|We’re keeping a close (virtual) eye on the World Bank Spring Meetings this week. The COVID-19 pandemic has forced the bank to spend money at a record pace. Now the institution is calling on its donors to shore up its accounts.|
|For the first time in a calendar year, World Bank Group funding commitments topped $100 billion in 2020. Lending and grants from two of the bank’s arms — IBRD and IDA — hit a combined $70.5 billion, which marked a 65% increase from 2019 and the biggest percentage and dollar increase ever for the institution.|
In response, the International Development Association, perhaps the most vital funding source for low-income countries, has compressed its funding cycle from three years to two. In December 2019, IDA’s donors committed $82 billion, which was supposed to last until June 2023. Instead IDA’s resources will be mostly exhausted by June 2022. IDA’s 20th replenishment, which was not supposed to happen until 2022, has been moved up to December.Clemence Landers at the Center for Global Development wants the bank to maintain at least $35 billion in IDA spending per year, which would require a record $105 billion replenishment. Getting there will require donors to step up — particularly since the U.K. government is currently stepping back — as well a more aggressive approach to borrowing from capital markets, she writes.World Bank chief David Malpass told reporters this week he isn’t thinking yet about another general capital increase for the bank. In 2018, just before Malpass took the reins, the bank secured a $13 billion boost from its shareholders, and that required some tough negotiation.“There may be room for a selective capital increase that would allow and address the particular challenges that are coming out of the pandemic. But that would be an issue for our shareholders, and that’s not an issue now. The bigger issue is IDA-20 and the full success of the replenishment,” Malpass said.
Source: Devex Newswire