World Bank pursues financing amid debt crises, climate imperatives
Date
3/20/2024 2:20:12 AM
(MENAFN) The World bank is embarking on a monumental effort to secure unprecedented funding aimed at addressing the intersecting challenges of mounting debt crises and the urgent need to combat climate change. Dirk Reinerman, the director of resource mobilization at the bank, emphasized the critical nature of this initiative, stating that the International Development Association (IDA) requires "the largest replenishment of its resources ever." This push is essential for facilitating access to affordable loans and grants for 75 developing nations.
While Reinerman did not specify a precise fundraising target, the IDA managed to secure USD23.5 billion from donor countries during its most recent fundraising cycle in 2021. Leveraging capital markets further boosted this figure to an impressive USD93 billion. However, meeting the escalating demands posed by sovereign debt crises and climate-related expenditures necessitates even more substantial increases in development financing.
Analysts underscore the pressing need for heightened investment in light of these challenges. Sovereign debt crises loom large, and the costs associated with mitigating climate change continue to mount. Yet, the ability of major donor countries, such as the United States and the United Kingdom, to contribute significant sums is constrained by various factors. Elections and shrinking aid budgets are among the factors curbing the generosity of these crucial supporters of the IDA.
Charles Kenny, a senior fellow at the Center for Global Development Research, highlights the complexities faced by traditional donors, noting that "some of the biggest traditional donors have things going on that make it difficult for them to give larger sums" to the IDA. Despite these challenges, the IDA remains a cornerstone of global efforts to alleviate poverty, earning recognition for its effectiveness in delivering aid. Its ability to access capital markets, triple annual profits, and extend financing to impoverished nations on concessional terms solidifies its reputation as a vital player in the fight against global poverty. With total assets amounting to USD235 billion, the IDA's role in mobilizing resources for development remains paramount.
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