International Development Association

So I, I think that the intent seems to be there, but I think the, whether the political will is there generally remains to be seen.

And then more near term is the IDA replenishment.

Have you been hearing a lot on what the-

Yeah, I mean, I mean, those things are gonna happen at the same time, right? The IDA kicks off at the, uh, replenishment kicks off at the end of the year and, you know, I think it comes in a really difficult landscape.

Um, and I think there will be a real question, um, especially as countries have decreased their official development assistance, whether IDA is something that they choose to spend that on.

And I think that there's a lot of people would make the argument that if you spend it on IDA, your money really goes a long way.

You can leverage it a lot.

And, but, but I think there are questions, right? Because also if they set ambitious targets, then, and don't get as much money as they want, how much do they then go to the capital markets? How does that impact the rates that IDA countries have to borrow at? Or how much grant capital actually exists in IDA for IDA countries? And that, I think, will be really critical because especially as we see [laughs] official development assistance decline, IDA funding, especially that grant funding, becomes really critical to do a lot of the things that we're seeing, um, people pull back on, including really key governance reforms, right? So we talk about private capital mobilization, but if you don't deal with the regulatory environments and those changes, you really can't get there, and that's where IDA money can help countries.

Rwanda has been unusually careful about what kind of debt it takes on.

According to the Ministry of Finance's published report, 88.2% of external borrowing is concessional, meaning low interest, long-tenner loans from institutions like the World Bank's International Development Association , the African Development Bank and bilateral donors.

Only about 12% is commercial debt at market interest rates.

That's a dramatic contrast to countries like Zambia, Ghana or Sri Lanka, which loaded up on expensive Eurobonds in the 2000s and then went into debt distress when interest rates rose.

So they're rolling over debt that they were issuing at much more affordable rates.

So what I'm going to be looking for is early indications of how much donors think they can contribute, but also the policy agenda around IDA.

I think a lot of reform is needed, especially around focusing IDA on the most vulnerable countries that really rely on it as part of the global financial safety net.

One of the things that we're also seeing, especially as there's this focus on private capital mobilization, is how does that then impact the poorest countries where it's the hardest to mobilize that capital, right? So is the offer from the World Bank different in those places and how are they differentiating some of that? And how does IDA then look to leverage the money it does get? What does it mean if it has to go to the capital markets to reach the top line number that they're looking for? What does that mean in terms of the mix of loans versus grants that are provided to countries?

We talk a lot about countries' financing costs, but the other thing is IDA and IBRD's financing costs.

And IDA was just celebrating the fact that it did its first bond issuance in U.S. markets, finally got an exemption from the Securities and Exchange Commission to issue.

But it did issue at close to 5%, which is high.

And it's not an outlier relative to the other MDBs.

And obviously, there's a lot of geopolitics in all these conversations and decisions.

But I, I think one of the things to me about, about this idea, we're gonna start hearing conversations about the next IDA replenishment.

In this current environment where funding is drawn down, what do we see? What do, what are the sort of inklings we get about where countries might come in in terms of the next IDA replenishment, which will be next year? And I think, uh, there are real questions there.

So what, you know, and if, and if the IDA pool ... shrinks.

Do you focus then, do you graduate more countries out of IDA and focus only on the poorest? How is the World Bank really sort of tackling the, the poorest countries in the world and using sort of especially its grant resources most, most efficiently? There's a host of number, a, a host of other issues.

We'll obviously be cracking the bank.

Always likes to talk about jobs, so I'm sure we'll hear a lot about that.

Um, so I know my colleague Jesse, who will be there, is gonna be sort of following on on some of those conversations.

So many of you are familiar with the world bank.

Um, well, it also has an international development association, the IDA, and here's the part that I find really interesting.

The IDA decides how much a country gets and whether it's a loan that they get or grant in two separate steps.

First, it sets the amount based on performance.

But again, I'm focused on the framework itself of these grant funding opportunities or other kinds of funding mechanisms.

Uh, not necessarily some of the other, uh, things that can come along with some of these funding mechanisms, particularly from the world bank or from the international monetary fund.

So this is the World Bank's International Development Association web page.

And this is where they lay out, you know, some of the borrowing countries and what is required of the borrowing countries.