Historic U.S. Pledge to World Bank's International Development Association Fund
In a significant move, U.S. President Joe Biden has pledged a record-breaking $4 billion contribution to the World Bank's International Development Association (IDA) fund for the world's poorest countries. This substantial pledge, which substantially exceeds the country's previous commitment of $3.5 billion in 2021, is seen as a historic gesture by international observers.
The announcement was made during a closed session of the Group of 20 (G20) summit in Rio de Janeiro, according to two sources with knowledge of the commitment. The U.S. pledge not only surpasses its previous annual contribution but also marks a considerable increase from its 2021 commitments, which stood at approximately $14.3%.
The World Bank's IDA fund provides mainly grants and low-interest loans to the world's poorest countries, addressing pressing issues such as crushing debts, climate disasters, conflict, and other developmental challenges faced by these nations.
However, it remains unclear whether President-elect Donald Trump will honor Biden's pledge given his previous stance on cutting foreign aid. The new government is planning a comprehensive review of government spending, which may impact funding for international initiatives like the IDA replenishment.
Spokesperson for the White House declined comment on the World Bank's IDA replenishment, and the commitment will not be formally approved until after Trump takes office in January.
Meanwhile, the World Bank President Ajay Banga is seeking a record-breaking $93 billion replenishment in the upcoming pledging conference scheduled for December 6. Banga earlier stated that a $120 billion target could be reached if country commitments rise substantially.
International partners like Spain and Denmark have already expressed their commitment to increasing funding for the IDA replenishment, with Spain announcing an increase of 37% to 400 million euros ($423 million) during the IMF-World Bank annual meetings in October.