US President Joe Biden has made a significant announcement, stating that the United States will commit $4 billion over the next three years to replenish the World Bank’s International Development Association. This generous pledge reflects America’s commitment to supporting global development efforts.
In a recent post on X, Biden expressed his commitment to supporting vulnerable countries by announcing that the United States will pledge $4 billion over 3 years to the replenishment of IDA, the arm of the World Bank. Biden, along with World Bank President Banga, called upon others to join in and increase their pledges as well.
The International Development Association (IDA) is a vital component of the World Bank, providing assistance to low-income countries. Since its establishment in 1960, IDA has worked in conjunction with the International Bank for Reconstruction and Development (IBRD), the World Bank’s original lending institution.
According to IDA’s official website, its focus is on granting funds and providing low-interest loans, enabling countries to invest in their long-term development and enhance the well-being of their citizens. Ultimately, IDA strives to foster more prosperous societies across the globe.
IDA plays a significant role in providing support to 78 low-income countries worldwide. It stands as the primary source of donor funds for essential social services in these nations. IDA offers loans with concessional terms, ensuring that they come with little to no interest charges. Moreover, the repayment period for these loans is extended over a span of 30 to 40 years.
More than half of the countries supported by the International Development Association (IDA) receive either all or half of their IDA resources in the form of grants, which do not require any repayment. These grants are specifically targeted towards low-income countries that face a higher risk of debt distress.
The funding for IDA primarily comes from contributions made by the governments of its member countries. Every three years, donors convene to replenish IDA’s resources and assess its policy framework. The most recent replenishment, known as IDA20, was finalized in December 2021, resulting in a historic financing package of USD 93 billion for IDA countries for the fiscal years 2022-2025.