World Bank hits IDA replenishment target despite smaller US pledge

World Bank hits IDA replenishment target despite smaller US pledge

 

devex // By Sophie Edwards // 16 December 2019

The International Development Association replenishment in Stockholm, Sweden. Photo by: World Bank

 

LONDON — The World Bank has surpassed its funding target by ensuring commitments of $82 billion for the International Development Association, despite a lower pledge from the United States.

 

The new commitments to the bank’s fund for low-income countries, announced in Stockholm on Friday, come from 52 countries, including six first-time donor governments. The countries collectively committed to raise $82 billion for IDA 19 — a record for the development finance institution and $7 billion more than it raised during the last IDA replenishment in 2016.

 

The IDA package represents $23.5 billion in new donor contributions, which the bank intends to leverage to reach $82 billion. Other pledges could still come in, the bank has said.

 

“The strong and enthusiastic support for IDA comes despite the tight budget environments faced by many of our donors, and most of the contributions have increased from IDA 18,” World Bank President David Malpass said during a call with the press. He added that the bank was “committed to using every dollar contributed to achieve the greatest development impact.”

 

The IDA pot is replenished every three years and is the world’s largest source of concessional financing and grants, currently open to 74 countries, mostly in sub-Saharan Africa and south Asia.

 

According to the bank, the new funding will help support up to 370 million people with essential services; immunize up to 140 million children; provide enhanced broadband internet access for up to 60 million more people; help 60 countries improve their governance capacity; and add an additional 10 gigawatts of renewable energy generation capacity.

 

But while the development finance institution surpassed its replenishment target of roughly $80 billion and said that most donors increased their contribution compared to IDA 18 in 2016, the bank’s largest shareholder, the U.S., pledged only $3 billion, which is nearly 9% less than the $3.3 billion it contributed last time.

 

In contrast, China pledged approximately $1.2 billion to IDA 19, a senior World Bank source told Devex. This is double the roughly $600 million it pledged in 2016.

 

Scott Morris, senior fellow at the Center for Global Development, told Devex that the U.S. pledge was “disappointing” and showed a steady decline in U.S. support to the bank’s fund for the poorest countries.

 

Nevertheless, IDA's ability to prosper despite cuts from one of its largest donors “speaks to the fundamental strength of its financial model. It relies on a broad donor base, along with effective use of leverage of those donor funds through bond markets,” Morris said.

 

The reduction in U.S. funding also marks a “sea change in the aid architecture,” according to Morris, who pointed out that the U.S. now gives 50% more to the sector-specific Global Fund to Fight AIDS, Tuberculosis and Malaria than it does to the broader development program supported by IDA.

 

The decline in U.S. funding to IDA is likely linked to growing tension between the U.S. and the World Bank over its ongoing lending to China, which U.S. President Donald Trump called out on Twitter last week. The issue has become more of a problem after revelations that some World Bank funding meant for a purported educational project in China was used for militarized re-education camps as part of the Chinese government's crackdown on Uighur Muslims. The bank has suspended funding to the project.

 

The United Kingdom, which has traditionally been IDA’s biggest donor, made an indicative pledge, which will be announced in the new year, a source said.

 

Details of individual country pledges will not be made public until next year, the bank said. New IDA donor countries include Angola, Azerbaijan, Bahrain, Bulgaria, Ecuador, and Uruguay.

 

The IDA Private Sector Window, which was introduced in 2016, will continue in IDA 19 at the same level — $2.5 billion, World Bank Managing Director Axel van Trotsenburg told journalists during the press call on Friday.

 

The fund allows the bank’s private sector arm, the International Finance Corporation, to use IDA funds to subsidize investments in companies and funds operating in frontier markets that would otherwise be deemed too risky. It has proved controversial and attracted criticism from U.S. lawmakers.

 

Keeping PSW’s resources at $2.5 billion could indicate that the bank’s shareholders are not convinced by the model after a review showed IFC had only managed to allocate a fraction of the PSW resources, Charles Kenny, senior fellow at the Center for Global Development, told Devex. IFC needs to try new approaches to using PSW funds, “including competition for subsidies and public-policy led open offers,” and not just offer companies a “dose of cheap money,” Kenny said.

