By Faridat Salifu
The World Bank has achieved a historic $100 billion funding milestone for its International Development Association (IDA), bolstering hopes for enhanced climate resilience and poverty reduction in the world’s most vulnerable nations.
During a replenishment meeting in Seoul, donor nations pledged $23.7 billion to the IDA, a marginal increase from the $23.5 billion raised in 2021 but below the $30 billion target set by World Bank President Ajay Banga.
Financial strategies, including market borrowing and capital optimization, will enable the bank to leverage these contributions to reach the $100 billion mark.
The funds will support 78 low-income countries through grants and concessional loans, addressing challenges like climate change, food insecurity, and conflict.
Under the theme, “Ending Poverty on a Livable Planet,” the financing aims to integrate developmental goals with climate action.
World Bank President, Ajay Banga, hailed the fundraising effort as the largest in IDA’s history.
“The IDA has become essential in tackling global challenges, particularly the climate crisis,” Banga said in an open letter.
Over the past decade, the IDA invested $85 billion globally, with half dedicated to climate adaptation projects, such as protecting communities from sea-level rise, building heat-resistant infrastructure, and improving agricultural resilience.
The replenishment drive saw increased contributions from 17 donor nations, including significant pledges from the United States ($4 billion) and the United Kingdom (£1.98 billion or $2.52 billion). Denmark, Latvia, Spain, and Poland also made notable increases in their funding commitments.
However, the sustainability of the U.S. pledge may face hurdles under the new Trump administration, which has a history of withdrawing support for climate initiatives. “We are cautious about counting on the full U.S. contribution, given past challenges,” said Amy Dodd of the think tank E3G.
Despite these challenges, the IDA’s concessional funding structure is celebrated as a lifeline for low-income nations, particularly in Africa, which receives nearly 75 percent of IDA financing.
As the main source of concessional climate capital for developing nations, the IDA plays a critical role in achieving global climate finance targets. In 2022, 35 percent of IDA’s projects had climate adaptation or mitigation benefits, and the World Bank aims to increase this share to 45% by 2025.
According to Eleonora Cogo, a senior associate at the Italian think tank ECCO, the replenishment is a step toward meeting the $300 billion annual climate finance goal set at COP29 in Baku last month.
“The IDA’s concessional funding is crucial for channeling climate finance from developed to developing countries, especially for those most vulnerable to climate impacts,” Cogo said.
While inflationary pressures mean the $100 billion may have less real-term impact compared to previous rounds, the replenishment reflects a strong international commitment to addressing global inequalities and climate change.
The IDA’s role as a key driver of sustainable development and climate resilience is expected to grow in the coming years as the World Bank channels more resources toward addressing these interconnected challenges.
Source :Climate Home News
