The arm of the World Bank that works with the poorest countries, the International Development Association, is on track to secure at least $80bn of financing for its next three-year round of investment, which begins in July next year, the official in charge of the negotiations has told Global Markets.
Akihiko Nishio, vice-president of development finance at the World Bank, said: “Judging by discussions with donors and client countries, we are on course to hit somewhere between the base case and the medium high, so somewhere between $80bn and $82bn.”
If the negotiations succeed in pulling in $80bn for the IDA19 replenishment, this will be as much money in real terms as the previous IDA18 round. Nishio said traditional donors such as the UK and US, which had been the largest and second largest donors to IDA18, had been supportive. “I am seeing a remarkable show of support from most donors, [although] I would not say all,” he said.
IDA19 will include an allocation of $2.5bn to IDA’s private sector window (PSW), the same as for IDA18.
Launched in July 2018, the PSW is intended to attract private capital into fragile states. Nishio said that IDA has only committed $700m from 2018’s $2.5bn.
However, that $700m of investments has been accompanied by another $1.6bn supplied by the International Finance Corp, the Bank’s arm that works with the private sector, and its Multilateral Insurance Guarantee Agency. PSW has leveraged a further $1.7bn from other investors including from the private sector. That means the $700m of PSW money has helped mobilise a total of $4bn of investment.
Nishio said he doubted IDA could allocate all the $2.5bn before the deadline of June 2020 because of the time and effort needed to get the innovative facility up and running, although he believed it would commit 90%, or about $2.25bn.
There is a large pipeline of projects waiting for review. “The pace of delivery has accelerated significantly,” he said. “Each PSW project comes to my desk, so I can sense how rapid the number has been and it’s been pretty incredible.”