 

Nadia Daar, head of Oxfam International’s Washington, D.C., office, said she welcomed the record replenishment, especially the focus on governance.

 

“Transparent and accountable concessional finance can help poor countries provide inequality-busting public services and build sustainable and equitable tax revenues, critical especially at a time of increasing debt distress,” she said.

 

“Supporting countries to implement climate plans and providing 10 gigawatts of renewable energy is an important step forward on climate action, and the bank should prioritize low-risk technologies and access for the billion people still energy-poor,” Daar added.

 

 

 

World Bank approves $400-million dev’t policy loan

 

By BusinessWorld - December 18, 2019 | 10:45 pm

 

REUTERS

 

THE World Bank Group has approved a $400-million development policy loan (DPL) meant to promote competitiveness, enhance fiscal sustainability and strengthen financial resilience against against natural disasters.

 

In a statement Wednesday, the World Bank also said its board has published a new country framework for the 2019-2023 period which outlines the bank’s lending program.

 

The newly approved DPL can be used to support reforms for sustained growth based on the country’s development plan, such as streamline services, establish an ID system, enhance financial services and strengthen management of public assets and fiscal risks to impacts of climate change, the multilateral lender said.

 

Meanwhile, its new Country Partnership Framework (CPF) for the Philippines for 2019-2023 prioritizes investment in human capital including health and education, competitiveness and job creation, peace-building and disaster resilience.

 

“With the new Country Partnership Framework, the World Bank Group renews its commitment to support the Philippines by mobilizing financing, global knowledge and technical expertise to support reforms and programs that help speed up poverty reduction and promote greater inclusion,” Victoria Kwakwa, World Bank’s vice-president for East Asia and the Pacific, was quoted as saying.

 

In a document, World Bank said the new CPF has an indicative average lending program of $1.5 billion annually during the period.

 

Next year’s borrowing plan could amount to $1.34 billion, the bulk of which or $900 million will go to programs meant to improve the country’s resilience in the face of natural calamities.

 

For 2021 and 2022, the programmed loans could range within $2.88 billion to $3.08 billion. Of which, $800 million are meant to fund programs for natural disaster risk management through DPL while IPF loans could reach up to $2.28 billion.

 

Programs under its Investment Project Financing (IPF) include the Seismic Resilience and Emergency Management Project, Sustainable Tourism Project, Marawi Reconstruction and Rehabilitation Project, National Community Driven Development Project Additional Financing, Marikina Dam Project and Agus Pulangi Hydro Rehabilitation Project, among others.

 

“The bank will work closely with counterparts to promote continued strong engagement during the transition between the current and subsequent administration,” it said in the document.

 

“The new Country Partnership Framework aims to help overcome the core constraints that continue to hamper the country’s efforts to address the remaining vulnerability of many Filipino families,” Mara Warwick, World Bank country director for Brunei, Malaysia, the Philippines and Thailand, was quoted in the statement.

 

“The Philippines can deepen inclusive growth and broaden shared prosperity by tackling child malnutrition and learning gaps in education; promoting policies that create more and better jobs for Filipino workers; and focusing on the dual risk of conflict and natural disasters that hurt poor communities,” Ms. Warwick added.

 

Meanwhile, the bank noted that the country’s goal to graduate to upper middle-income status by next year “will likely reduce access to concessional financing from several development partners.”

 

“Looking ahead, as access to concessional financing tapers down in the country, the relevance of leveraging private financing for development will grow,” it added.

 

World Bank said the Philippines has a total net commitment through its official development assistance (ODA) portfolio of $14.5 billion as of end-September 2018.

 

Japan remained to be the largest ODA source last year with $5.98 billion in loans and grants, followed by the World Bank and the Asian Development Bank, respectively.

