Additional funding for eradication of poverty
The replenishment negotiations of the International Development Association (IDA), part of the World Bank Group, were concluded in Moscow on 17 December. IDA offers soft loan funding and donates aid to the poorest developing countries. The purpose of the operations is to end extreme poverty and promote more balanced distribution of well-being. The IDA funding is in great demand, and its operations have significant development impact.
In the replenishment negotiations, agreement was reached on the IDA’s operating policy and replenishment of funding to USD 52 billion for the period 2014–2017. The funding is provided by a total of 46 states. The United Kingdom, the United States and Japan remain the biggest donors. Finland's contribution is EUR 256 million.
It was agreed in the negotiations that the replenishment will be used to support, for example, private sector mobilisation, inclusive economic growth and gender equality in recipient countries; adaptation of the poorest developing countries to climate change; and development of fragile and conflict-affected states. The measures will, for their part, strengthen the implementation of the World Bank Group’s new strategy, adopted in October 2013.
According to the World Bank estimates, the pledged replenishment is expected to provide, for example, electricity for 20–30 million households, microfinance loans for one million women entrepreneurs, basic health services for 65 million people, life-saving vaccines for more than 200 million children, and access to clean water for 32 million people.
The moment of the replenishment negotiations has been challenging. The effects of the global economic crisis are still present, and the economic situation of several donor countries is difficult. So far, IDA operations have been financed by donations. In the negotiations, IDA agreed on adoption of a new loan-based financing instrument, the Concessional Partner Loan (CPL), to supplement the organisation's funding base. In Moscow, five countries announced that they will use the CPL instrument in order to increase their IDA funding.
The goals and focus areas of the replenishment round are in line with the priorities set in the Finnish Development Policy Programme. Finland made active efforts to influence the drafting of the priorities for the replenishment round. Finland underscored enhancement of aid effectiveness and the importance of inclusive economic growth for eradication of extreme poverty, highlighting, for example, tax policy as a key factor in strengthening the resource base of the public sector in developing countries. Together with its Nordic-Baltic constituency, Finland participated actively in the debate on the CPL instrument and drafting of its terms and conditions.
Additional information: Pekka Hukka, Counsellor (main IDA negotiator), tel. +358 295 351 747; Johanna Karanko, Counsellor, World Bank Group Team Leader, tel. +358 295 350 712