Countries Rally to Boost Climate Resilience Funding for World’s Poorest – Largest IDA Replenishment Yet

Countries around the world have increased their contributions to the International Development Association (IDA) in its largest replenishment yet, reaching a $100 billion funding target for the World Bank’s lending arm dedicated to the world’s poorest countries. This news has raised hopes for a boost in climate resilience financing.

At a replenishment meeting in Seoul, South Korea, donor countries pledged $23.7 billion to the IDA, a slight increase from the $23.5 billion pledged in 2021 but falling short of the $30 billion target set by World Bank president Ajay Banga. The bank plans to leverage the donors’ money to reach $100 billion through various financial engineering methods, including borrowing more from markets and freeing up capital for lending.

The funds will be used to provide grants and concessional loans to 78 poor and vulnerable nations to help them address climate change, food insecurity, conflict, and other developmental needs under the theme of “ending poverty on a livable planet.” However, experts caution that rising inflation means the $100 billion figure represents a real-term cut compared to the previous round of funding.

G7 countries make up the majority of IDA’s traditional contributor base, which has grown from 48 to 59 countries in this cycle. While a detailed breakdown of pledges has not been disclosed, the United States has pledged $4 billion, the United Kingdom announced a £1.98 billion ($2.52 billion) pledge, and other countries like Denmark, Latvia, Spain, and Poland have also increased their contributions significantly.

In an open letter, World Bank president Ajay Banga praised donor countries’ generosity and highlighted the critical role the IDA plays in addressing the climate crisis. Over the past decade, the IDA has invested $85 billion globally, with half of that going towards building adaptation in poor countries to protect communities from climate impacts.

African nations receive nearly three-quarters of IDA’s financing, making the bank the main source of concessional climate capital for supporting countries in coping with climate impacts. The IDA has committed to channelling 45% of its overall funding to climate projects by mid-2025, with 35% of projects in 2022 having climate mitigation or adaptation co-benefits.

Experts believe that the IDA replenishment is good news for climate finance, especially given the highly concessional nature of its funding. Together with contributions from other multilateral development banks, the IDA will play a crucial role in channelling at least $300 billion a year from developed to developing countries by 2035, a finance goal agreed upon at the UN COP29 climate talks in Baku in November.

Overall, the increased contributions to the IDA represent a significant step towards addressing the needs of the world’s poorest countries and building climate resilience in the face of ongoing challenges.