s global challenges.

A drop in the ocean: The bigger financial picture

Even with this record-breaking replenishment, the scale of the global financing challenge remains daunting:

• The global financing gap is approximately USD 4 trillion.
• Over 60 percent of IDA-eligible countries are grappling with a debt servicing crisis.
• Growth remains sluggish, exacerbated by geo-economic fragmentation.

Without significant systemic change, these challenges will persist, further undermining development gains.

Looking ahead to FfD4: What needs to happen

Next year’s 4th Conference on Financing for Development (FfD4) in Seville, Spain, must see firm commitments to:

• Adequately capitalizing multilateral development bank concessional financing instruments.
• Tackling the runaway cost of financing.
• Removing structural barriers that prevent developing countries from fully benefiting from economic activity and realizing their potential in the global economy.

Will the Multilateral System Deliver?

This replenishment reminds us of both the progress made and the distance we still need to cover. Will the multilateral system rise to the challenge? It’s time to go beyond incremental progress and meet the scale of the challenge head-on.

Photo courtesy of the World Bank.