Developing countries are facing multiple crises — including climate change, crushing debt burdens, and growing food insecurity. The world’s 17 U.N. Sustainable Development Goals (SDGs) — once the bright north star for the international community — sometimes seem dim and unattainably distant, just five urgent years from the deadline. The financing gap for achieving the SDGs is estimated at $4 trillion per year.
One tool to help developing countries navigate these crises and build a promising future is the International Development Association (IDA), the concessional lending arm of the World Bank. It is a crucial lifeline to those who need it most. As we near the IDA’s donor conference in December, its three-year replenishment hangs in the balance.
IDA’s centrality in funding development and climate resilience is undisputed. IDA is the largest source of financing for low-income countries and the world’s largest fund for climate adaptation. It provides concessional loans (with low interest rates and long repayment periods) and grants to the poorest countries. It is essential to the fight against climate change and poverty.
And, as the U.N. Conference on Trade and Development (UNCTAD) recently observed, the cost of development finance is a “critical determinant in the sustainability of external and public sector debt.” As a result, IDA’s mix of concessional loans and grants can change to meet the moment — in fact, grants have recently made up as much as one-third of IDA’s overall annual support to developing countries.
Since it was created over 60 years ago, IDA has had a strong record of success in enabling developing countries to determine their own needs for funding climate solutions as well as investments in education, health, agriculture, and infrastructure, and empowering women. It has been so effective that 36 countries graduated from IDA and many — including India, China, and South Korea — have become IDA donors themselves.