 

“Bilateral partners have included the USA, Australia, Japan, China, South Korea, Germany, Canada, New Zealand, Spain, Italy, and France among others. In terms of grants, the US, Australia, and the UN System together accounted for 71% of ODA grants,” it said. — Beatrice M. Laforga

 

 

 

 

World Bank extends $4-billion loans, grants to PHL for 2019-2023

 

BusinessMirror / By Cai Ordinario -December 19, 2019

 

THE World Bank will be extending over $4 billion worth of loans and grants to the Philippines under its new Country Partnership Framework (CPF) for 2019-2023.

 

Based on the CPF, loans to be extended, at least between 2020 and 2022, will be around $4.22 billion to $4.42 billon, while the amount of grants closing 2020 onward amount to $14.2 million.

 

The Washington-based lender said in a statement the CPF will prioritize investments in human capital (health, education, nutrition), competitiveness and job creation, peace-building, climate and disaster resilience, governance, and digital transformation.

 

“The Philippines can deepen inclusive growth and broaden shared prosperity by tackling child malnutrition and learning gaps in education; promoting policies that create more and better jobs for Filipino workers; and focusing on the dual risk of conflict and natural disasters that hurt poor communities,” said Mara Warwick, World Bank country director for Brunei Darussalam, Malaysia, Philippines and Thailand.

 

“The new Country Partnership Framework aims to help overcome the core constraints that continue to hamper the country’s efforts to address the remaining vulnerability of many Filipino families,” she added.

 

Under the loans, the World Bank will finance four DPLs worth $1.7 billion. The DPLs are the Promoting Competitiveness and Improving Resilience to Natural Disasters I, worth $400 million, and Third Disaster Risk Management Development Policy Loan with Catastrophe Deferred Drawdown Option (CAT-DDO), worth $500 million, to be financed in 2020.

 

The other two, worth $400 million each, will be financed between FY 2021 and 2022. These are the Promoting Competitiveness and Improving Resilience to Natural Disasters II, and Promoting Competitiveness and Improving Resilience to Natural Disasters III.

 

The list also includes 12 Investment Project Financing (IPF) loans worth $440 million in 2020 and a maximum of $2.28 billion in 2021-2022.

 

IPFs to be financed in 2020 are the $80- million Philippine Customs Modernization Project and two standby IPFs, the $100 million Teacher Effectiveness and Competencies Enhancement Project and $260-million Support to Parcelization of Land for Individual Titling Project (SPLIT).

 

For 2021 and 2022, the IPFs include the $300-million Seismic Resilience and Emergency Management Project, Sustainable Tourism Project and National Community Driven Development Project Additional Financing.

 

Other IPFs include the $280-million Philippine Rural Development Project (PRDP) Additional Financing and the $100-million Mindanao Inclusive Agriculture Development Project, Civil Service Modernization and Human Resources Management Project, and Marawi Reconstruction and Rehabilitation Project.

 

Two project—the Marikina Dam project, estimated to cost between $400 million and $500 million, and the Agus-Pulangi Hydro Rehabilitation Project, from $200 million to $300 million—are also included in the pipeline.

 

The grants that will close in 2020 onward include the $2.73-million PHRD Pillar IV- Preparation of a Program Towards Sustainable Flood Management in the Greater Metro Manila Area, and the $410,000 CADF Support to the LBP Carbon Finance Support Facility.

 

The list includes the $5.07-million Philippines Cebu Bus Rapid Transit Project-CTF Loan TF; $5-million PH-Rural Development Project (PRDP); $80,000 Philippines Methane Recovery and Combustion with Renewable Energy Generation from Anaerobic Animal Manure Management System; and the $910,000 Quezon City Controlled Disposal Facility Biogas Emission Reduction Project.

 

“With the new Country Partnership Framework, the World Bank Group renews its commitment to support the Philippines by mobilizing financing, global knowledge and technical expertise, to support reforms and programs that help speed up poverty reduction, and promote greater inclusion,” said Victoria Kwakwa, World Bank vice president for East Asia and the Pacific.

 

The World Bank, Warwick added, will support a cohesive approach to Mindanao’s development and intensify efforts to engage the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM), including reconstruction support for Marawi.